HMO vs PPO: Whatʼs the Difference Between HMO and PPO Plans? (2024)

There are a lot of decisions to make when it comes to choosing a health insurance plan. One of the first decisions you will need to make is which type of plan is right for you.

You’ve probably heard the terms health maintenance organization (HMO) and preferred provider organization (PPO), but do you really understand the differences between them?

Before we get started:

What is an HMO?

Health maintenance organizations (HMO)* have a network of doctors, hospitals and other healthcare providers who provide their services for a specific payment, which allows the HMO to maintain costs for its members. Cost and choice are the 2 features that set HMOS apart from other healthcare plans.

What is a PPO?

Preferred provider organizations (PPO) offer a network of healthcare providers to use for your medical care at a certain rate. Unlike HMO, a PPO offers you the freedom to receive care from any healthcare provider—in or out of your network.

* Please note, a referral may be required

Get more with a Medicare Advantage plan

Medicare Advantage plans help expand your Medicare coverage beyond Original Medicare, often with extra benefits. Explore Humana’s Medicare Advantage plans in your area today!

HMO vs. PPO plans: What’s the difference?

Which one is cheaper? Which one provides the coverage you need?To help you decide, we’ve created a simple comparison chart that lays out the basic features of HMOs and PPOs. Once you have a better understanding of each plan type and how they work, it will be much easier to choose the plan that’s best for you and your family.

Question HMO health maintenance organization PPO preferred provider organization How much will this plan cost? Lower cost
HMO plans typically have lower monthly premiums. You can also expect to pay less out of pocket.
Higher cost
PPOs tend to have higher monthly premiums in exchange for the flexibility to use providers both in and out of network without a referral. Out-of-pocket medical costs can also run higher with a PPO plan.
Do I have to use a primary care physician (PCP)? Yes
With most HMO plans, all of your healthcare services are coordinated by your designated PCP.
No
PPO plans do not require referrals for any services.
Do I have to get referrals to use another doctor? Yes
With an HMO, you must first schedule an appointment with your PCP and they will provide a referral to an in-network specialist.
No
PPO plans do not require referrals for any services.
If I have a doctor or a specialist who is out of network, will I still be able to see him or her and have the costs covered? No
HMOs don’t offer coverage for care from out-of-network healthcare providers. The only exception is for true medical emergencies.
Yes
With a PPO, you have the flexibility to visit providers outside of your network. However, visiting an out-of-network provider will include a higher fee and a separate deductible.
Will I need to file claims? No
Since HMOs only allow you to visit in-network providers, it’s likely you’ll never have to file a claim. This is because your insurance company pays the provider directly.
Yes
In some cases, you will have to pay a doctor for services directly and then file a claim to get reimbursed. This is most common when you seek services from out-of-network providers.

Generally speaking, an HMO might make sense if lower costs are most important and if you don’t mind using a PCP to manage your care. A PPO may be better if you already have a doctor or medical team that you want to keep but doesn’t belong to your plan network.

Medicare HMO and PPO

Medicare also has both PPO and HMO options. If you are eligible or over the age of 65, you might want to check out Humana’s Medicare PPO plan or Humana’s Medicare HMO plan.

Making your decision

Now that you understand the major differences between the 2 types of insurance, you may have an idea of which 1 makes the most sense in your situation.

But if you’re still undecided about individual medical plans and would like even more information to make your decision, please visit our PPO overview page or our HMO overview page.

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HMO vs PPO: Whatʼs the Difference Between HMO and PPO Plans? (1)

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HMO vs PPO: Whatʼs the Difference Between HMO and PPO Plans? (2024)

FAQs

HMO vs PPO: Whatʼs the Difference Between HMO and PPO Plans? ›

HMO plans typically have lower monthly premiums. You can also expect to pay less out of pocket. PPOs tend to have higher monthly premiums in exchange for the flexibility to use providers both in and out of network without a referral.

Which is better, an HMO or PPO? ›

Is an HMO or PPO better? An HMO is better if you're looking for cheaper health insurance costs, but a PPO is superior if you want the option of out-of-network care and don't want to get primary care physician referrals to see a specialist.

Why do doctors prefer PPO? ›

Doctors often prefer PPOs because they offer greater reimbursem*nt rates compared to HMOs and have less administrative paperwork. Is a PPO a good thing? For many, a PPO's flexibility and coverage make it a favorable choice, but it comes with higher premiums.

What is PPO good for? ›

More flexibility

Unlike an HMO, a PPO offers you the freedom to receive care from any provider—in or out of your network. This means you can see any doctor or specialist, or use any hospital.

What does PPO mean in healthcare? ›

Preferred provider organization (PPO) A type of medical plan in which coverage is provided to participants through a network of selected health care providers, such as hospitals and physicians.

Why do doctors not like HMO? ›

HMO plans frequently need primary care physicians to refer patients and have constrained provider networks, which may frustrate some physicians. Yet, HMO plans often have lower consumer out-of-pocket payments, which may appeal to physicians who wish to provide appropriate care.

Who is PPO best for? ›

PPOs Usually Win on Choice and Flexibility

If flexibility and choice are important to you, a PPO plan could be the better choice. Unlike most HMO health plans, you won't likely need to select a primary care physician, and you won't usually need a referral from that physician to see a specialist.

Why would someone want a PPO? ›

PPO plans typically require higher monthly payments in exchange for increased flexibility. With a PPO, you do not need to maintain a primary care physician and can see a different doctor of your choice at any time, including specialists. This also means when you are traveling, you can receive care wherever you are.

Should I avoid HMO? ›

If you like the idea of your primary care physician managing your care, an HMO plan will be a good fit for you. If you'd like to avoid referrals from your PCP when you need or want to see a specialist, a PPO or EPO plan will probably be a better fit.

Is Medicare better than a PPO? ›

Each type of plan offers different types of coverage based on cost and networks, so the best plan for you depends on your budget and your doctor preferences. Medicare PPO is a better choice if: Medicare HMO is a better choice if: You are looking for more flexibility in the doctors you see.

Why PPO is the most popular? ›

The biggest advantage of a PPO is the plan's flexibility. PPOs come with a wide range of premiums, copays, and deductibles, so you can look for a plan that really caters to your financial and health needs. Another great benefit of PPO plans is that you don't need a referral to visit a specialist.

What are the bad things about HMO insurance? ›

There are no deductibles in most plans; however, in some cases the member may need to pay one before receiving care. The out-of-pocket costs are large and the plan is limited in some ways, such as having to stay in the main network of doctors and specialists.

Is HMO worse than PPO? ›

HMO plans typically have lower monthly premiums. You can also expect to pay less out of pocket. PPOs tend to have higher monthly premiums in exchange for the flexibility to use providers both in and out of network without a referral. Out-of-pocket medical costs can also run higher with a PPO plan.

What are three disadvantages of PPO insurance? ›

In general, PPO plans tend to be more expensive than an HMO plan. Your monthly premium will be higher and you will have to meet your deductible before your health insurer starts paying. You will also have to pay more out-of-pocket if you visit a provider who is not part of your PPO network.

What does HMO mean in health insurance? ›

A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency.

Is HMO better than Medicare? ›

Many people choose an HMO plan because it covers everything Original Medicare covers plus additional benefits. HMO plans generally have lower monthly premiums than Medicare Supplement plans and are available with prescription drug coverage, so you can have medical and drug coverage in one plan.

In which of the following ways do PPOs differ from HMOs? ›

HMOs provide benefits on a prepaid basis. PPOs differ from HMOs in that they do not provide benefits on a prepaid basis and employees often are not required to use the preferred providers. Instead, employers may provide incentives for employees to choose, for example, a physician who participates in the plan.

What is HMO Blue New England? ›

An Association of Independent Blue Cross and Blue Shield Plans.

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