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HMO plan vs PPO


What's the Difference Between an HMO and a PPO?

It’s nice to have options. When it comes to health insurance, you may choose from a variety of options. HMO and PPO are two common varieties you’ll come across.

Network size, ability to see specialists, fees, and out-of-network coverage are all differences between HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization) policies.

To understand more about these and other distinctions between these two plan types, let’s take a closer look at each to see how they’re similar, how they’re different, and how you can pick the right one for you.

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HMO Health Insurance Plans

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An HMO provides you with access to a network of doctors and hospitals. A network is made up of providers who have agreed to cut their charges and achieve quality standards for plan participants. However, unlike PPO policies, HMO plans only cover care if you see a physician who is part of the HMO’s network. There are few possibilities to see a provider who isn’t part of the network. There are also often additional coverage restrictions than with other plans, including as a limit on the number of visits, tests, or treatments allowed.

Other important considerations to remember about HMOs:

  • Some plans may require you to choose a primary care physician (PCP), who will determine the appropriate therapy for you.
  • When you see a specialist or have a particular test done, you may require a PCP referral with some plans.
  • If you opt to see a doctor outside of an HMO network, there is no coverage, meaning you will have to pay the entire cost of medical services.
  • HMO plans typically have lower premiums and no or a low deductible.

Some HMO plans, such as Medical Mutual’s, don’t require you to choose a primary care physician or get a referral to see a specialist.

Health Insurance Plans with PPOs

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PPO plans provide you with additional options when it comes to choosing a doctor or hospital. They have a network of providers as well, but there are fewer limits for visiting providers outside of the network. In addition, if you see a non-network provider, your PPO insurance will pay, however at a lesser rate.

Here are some key features:

  • You don’t have to see a PCP first to see the doctor or specialist you want.
  • You may be covered if you see a doctor or travel to a hospital that is not in the network. If you stay in the PPO network, however, your benefits will be better.
  • Premiums are usually higher, and there is usually a deductible.

Plan Comparison: HMO vs. PPO

As previously stated, network size, ability to visit specialists, fees, and out-of-network coverage are all differences between HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization) plans. HMOs are less expensive than PPOs. PPOs, on the other hand, typically provide more flexibility in terms of seeing specialists, have wider networks than HMOs, and provide some out-of-network coverage.

Here’s a closer look at the comparative spots.

Plan Networks

The fact that both HMO and PPO plans have networks is a distinguishing aspect. Network providers agree to give discounts in exchange for access to a health plan’s members, which is one strategy to reduce healthcare expenses. This saves money for health insurers, but it also saves money for health plan members – savings for the insurer can translate to lower premiums, deductibles, and copays for plan members. In general, PPO networks are larger than HMO networks, with more doctors and hospitals, providing you with more options. However, because networks vary from one insurer to the next and from one plan to the next, it’s wise to examine each plan’s network before making a decision.

Primary Care Physicians

The majority of HMOs will require you to choose a primary care physician who will be your primary point of contact for medical care. Your primary care physician will determine what treatments you require and will send you to specialists if specialized care is medically essential. Specialist costs will not be funded without a referral from a primary care physician. PPOs, on the other hand, don’t normally require you to choose a primary care physician, and you can usually see a specialist without a referral and still have these costs covered.

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Coverage for Out-of-Network Care

If you receive care from in-network providers, your expenses for both PPO and HMO plans will be the lowest. The coverage for services provided by providers outside the plan network differs significantly between the two types of plans. Out-of-network services are normally not covered at all by HMOs, with the exception of emergencies. PPOs differ from HMOs in that they normally cover these types of treatments to some extent, but coverage for in-network providers is significantly better.


PPO plans are often more expensive than HMO plans because of the increased coverage and flexibility they provide. When we think of healthcare expenditures, we normally think of monthly payments — HMO prices are typically less expensive than PPO premiums. A deductible is another cost to consider. This is the amount of out-of-pocket medical expenses you must spend before your healthcare plan kicks in. Although deductibles are not required in all HMOs, when they are, they are typically lower than PPO deductibles.

Our Understanding Health Insurance Costs article might help you learn more about the costs of health insurance.

Here’s a table with a summary of the above comparisons:

Access to a network of doctors, hospitals, and other healthcare providers through HMOPPO. Having the freedom to see whatever doctor you want without the need for a PCP to authorize treatment. A referral from a primary care physician is not required to see a specialist. Low or no deductible, as well as lower premiums in general ✓ Medical expenses incurred outside of the plan’s network, are covered. Possibly

Which is Better: HMO or PPO?

According to the Kaiser Family Foundation’s 2018 Employer Health Benefits Survey, PPOs are the most popular type of employer health insurance. In the poll, PPO plans were used by 49 percent of covered workers, while HMOs were used by 16 percent.

It may sound cliche, but when it comes to picking between an HMO and a PPO plan, it’s not about which is better, but which is best for you. If you have a choice between these two types of programs, think about the benefits and drawbacks of each, as well as how they apply to your specific situation.

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In Most Cases, HMOs Win on Cost

If cost is the most crucial factor in your financial circumstances, you should seriously consider an HMO plan. HMO plans will, on average, be less expensive. Premiums are usually lower, and deductibles are either lower or non-existent. However, flexibility will be the price to pay.

PPOs Usually Win on Choice and Flexibility

A PPO plan may be a better option if flexibility and choice are crucial to you. Unlike most HMO plans, you won’t have to choose a primary care physician, and you won’t need a referral from that doctor to see a specialist. A PPO network is likely to be wider, allowing you to choose from a larger number of in-network doctors, specialists, and facilities.  Additionally, PPOs will typically have some coverage for out-of-network providers, should you want or need to see one. Out-of-network coverage is usually limited to emergencies with HMOs, and non-emergency services are frequently not covered at all.

Pros and Cons Summary

Here’s a quick rundown of the benefits and drawbacks listed above to aid your decision:

Check the provider network for any plan to see if your preferred providers are included, as keeping in-network will save you money. Because PPO networks are typically bigger, you’ll have a better chance with a PPO plan, but it’s essential to do your research before deciding. It’s possible that the HMO plan you’re contemplating includes your preferred providers, or at least enough of them to suit your requirements. You can check our networks before applying for a Medical Mutual plan if you’re thinking about it.

See our post on Comparing Health Insurance Plans for advice on selecting the right health insurance plan for your needs. This page can assist you in deciding not only between plan types but also between plans of the same kind.

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When deciding between an HMO and a PPO, consider the following factors.

Consider the pricing and flexibility you require in a health plan while selecting the best option for you. The following are the distinctions between an HMO and a PPO.

What are the distinctions between HMO and PPO healthcare plans?

It doesn’t have to be difficult to choose between an HMO and a PPO health plan. The size of the healthcare provider network, the flexibility of coverage or payment help for doctors in-network vs. out-of-network, and the monthly cost are the key distinctions between the two.

An HMO plan has a cheaper monthly premium than a PPO plan with the same deductible and out-of-pocket maximum.

CareFirst’s PPO plans include a large provider network. An HMO provides a smaller network of available doctors, hospitals, and specialists in exchange for a lower monthly premium. CareFirst’s policies are designed to give people the freedom to see any doctor they want, and the HMO plan still covers a larger network of doctors than many other health insurance companies.

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In-depth: HMOs

Health Maintenance Organization (HMO) is an acronym for Health Maintenance Organization. A Health Maintenance Organization (HMO) is a group of doctors, hospitals, and other healthcare providers who have agreed to work together to offer care at a lower cost. HMOs may require you to choose a primary care physician (also known as a primary care provider or PCP) who can refer you to specialists as needed to keep expenses down.

Except for emergency treatment, which may be covered out-of-network, an HMO plan will only pay for services from health care providers in the HMO network. Lab procedures, like a blood sample or a urine test, are also confined to the HMO network’s one laboratory provider.

HMO plans are typically less expensive than PPO plans, with lower monthly payments, making them perfect if your preferred providers are already in the network, or if you receive the majority of your treatment close to home.

In-depth: PPOs

Preferred Provider Organization is an acronym for Preferred Provider Organization. A Preferred Provider Organization, like an HMO, is a group of doctors, hospitals, and other health-care providers who agree to offer services at a set price. You are not restricted to in-network providers, unlike an HMO, albeit your copay or out-of-pocket fee for out-of-network visits may be greater than for in-network providers.

In return for more flexibility, PPO plans usually have higher monthly fees. You don’t need to keep a primary care physician if you have a PPO, and you can see any doctor you want, including specialists, at any time. This also means that you can get medical help wherever you are when traveling.

In addition, PPO plans give laboratory service providers greater options. When you need lab work done, you can use a PPO network to choose the most convenient.

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Consider the following factors while deciding between an HMO and a PPO:

Consider the following factors while selecting the best plan for you and your family:

Are you looking for a way to reduce your monthly payment?

The monthly costs of the HMO and PPO plans are compared. Consider an HMO plan if you require a cheaper monthly premium.

Do you prefer to stay close to home or travel frequently?

If you travel frequently and are more likely to require medical attention while away from home, especially if you have a chronic condition or engage in high-risk activities such as certain sports, a PPO may be the best option for you.

If you require a lot of specialized care, such as for a rare or chronic ailment, you may prefer the convenience of selecting experts and seeing them straight away that an HMO plan provides.

An HMO is more likely to provide the correct coverage for you if you usually seek treatment in your home city or from your family physician.

If you already have a favorite doctor, does the plan you're considering include visits with him or her?

While CareFirst’s HMO plans have a larger network than many other HMOs, the PPO plans still cover more health care providers in their network. If you want to keep your current doctor, check whether he or she is in-network under an HMO, a PPO, or both.

Choosing the proper health plan can provide you peace of mind, knowing that your medical needs are covered by your insurance.

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