HMO vs. PPO

An HMO and a PPO are common types of health insurance plans. In this article, we will go over the basics and key differences of HMO vs. PPO.

HMO

HMO stands for Health Maintenance Organization. Here you find care with a specific network of doctors and hospitals. You will choose a primary care doctor and they will coordinate your care, including giving you the required referrals for specialists. HMOs typically have lower costs because of the agreements with care providers that the insurance company has in place. If you see a provider that is out-of-network, the HMO plan typically will not cover it, unless it is an emergency. For HMO coverage, you will pay a monthly premium as well as co-pays when you seek care.

PPO

PPO stands for Preferred Provider Organization. PPOs give you more flexibility about where you find care. You have the ability, at a higher cost, to see out-of-network providers and you can go to a specialist without a referral. The insurance company has agreements with in-network providers to standardize the cost of care.

Key Differences

There are two key differences when it comes to an HMO vs. PPO. This is cost a flexibility. HMOs may offer lower premiums. Both an HMO and PPO may require you to reach a deductible before your services are covered. But that is less likely with an HMO. PPOs may have higher premiums, but you will have a level of out-of-network coverage.

When it comes to flexibility, PPOs are the winner. You can chose a doctor that is in-network or out-of-network and you do not need prior approval to see a specialist. So it sums down to this: with an HMO you may pay less but will have less flexibility. Whereas with a PPO you may pay more but will have more options for care.

How to Choose

You will have to decide what is more important to you, cost saving or flexibility. There are some other questions you can ask when comparing plans to help you further pare down your options. These include:

• What is the deductible?
• How often do you visit the doctor?
• What type of medical services do you think you’ll require in the near future?
• Do you have an existing condition that requires specialist visits?
• Is your current doctor in-network or out-of-network?

You will need to weigh all the options when deciding HMO vs. PPO to find what works best for your budget and health needs.

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