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HMOs vs. PPOs

HMOs offer less flexibility when picking a doctor, but it comes at a lower cost. PPOs have more freedom, but at a higher rate. While both plans have their advantages, understanding these differences can help you make an informed decision about which plan best suits your needs.

HMO Meaning

Health Maintenance Organizations, or HMOs, are a type of health insurance plan that offer access to healthcare providers within a network established by the insurance company. This means that patients enrolled in an HMO can only receive coverage for services received from doctors and hospitals within their network.

PPO Insurance 

PPO insurance plans have networks of healthcare providers that contract with the insurance company to provide services to their members.

However, unlike HMO networks which require patients to see only in-network providers except for emergencies or certain approved situations like referrals from your primary care physician; PPO networks allow patients to seek out-of-network care if they choose.

Key Differences between HMO and PPO Insurance

HMO vs. PPO: Referrals

  • HMO: In HMO’s network, members are required to choose a primary care physician (PCP) within the plan's network who will coordinate their healthcare needs. This means that you must see your PCP first for any non-emergency medical issues before being referred to a specialist or receiving additional services.

  • PPO: On the other hand, PPO plans (Preferred Provider Organization) provide more flexibility when it comes to choosing healthcare providers. They can visit specialists without referrals and even choose out-of-network providers. PPO plans are often preferred by those who want more control over their healthcare choices and are willing to forfeit the lower premiums for that flexibility.

HMO vs. PPO: Out-of-Pocket Costs

Generally speaking, HMO health insurance plans tend to have lower premiums and out-of-pocket expenses compared to PPO plans. This is because HMOs negotiate contracts with a specific network of providers who agree to offer services at reduced rates. In exchange for these lower costs, members must adhere to the insurance company's restrictions on provider choice and referrals.

PPO plans typically come with higher monthly premiums but provide greater flexibility when choosing healthcare providers both within and outside the plan's network. Members can expect increased out-of-pocket expenses if they choose an out-of-network provider or specialist without a referral from their PCP.

  • HMO: Lower monthly premiums; restricted network; requires referrals for specialty care

  • PPO: Higher monthly premiums; more flexible provider options; no referral needed for specialty care

In brief, while HMOs generally offer lower costs in exchange for limited provider choices and required referrals, PPO networks provide greater freedom in selecting healthcare providers at potentially higher expense levels.


Is a PPO less restrictive than an HMO?

HMOs have a limited provider network and require referrals for specialist care. A PPO offers more flexibility in choosing providers but comes with higher costs. The best choice depends on personal preferences, and whether the lower premiums that come with HMOs are important.

Why would someone choose PPO over HMO?

A person might choose a PPO over an HMO because of the greater freedom in selecting healthcare providers without needing referrals from primary care physicians. Additionally, PPOs often cover out-of-network services at a reduced rate compared to HMOs that typically don't provide coverage outside their network.

What is the cons of belonging to an HMO?

The main disadvantage of belonging to an HMO is the restricted provider network which limits your choices when seeking medical care. You must select a primary care physician (PCP) within the network who will coordinate all your healthcare services and provide necessary referrals for specialists.

Is PPO or HMO more common?

PPO insurance is the more common than many other types of insurance, with 49% of covered workers choosing PPOs vs. HMOs. 


Overall, HMOs and PPOs are two common types of health insurance plans. The key differences between HMO vs. PPO insurance plans are the out-of-pocket costs and the ease of requesting care. 

It is important for seniors to carefully consider their healthcare needs when choosing between an PPO vs. HMO plan. By weighing the advantages and disadvantages of each type of plan, they can make an informed decision that best fits their unique situation.

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