HMO vs. PPO: How to Select the Best Healthcare Plan for You

Choosing a healthcare insurance plan requires knowing which type of coverage you need. You can choose between a health maintenance organization (HMO) or a preferred provider organization (PPO).

So, what is an HMO versus. a PPO and how do you know which one will be the best plan for you? When considering an HMO or a PPO, you must understand what each plan covers and the associated costs.

To help you figure out which plan to select, you can take a moment to review this guide that explains what each plan is and what advantages each one has to offer.

It will also cover the frequently asked questions people have when making their choice. That way, you can make an informed decision and one that meets your specific needs and those of your family.

PPO vs. HMO: Which is Better?

You will need to consider your healthcare coverage needs based on medical history to answer this question. Do you have pre-existing conditions that will require specialist referrals?

Also, you will need to think about what type of out-of-pocket expenses you can afford or whether you want to visit a doctor outside of your network. Determine what your expectations are when seeking care.

Another way to determine which plan better for you is to consider whether you want to wait to file a claim for reimbursement for services you pay for upfront. That is how you can determine which plan is better for you.

FAQs About Selecting an HMO vs. a PPO

Everyone’s healthcare preferences are specific to their individual needs. Here are some frequently asked questions people inquire when looking for the right way to meet those needs.

How much will each plan cost?

HMO: Lower Costs

An HMO plan will generally offer lower monthly premiums. You will also pay less out of pocket for doctor visits if any payment is required.
PPO: Higher Costs

PPOs often have higher monthly premiums. However, you get the flexibility to use both in and out of network providers without needing a referral. You can expect to pay more for medical costs out of pocket.

Do I need to have a primary care physician?

HMO: Yes

Your primary care provider (PCP) will coordinate your healthcare service. You will not be able to see a specialist without a referral from your doctor.
PPO: No

Under a PPO plan, you are not required to have a PCP, nor do you need that provider to refer you to a specialist.

Do I need a referral to see another doctor?

HMO: Yes

To obtain a referral from your PCP, you will need to schedule an appointment with your doctor. They will then refer you to see a specialist or other doctor based on their assessment.
PPO: No

A PPO plan does not require that you obtain a referral for any services or care you need.

Will each plan cover the costs if I see a specialist or an out-of-network doctor?

HMO: No

You will not be covered under an HMO if you seek care with a provider outside of your network. The only time you can see an out-of-network doctor is for medical emergencies.
PPO: Yes

PPO plans offer you the flexibility to see any doctor you wish. You can even see one outside of your network. Do keep in mind, you will pay more to visit the out-of-network doctor, and you will have to pay a separate deductible with that provider.

Do I need to file a claim?

HMO: No

There is no requirement to file a claim with your HMO plan in most cases. The reason is that in-network providers are covered, and your insurance provider pays the doctor directly.
PPO: Yes

If you see a doctor who is not in your network, you will have to pay the doctor directly. Your PPO plan will then require you to file a claim to have the insurance provider reimburse you for the visit and the treatment provided.

Choosing Your Healthcare Plan

The significant differences between an HMO versus a PPO may help you determine which plan you should choose. However, that requires you to know what you are looking for in a provider.

If you still are unsure which coverage option is best for you, speak to a healthcare plan member services professional. They can tell you more about each plan based on your current situation.

In general, an HMO may make more sense for you if lower costs and fewer out-of-pocket expenses are important to you. If you would rather have the flexibility to see any provider you want without waiting on a PCP referral, a PPO might be best.

A PPO is also a better option if you already have a team of medical professionals managing your care that do not belong to your network.