Medicare HMO vs PPO Plans; What’s the Difference?

When shopping for a Medicare plan, Medicare beneficiaries may come across several different types of plans. The two of the most popular kinds that you will see are Medicare HMO’s and Medicare PPO’s. Understanding how they are different may help you determine which one might be best for you. Let’s compare HMO vs PPO what’s similar and what’s different between these two plan types!

What is a Medicare HMO plan?

HMO, which stands for Health Maintenance Organization, is known for having lower costs. The lower costs often apply to not just your monthly premiums, but out of pocket costs as well.

An HMO plan often has you see a primary care physician (PCP), or a general practice doctor. You are usually required to visit your PCP first, as they can generally treat you for most things. If a specialist is needed, your PCP will refer you. Some HMO plans require the referral before you can see a specialist.

HMO plans usually have a smaller network they work with. In most cases, your plan will only cover care from a provider within that network. Except in the event of an emergency, you are required to pay the costs of out-of-network care.

What is a Medicare PPO plan?

PPO, which stands for Preferred Provider Organization, is known for it’s flexibility and choice.

With a PPO plan, you are able to choose the health care provider that you prefer. Similar to the HMO plan, a PPO plan will have a network of providers, but PPO’s usually have a wider network than an HMO. You also will similarly have lower out-of-pocket costs if you stay within that network.

However, some PPO plans will cover some of the costs for care you receive out-of-network, unlike an HMO plan. However, the coverage is drastically reduced, so you will pay higher out-of-pocket costs for care you receive out-of-network.

The biggest advantage to a PPO plan is that you aren’t required to get a referral to be a specialist. Without the need to designate a primary care provider, you are usually free to see who you feel you need to see. This reduces the time that it takes for you to get the care you need, should you need to see a specialist.

What are the key differences between HMO and PPO?

  • Primary care physicians are required on an HMO plan. You are not required to name a PCP on a PPO plan.
  • Costs tend to be lower on an HMO plan in regards to premiums, deductibles, and total out of pocket costs. On a PPO plan, these costs tend to be higher.
  • Referrals are required from your primary care provider on an HMO plan, if you seek to see a specialist. On a PPO plan, referrals are not required, nor is a PCP. You have more freedom to see who you feel you need to see.
  • Out-of-network care can be covered on some PPO plans. Costs will still be higher than getting care in-network, but you wouldn’t have to pay the full costs. HMO plans do not cover any out-of-network care.

What are the similarities between HMO and PPO?

Despite their differences, there are some thing health insurance plans must cover that are referred to as “essential health benefits”, including:

  • Emergency care
  • Hospitalizations
  • Laboratory services
  • Mental health and substance use disorders
  • Pediatric services, including dental and vision care for children
  • Pregnancy, maternity and newborn care
  • Outpatient care you get without admission to a hospital
  • Prescription drugs
  • Preventive and wellness services and chronic disease management
  • Rehabilitative and habilitative services

ACA plans also must cover breastfeeding and birth control.

Medicare HMO and PPO plans may also include benefits not covered by Original Medicare.

Why choose an HMO plan?

You should choose an HMO plan if your health preferences include:

    • Lower premiums
    • No need to file claims
    • Having your health care coordinated by a primary care physician

Why choose a PPO plan?

You should choose a PPO plan if your health preferences include:

  • At least partial coverage for care received outside of the plan’s network
  • the flexibility to seek out your own care without a referral from a primary care physician for specialist care

Which type of Medicare Advantage plan is right for you?

Each type of Medicare Advantage plan has its own benefits, and choosing between an HMO vs PPO is entirely up to your health care needs and budget.

For some, a primary care physician can be a great piece of your healthcare puzzle. Your PCP will get to know you and your health, and you can establish a trusting and long-lasting relationship. The coordinated care they experience in an HMO plan is also an appealing aspect to many, as people feel the providers in the network take more of a team approach to your care.

For others, you may enjoy the freedom and flexibility that comes along with a PPO plan. And if you see specialists often, a PPO plan will reduce the amount of time before you receive care.

To learn more about which options are available where you live, call to speak with a licensed agent. We can discuss your health needs and find a plan in your area that is best suited to you!

Get a personal consultation.

Call us today at 1-800-940-0633