Deciding which type of insurance plan is best suitable for you can be confusing. Fortunately, we help hundreds of individuals select the plan that best fits their needs each year, and one question always seems to come up: What exactly is the difference between a Health Maintenance Organization (HMO) and a Preferred Provider Organization (PPO) insurance plan?
While there are variations of these plan types, specifically in the Medicare world, these are the two most common plan types. Below, we have outlined the traditional distinctions between HMO and PPO insurance plans.
Health Maintenance Organization (HMO)
- You will need to select a primary care physician.
- In most cases, you will need a referral to see a specialist.
- Certain services, like yearly screening mammograms, don’t require a referral.
- You must receive your medical care from an in-network provider, except for emergency services.
- Typically, an HMO network will be smaller than a PPO network.
Important Note: You can request authorization to seek non-emergency medical care from an out-of-network provider.
Preferred Provider Organization (PPO)
- You can seek medical services from out-of-network providers, but typically with higher cost-sharing amounts.
- You do not need to select a primary-care physician.
- In general, a PPO provider network is larger than an HMO provider network.
- In most cases, you will not need a referral to see a specialist.
Important Note: When seeing an out-of-network provider, that provider must agree to treat you. If you are on Medicare Part C, that provider must accept Original Medicare.
When deciding on which plan type is best for you, it is important to take your needs and wants into account. Here are some baseline questions you should be asking yourself:
Will I be traveling while on this plan?
Do I value a large network of doctors?
Would I prefer for my primary care physician to coordinate my care?
Do I want to keep my out-of-pocket expenses as low as possible?
How important are extra benefits, like dental and vision, to me?
Your answers to the above questions will help to get you started on selecting the plan that is truly best for you. Remember, there is no “one-size fits all” plan. As always, we recommend having a discussion with a licensed insurance professional to help navigate you on this big decision.