HMO vs. PPO: Health Insurance Types, Explained

HMO vs. PPO: Health Insurance Types, Explained

Trying to find a good health insurance plan can be overwhelming, to say the least. There are premiums, deductibles, copays, networks, and dozens of different plans, all of which are expensive to choose from. Then you see the acronyms HMO and PPO, and you’re completely lost.

Knowing the difference between an HMO vs. PPO can help you find a healthcare plan that works better for you. Read on to learn the difference between these two plans and decide which one will fit your needs.

What Is HMO?

A health maintenance organization, or HMO, is one of two health insurance types designed to help insurance providers control costs. In this sort of plan, you can see only physicians in the network of providers that your insurance covers. Any visits you have outside your network won’t be covered by your insurance.

An HMO also requires that you have a primary care physician who you go through for all other care. If you have an issue that requires care from a specialist, you have to go see your primary care physician first. They can then refer you to an in-network specialist who will provide the care you need.

What Is PPO?

A preferred provider organization, or PPO, is the other common type of insurance plan. Unlike in an HMO, in a PPO, you can see any provider, no matter whether they’re in your network or not. You’ll pay less for visits to in-network providers, but you can still get coverage for visits to out-of-network providers.

A PPO does not require you to go through your primary care physician for all your care. You can go directly to a specialist if needed, without getting a referral from your primary care physician. However, it is important to note that some specialists may require a referral before they’ll see you.

Plan Networks

We’ve mentioned networks of providers that HMOs and PPOs use, but what does that mean? In both cases, your insurance company has a list of doctors who they have a working relationship with. Providers in that network don’t charge as much to patients who have that particular insurance, making it more affordable for the insurance company.

In either an HMO or PPO, staying in your network for care will help you save money. PPOs do give you the option to go out of network for care if your in-network physicians aren’t meeting your needs. But while they will still provide some coverage, it won’t be as much as if you visit an in-network provider.

Filling Prescriptions

When most of us think about in-network and out-of-network providers, our minds tend to go to doctors. And while most of these questions do revolve around physicians, those network requirements apply to all healthcare professionals. This can include chiropractors, nurse practitioners, and pharmacists.

If you’re getting a prescription filled with an HMO, you’ll have to go to a pharmacy that’s in your network. Otherwise, you’ll be paying for that medication out of pocket, which can get tremendously expensive. If you have a PPO, you can go to any pharmacy, though the same coverage rules still apply.


So at the end of the day, what will the costs look like if you have an HMO versus a PPO? In general, most HMOs have lower monthly premiums than PPOs do. Because they only cover in-network physicians, they can provide full coverage at a lower cost than a PPO, which has to absorb some extra costs for out-of-network care.

PPOs do give you more freedom in which doctors you can see, but you’ll pay for that with higher monthly premiums. You may also have other out-of-pocket expenses, including co-pays, deductibles, and other such costs. You might even need to consider a coinsurance plan to help you cover the costs your PPO plan won’t.

Filing Claims

One of the biggest questions with any sort of insurance is what the claims filing process looks like. If you work with an HMO, you won’t need to worry about filing any claims. If you get care in your network, your costs are covered; if you go outside your network, you’re paying out of pocket.

But with a PPO, you may have to deal with the claims filing process, especially when you go out of network. Most in-network care will be covered, no questions asked. But when you get care out of your network, you may have to pay the full cost up front, and then file a claim with your insurance to get reimbursement.

Picking the Right Option for You

The question of whether you should get an HMO or PPO will depend entirely on your personal situation. An HMO might be a better option if you live somewhere with plenty of access to in-network providers. It can also be a good way to get at least some medical care if you don’t have a lot of money to put towards health insurance costs.

In some cases, however, an HMO may not be able to provide you with the care you need. If you have specialized healthcare needs or if you live in an area that doesn’t have a lot of providers, you may want to consider getting a PPO. This can also offer you more medical freedom if you have the resources to pay the higher costs associated with these plans.

Learn More About HMO vs. PPO

Trying to find the right health insurance for you can be a challenge, especially if you have specialized healthcare needs or a tight budget. Knowing the difference between an HMO vs. PPO can help you find a plan that meets your needs. Make sure to take a look at the restrictions and benefits of each before you settle on a plan.

If you’d like help finding the right healthcare plan for you, check out the rest of our site at Health Plans. We can help you shop health insurance smarter and compare affordable coverage options. Check out our health insurance guides and start getting the coverage you need today.