When choosing a health insurance plan, two options you’ll commonly see are HMO and PPO plans. But what exactly is the difference between an HMO and a PPO plan? In this article, we’ll explain what HMOs and PPOs are, compare HMO and PPO coverage, costs, and networks, and help you decide which type of health plan is right for you.

HMO Health Insurance Plans

HMO stands for “Health Maintenance Organization”. Here are some key things to know about HMO plans:

  • You must choose a primary care physician (PCP) within the HMO’s network who coordinates your care.
  • To see specialists or get referrals to other in-network providers, you generally need approval from your PCP first.
  • Services are only covered if you see healthcare providers who are in the HMO’s network, except in emergencies.
  • HMOs have lower monthly premiums but you pay higher costs if you need out-of-network care.
  • Many HMOs require you to live or work within the plan’s service area to enroll.

In summary, HMO plans offer affordable premiums and comprehensive coverage, but only if you stay within the plan’s network of approved doctors and facilities. You need referrals for specialty care.

PPO Health Insurance Plans

PPO stands for “Preferred Provider Organization”. Key facts about PPO plans:

  • You do not need to choose a PCP and can see any provider in the PPO’s network without a referral.
  • PPOs pay for a portion of out-of-network care, unlike most HMOs which don’t cover it.
  • You pay higher monthly premiums, but have lower costs when visiting in-network providers.
  • Deductibles and copays are usually higher than HMO plans.
  • Nationwide PPO networks are common, offering greater flexibility.

In summary, PPO plans provide more provider choice flexibility and nationwide access compared to HMOs, but at a higher monthly cost.

Main Differences Between HMOs and PPOs

Now that we’ve reviewed the basics, here are some of the key differences to understand between HMO and PPO health insurance plans:

Provider Networks

  • HMOs have smaller regional provider networks you must use. PPOs have larger national networks with out-of-network coverage.

Primary Care Physicians

  • HMOs require you to select a PCP to coordinate care. PPOs allow you to see any network provider without a PCP referral.

Referrals to Specialists

  • HMOs require a referral from your PCP before visiting a specialist. PPOs allow self-referrals to any network specialist.

Pre-Approval for Care

  • HMOs need pre-approval for many services through utilization review. PPOs have fewer approval requirements.

Out-of-Network Coverage

  • HMOs only cover out-of-network care in emergencies. PPOs partially pay for non-emergency out-of-network services.

Costs and Premiums

  • HMO monthly premiums are lower. PPO premiums are higher but you pay less when receiving medical services.

Service Areas

  • Many HMOs only operate in certain regions. National PPO networks allow wider coverage.

So in summary, HMOs are lower cost plans with tighter regional networks and rules, while PPOs offer greater provider choice freedom and flexibility at a higher monthly cost.

HMO Plan or PPO Plan: Which is Better?

When choosing between HMO and PPO health insurance plans, there are advantages and disadvantages to consider for each:

Benefits of HMO Plans

  • Lower monthly premiums and overall costs
  • Little to no bills for in-network care
  • Integrated care coordination through a PCP

Drawbacks of HMO Plans

  • Limited provider network and need for referrals
  • No out-of-network coverage in most cases
  • Pre-approval required for specialized treatment

Benefits of PPO Plans

  • Freedom to choose any healthcare provider
  • Nationwide provider access and out-of-network coverage
  • No need for referrals to see specialists

Drawbacks of PPO Plans

  • Higher monthly premiums and deductibles
  • Unexpected out-of-network costs can be high
  • Pre-approvals less common but still exist

There is no definitive “better” option. Choosing between an HMO and PPO comes down to your budget, health status, need to see specialists, and preference for provider choice flexibility versus lower costs.

Is an HMO or PPO Plan Right for You?

So when trying to decide between an HMO or PPO, ask yourself these key questions:

  • How much can you afford in monthly premiums – HMOs are lower cost
  • Do you travel frequently and want national coverage – PPOs have larger networks
  • Do you see specialists and want provider choice – PPOs offer greater flexibility
  • Do you prefer integrated care through a single PCP – HMO approach
  • Do you have complex health needs that require specialist referrals – PPOs don’t need referrals

Also consider whether your existing doctor participates in the HMO or PPO you are considering. Check if the HMO’s service area includes where you live or work. Evaluating these factors will help you determine if an HMO or PPO plan better fits your health insurance needs.

Other Health Plan Types

In addition to HMO and PPO plans, there are a few other common health insurance plan types:

EPO – Exclusive Provider Organization

EPOs are similar to HMOs in that you must see in-network providers, but don’t require PCP referrals to see network specialists like HMOs.

POS – Point of Service

POS plans combine aspects of both HMOs and PPOs. You choose a PCP that coordinates care within an HMO-like network, but can also see out-of-network providers for higher costs like a PPO.

HDHP – High Deductible Health Plan

HDHPs have much lower monthly premiums but extremely high deductibles you must pay before coverage kicks in. You pay full cost for care until the deductible is met.

Choosing the Right Health Insurance Plan

Selecting the best health plan for your needs involves:

  • Comparing monthly premiums to your budget
  • Assessing deductibles and copays
  • Reviewing provider networks
  • Understanding plan rules and restrictions
  • Weighing desire for provider choice vs lower costs

Speaking with an insurance broker or representative from the health plans you are considering can provide guidance on choosing between an HMO, PPO, or other plan type. Make sure you understand all costs, coverage details, and networks before enrolling so you select the optimal health insurance plan for your personal situation.

We’re Here to Help

You do not have to spend hours reading articles on the internet to get answers to your Medicare questions. Give the licensed insurance agents at Glidden Group a Call at (208) 962-0077. You will get the answers you seek in a matter of minutes, with no pressure and no sales pitch. We are truly here to help.


What is the difference between a PPO and a HMO?

The main difference between a PPO (Preferred Provider Organization) and a HMO (Health Maintenance Organization) is how they provide medical services. HMO plans typically have a restricted network of doctors, hospitals, and other healthcare providers, and you need to select a primary care physician (PCP) who will take care of your overall healthcare needs. PPO plans, on the other hand, give you more flexibility to choose your healthcare providers without needing a referral from a PCP.

What are the differences between HMO and PPO plans?

HMO plans have a more restricted network of doctors and hospitals compared to PPO plans. With HMOs, you need to select a primary care physician (PCP) who will refer you to specialists and coordinate your healthcare. PPO plans, on the other hand, have a larger network of healthcare providers and don’t require you to choose a PCP or get referrals to see specialists.

What is an EPO?

A: EPO stands for Exclusive Provider Organization. It is a type of plan that combines features of both HMOs and PPOs. Like an HMO, EPOs have a limited network of doctors and hospitals, but like a PPO, they don’t require you to select a PCP or get referrals to see specialists.

How do out-of-network costs work?

Out-of-network costs refer to the expenses you may have to pay when you receive medical services from healthcare providers who are not part of your plan’s network. With HMO plans, out-of-network services are typically not covered, while PPO plans may offer some coverage for out-of-network care, but at a higher cost to you.

What are out-of-pocket costs?

Out-of-pocket costs are the expenses that you have to pay for healthcare services, apart from your monthly premiums. This includes deductibles, copayments, and coinsurance. Different healthcare plans may have different out-of-pocket cost structures.

How do I choose the right health insurance plan?

When choosing a health insurance plan, you need to consider factors such as your healthcare needs, preferred doctors and hospitals, affordability, and coverage options. It’s important to compare different types of health insurance plans, including HMOs and PPOs, and choose one that aligns with your requirements.

Is an HMO or a PPO plan right for me?

The right plan for you depends on your healthcare needs and preferences. If having a more restricted network of doctors and hospitals and going through a primary care physician for specialist referrals is not a concern, an HMO plan might be right for you. If you prefer more flexibility in choosing your doctors and don’t want to go through a PCP for referrals, a PPO plan may be a better fit.

What’s the difference between in-network and out-of-network providers?

A: In-network providers are doctors, hospitals, and other healthcare providers who have a contract with your health insurance plan to provide medical services at negotiated rates. Out-of-network providers, on the other hand, are not contracted with your plan and may result in higher out-of-pocket costs if you choose to receive care from them.

How does a PPO plan work?

A PPO plan is a type of health insurance plan that offers a larger network of doctors and hospitals compared to HMOs. With a PPO plan, you have the freedom to see specialists without needing a referral from a primary care physician, and you can also choose to receive care from out-of-network providers, although the costs may be higher.

What’s an HMO?

HMO stands for Health Maintenance Organization. It is a type of health insurance plan that typically has a more restricted network of doctors and hospitals compared to PPO plans. With an HMO, you need to select a primary care physician (PCP) who will coordinate your healthcare and refer you to specialists within the network.