HMO vs. PPO: What’s the Difference?

PPO vs HMO written on a notepad. Healthcare insurance concept.

When you’re making a choice among health insurance plans, you’ll notice that each policy will identify itself as an HMO or PPO plan and you may wonder what that means. You shouldn’t feel ignorant, as it’s not day-to-day knowledge. So with this mind you may wonder, is there a difference between HMO and PPO coverage? If you were to compare HMO vs. PPO, which one is the better? Here are some answers that can provide a better understanding of HMO/PPO health plans.

What is HMO Insurance?

HMO stands for “Health Maintenance Organization.” HMO health insurance offers you access to certain doctors, hospitals, and other health services within a network. In exchange of this exclusivity, the healthcare providers in this network agree to lower their rates for HMO plan members. For the most part, premiums are generally lower in price compared to PPO insurance.

While getting a discount on medical services on top of having a lower premium is appealing, HMO insurance is more restrictive. Many HMO policies won’t allow you to receive coverage if you choose to use a doctor or healthcare service that is outside of their network. Some plans may require you to select a primary care physician (PCP), who will determine what treatment you need. If you need to have a specialist treat you, you will likely need to get a referral from your PCP beforehand in order to get coverage. There may also be restrictions on the number of doctor visits, tests, or treatments you’re able to receive during your policy period.

What is PPO Insurance?

PPO is shorthand for “Preferred Provider Organization.” PPO health insurance tends to have higher premiums. A PPO plan often has a deductible for medical services as well. However, while the costs tend to be higher, PPO policies offer a lot more freedom of choice for the insured.

While PPO policies also have a preferred network of providers, they will provide coverage if you visit a doctor or hospital outside of their network. Your benefits will be better if you choose the doctor within your network, but you will still get some coverage albeit usually at a lower rate. You will also be able to see a specialist without needing a referral from a PCP first. In other words, the PPO coverage is wider and more flexible in where you receive treatment compared to an HMO, but has a higher price tag overall.

Is One Better Than the Other?

So which one wins the battle between PPO vs. HMO? To be honest, it depends on your needs and how much you are willing to pay. If you want a lower price for your health insurance premium, you may be willing to work within the restrictions of an HMO. If you can afford higher premiums and want more freedom in choose your health care providers, a PPO might work best for you.

Regardless of which one you choose, it is best to consider your medical needs and look at the policy’s provider network to determine if the doctor and the hospital options can fit your needs. You may have a specialist or have a doctor you prefer that is out of an HMO’s network. If an HMO’s network can meet all of your needs, it may be a better option than a PPO. If an HMO’s network is smaller, a PPO can allow you more freedom to choose and get bills covered outside of a network. Ultimately, the best choice between an HMO and a PPO is the one that can cover all your needs at the lowest cost possible.

After learning the differences between HMO and PPO coverage, you may want to revisit your health insurance plan. Freeway Insurance can provide you the best health insurance options at a low price. Get the plan you want at a price you can afford. Give us a call at 888-971-6381 or get a free health insurance quote online to save money on quality coverage.