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Difference Between a PPO and an HMO

Help! What’s the Difference Between an HMO and a PPO?

Health insurance can be a valuable tool in protecting our health. However, it can also be a very confusing and complicated topic to grasp. The two most common and well-known types of health insurance include PPOs (Preferred Provider Organizations) and HMOs (Health Maintenance Organizations). These are the types of health insurance that most people are familiar with on some level. 

Even so, knowing the differences, including the benefits and drawbacks, can be difficult for many people to grasp. Not to worry, however, this is where The Medicare Family can help you and your family. Contact us today and let us walk you through the process and learn the differences in plans, access the plans in your area, and discover which plan is best for you. Let’s begin by comparing the pluses and minuses of a PPO versus an HMO.

PPO Plans 

network of doctors and hospitals

PPO plans offer excellent options for people who prefer to have more choices and flexibility in their health care decisions, primarily regarding the doctors and hospitals that they visit. PPO plans prefer to work with a specific network of doctors and hospitals; however, there are fewer restrictions on the doctors and hospitals that are out of network. 

Moreover, PPO insurance will be more likely to pay if you visit providers that are out of network. Although, it is important to note that this rate of pay may be lower than the rate for providers in the network. The key points of a PPO include the following:

  • You may see any doctor or hospital you choose, including specialists, without seeing your Primary Care Physician first.
  • You can choose to see a doctor or hospital outside of the network. 
  • Premiums on PPOs tend to be a bit higher. 
  • Deductibles are common on most PPO plans as well. 
  • Filing a claim can sometimes require some legwork on the part of the patient. In some cases, patients will first pay out-of-network providers for any services they received and then file a claim for reimbursement from their PPO afterward.
  • You may have your prescriptions filled at pharmacies in and out of the network. As is the case with providers and hospitals, a PPO will pay a higher rate for prescriptions filled at pharmacies in the network. 

PPO plans afford flexibility and choice for people in various aspects of their health care. There are, as with everything, trade-offs, including higher premiums and deductibles. Knowing your health care needs is essential to discerning which aspects of a health insurance plan are most important to you and your family. The Medicare Family can help you identify those aspects and navigate the health insurance maze regarding Medicare.  

HMO Plans

Difference Between an HMO and a PPO

An HMO plan is more network centered. They provide you with an intricate network of doctors and hospitals to access and utilize as you manage your healthcare. The providers in this network have agreed to lower their prices while maintaining a standard of service that ensures you receive excellent healthcare with each visit. 

HMO plans only cover doctors that are in the network. If you choose to see a healthcare professional that is out of network, you will be responsible for the cost of the visit in most cases. In addition, there are typically more restrictions for coverage on an HMO plan than on other plans. 

An HMO plan can limit treatments, tests, and even doctor visits. The basics of the HMO plan are as follows:

  • Most HMO plans require you to choose a Primary Care Physician or PCP. Your PCP will determine a plan of action for your health care, including referrals for testing and specialists as necessary. 
  • If you see an out-of-network provider, you will be responsible for the cost of the visit and any costs associated with testing or treatment from the visit.
  • Premiums on HMO plans are typically lower than on PPO plans.
  • There are usually no deductibles or very low ones on an HMO plan.

HMO healthcare plans, while being more restrictive in some ways, also provide more affordable options for healthcare. Again, knowing your needs and your family’s needs is paramount to choosing the right plan for your life. The Medicare Family can help you understand your needs and potential future needs to help you find the right healthcare plan for your life. 

Choosing the Plan That is Right for You

Young dedicated reliable physician and female patient shaking hands before consultation in the office of a modern medical center

Many people get caught between a PPO and an HMO as they try to discover which plan is best for their needs and those of their families. It can be a challenge to know which is the best way to go for the cost. Things to consider when making your decision between a PPO and an HMO include the following:

  • It is crucial to consider the size of the network of providers you have access to with each plan; frequently, checking to see if your current doctors are included in the network on either type of plan can be a good suggestion. Most providers can also confirm their participation in or out of network, as is the case with the Mayo Clinic.
  • The PPO includes partial out-of-network coverage, while an HMO has coverage only for in-network providers.
  • The ability to see specialists is another factor that needs to be taken into consideration in the following manner:
    • HMO-requires PCP referral before a specialist may be seen.
    • PPO-you may see a specialist at any time with or without a PCP referral.
  • Monthly costs are another aspect to consider. Generally, the cost is lower with an HMO; premiums and deductibles are lower. PPO has higher premiums, and deductibles are a part of most plans.

Find the Best Plan for You

Both a PPO and an HMO offer excellent opportunities to manage your health care. However, the plans are vastly different, and knowing your needs and your family’s needs is important in determining which type of plan is best for you. The Medicare Family can help you as you navigate the health insurance waters. Contact us today to help you identify your needs, learn about health insurance, and choose the right path for you and your family.

Sylvia Gordon, aka Medicare Mama®, is an expert on all things Medicare and Social Security. She is the 2nd Generation here at The Medicare Family and has served on the advisory boards of major insurance companies like UnitedHealthcare®, Cigna, and Anthem. In her free time, she can be found taking care of her animals (dogs, goats, peacocks, chickens), and reading a good book. Learn More.
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