HMOs and PPOs are both managed care plans that deliver care from an approved network of providers in exchange for a lower cost. Of the two plans, HMOs are generally less expensive, if you follow their terms. With HMOs, you must agree to have a primary care provider (PCP) who manages your care. With PPOs, you may visit doctors outside your plan’s network, but you’ll pay more for the flexibility.
Should I choose an HMO or PPO?
It depends on what may be right for you.
HMO plans are typically more cost-effective than PPOs:
- You are required to choose a PCP from your plan's network.
- Your PCP will need to refer you to in-network specialists, if needed.
- HMOs don’t cover costs from providers outside the plan’s network, except in true emergencies as defined by the plan.
PPO plans are typically more flexible and may cost a bit more than HMOs:
- PPOs typically allow you to see both in-network and out-of-network providers, but you may pay more for out-of-network care.
- PPOs don’t require you to choose a PCP, though having one is always a good idea.
- Referrals aren’t needed to see a specialist.
How do I know I’ve made the right choice: HMO vs PPO?
When choosing an HMO or PPO, decide whether your priority is monthly savings or access to a wider range of health care providers. If you’d like to benefit from the potential savings an HMO plan may offer, you’ll have to get care from providers within a restricted network. If you’re generally in good health and don’t anticipate needing care from any out-of-network provider or specialist, an HMO may be the right plan for you.
If you’re happy with your current medical team, and they’re out-of-network, you may opt for a PPO. It permits you to see out-of-network doctors, despite having to pay more for the convenience.
The difference between HMO and PPO plans is the number of approved care providers you can access and the cost associated with doing so. HMOs require a PCP to manage your care, but they’re also some of the most cost efficient. With PPOs, you can access out-of-network providers as well as specialists – without first getting a referral – but to do so, you’ll pay a higher monthly premium.