What's the Difference Between HMO and PPO Plans?

By Daniel Petkevich

Dec 1, 2022

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HMO or PPO: Which Medicare Health Plan Is Right for You?

What's an HMO Plan?

• No coverage outside your network (except for emergency care)
• Low monthly premiums and deductibles
• You have to select a primary care physician (PCP) to manage your healthcare needs
• Your PCP must write a referral for you to visit a specialist
• Prescription drugs are only covered if you're enrolled in an HMO plan with prescription drug coverage (and you must order these drugs from pharmacies within your network)
• Your network covers only one laboratory provider for lab work (e.g., blood draws and urine tests)

What's a PPO Plan?

• Coverage both inside and outside your network (Note: Copays and out-of-pocket costs might be higher for out-of-network providers)
• Higher monthly premiums
• You don't need to select a PCP
• You don't need PCP referrals to see a specialist
• Prescription drugs are only covered if you're enrolled in a PPO plan with prescription drug coverage. (You can order prescription drugs from any pharmacy, but choosing pharmacies within your network might be cheaper)
• You have more coverage options for your lab work

What Are the Differences Between an HMO and PPO Plan?

• Provider networks (in-network limitations and out-of-network coverage)
• Costs (premiums)
• PCP requirements
• Expectations for filing reimbursement claims

HMO vs. PPO: Provider Networks

• Provide coverage only when you visit an in-network doctor (i.e., they don't cover visits to out-of-network providers)
• Have in-network limitations for lab work and prescription drugs. You'll need to stick to labs and pharmacies within the network to get coverage for your blood tests, urine tests or prescription drugs

• Provide coverage even when you see a doctor outside the network (Note: You might have a higher copay for out-of-network visits)
• Don't have in-network limitations for lab work and prescription drugs

HMO vs. PPO: Costs

• Low premiums
• Low (or no) deductibles
• Only require a copay when you receive healthcare services

• High monthly premiums
• Include deductibles, copays, and coinsurance when you receive healthcare services

HMO vs. PPO: PCP

• Require you to select a primary care physician (PCP) from within the network
• Require a referral from your PCP to consult a specialist
• Cover specialist consultations only when you have a referral

• Don't require you to have a PCP
• Let you visit any doctor (or specialist) without a referral

HMO vs. PPO: Filing Claims

• Don't require you to file a claim (since your healthcare services only come from in-network providers)

• Ask that you pay out-of-network providers directly and then file a claim for reimbursement

Which Health Plan Fits for Me?

• You're in good health — HMO
  • If you have no major health issues and your favorite doctor is within the network, choose an HMO.
• You're looking for an affordable plan — HMO
  • HMO plans might have lower monthly premiums and sometimes have zero deductibles.
• You travel a lot — PPO
  • A PPO plan is best for frequent travelers since it doesn't limit you to only in-network providers. You can visit any doctor outside the network, even when you're away from home.
• You live in a rural area — PPO
  • A PPO plan is a good option if you live in a rural area with very few doctors within your network.

Fair Square Medicare Can Help You Decide Which Plan Meets Your Needs