Are you trying to find the right health insurance plan for yourself and your family? If so, you’re likely finding yourself at the point where you need to choose between HMO vs. PPO insurance. Health maintenance organization (HMO) plans and Preferred Provider Organization (PPO) plans aren’t the only types of plans, but they are among the most popular options.
There are some distinct differences between these two types of insurance coverage options that you’ll need to understand before you can decide which one is right for you. To help you do that, we’ve outlined the key differences between HMO vs. PPO insurance. Keep reading or use the links below to learn more.
What is an HMO?
HMO Insurance stands for health maintenance organization. Many people enjoy using an HMO because it contributes to lower monthly premiums. However, you also pay the most money out-of-pocket.
On the other hand, with an HMO, you are required to see your primary care physician first. You cannot go and see a specialist and get coverage for that visit unless you have been referred there by your primary care physician. You also do not have as much coverage for out-of-network care, and your options for in-network coverage are generally smaller when compared to a PPO.
When were HMOs first available?
The very first HMO was established around 1910. At the time, the owner of a lumber mill offered his employees health coverage for approximately $0.50 per month. Since that time, HMOs have evolved significantly, but many of the components of the very first HMO are still in tact to this day.
What is a PPO?
PPO stands for preferred provider organization. This insurance plan typically has a slightly higher monthly premium and out-of-pocket expenses, but you also have access to a much larger network. You do not necessarily need to ask your primary care provider for a referral before you see a specialist, and you have some coverage for out-of-network visits. If you go out of network, some of the costs will be covered, but you generally have a separate deductible you need to meet.
When were PPOs first available?
The very first PPOs were introduced in the 1970s, and by the 1980s, they were the preferred healthcare insurance model in the United States. Because of their flexibility, they remain popular to this day.
Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) are two of the most popular types of major medical health insurance plans. The major differences between HMO vs PPO plans can be found in the:
- Size of the network
- The cost of the plan
- The ability to see specialists without referrals
- The size of the in-network
- The coverage for out-of-network services
The big difference between HMO and PPO for many individuals and families, is the primary care doctor. With an HMO, you will have a primary care doctor whom you and your family go through for most medical services. If you want to see a specialist for any reason, you will need a referral from your primary care doctor, which means an extra office visit. The trade off is that oftentimes HMO plans have lower premiums, but every plan is different, so visiting eHealth and seeing plan details might help you decide between an HMO vs PPO plan.
Some families or individuals might not care about having a primary care doctor as their outlet to all other medical services—deciding between an HMO vs PPO is very specific to each family or individual’s needs.
HMO vs. PPO: In-network providers and PCPs
By definition HMO plans offer an entire network of various health care providers who can offer you their services. These health care providers include a selected Primary Care Provider (PCP) who will be assigned to you and your family. It is important to note that your PCP will be responsible for coordinating your health care services, especially if you need appointments with specialists. If you do need to see an in-network specialist, then your PCP will have to make a referral before your plan will cover the visit.
Unlike an HMO, a PPO plan allows members to see any health care provider who is within the insurance company’s network, without a referral. The latter rule even applies to specialists. The lack of PCP referral requirements makes this the preferred type of plan for individuals who need to regularly visit specialists. There are also fewer restrictions on seeing out-of-network providers. Additionally, members are not required to choose a PCP. Like HMO plans, a PPO plan will typically have copayments on non-preventive medical care. However, many PPO plans will also have an annual deductible and higher premiums.
HMO vs. PPO: Fees
Another difference between HMO vs PPO plans can be found in the types of fees. HMOs typically require copayment fees for every type of non-preventive medical visit. HMO plans also give members access to in-network doctors and hospitals. This network is comprised of providers who offer lower rates to plan members, while still meeting set quality standards. However, if you choose to see an out-of-network provider, then your HMO plan might not cover the costs of your visit.
HMO vs. PPO: FIling a claim
There are also significant differences when it is time to file a claim. In an HMO, you don’t usually hav to file a claim because your insurance company should pay the provider directly. In contrast, with a PPO, you may have to pay a doctor directly for his or her services. Then, you will have to file a claim with the PPO to get reimbursed. This is very common if you decide to see someone who is out of network.
Main differences between HMO and PPO plans
When it comes to HMO vs PPO there are a few additional key feature differences that you should consider before you select a plan.
| HMO | PPO | |
| Doctor Choice | You must choose doctors within the network to be covered for services. | You may see doctors outside the network, but you may pay more out of pocket for services. |
| Specialists | To see specialists, you will need to have a referral from your primary care physician. | You do not need to name a primary care physician or get referrals to see specialists. |
| Hospitals, Other Providers | All hospitals and other medical services must be done within the network to be covered. | You may be able to go to hospitals and other medical services out of network. |
| Premium Costs | Premium costs tend to be lower, although this varies from plan to plan. | You might pay more for your monthly premiums although this varies from plan to plan. |
| Plan Costs | Deductibles are rare and copayments are usually minimal, but this depends on the plan. | You may have a deductible and copayments might be slightly more depending on the plan. |
| Filing Claims | Claims tend to be handled within the network, so you do not have to file claims yourself. | You might have to file some claims, especially for providers outside your network. |
HMO vs. PPO: Which is right for you?
There are several factors to consider if you are trying to figure out whether an HMO or PPO plan is right for you. They include:
- Flexibility: How important is it for you to go out of network and see specialists without asking for a referral from your primary care doctor? A PPO provides you with a greater degree of flexibility.
- Cost: If you want to minimize your health expenses, it might be better for you to go with an HMO. You generally have lower health insurance premiums and lower out-of-pocket expenses. On the other hand, you do not have as much out-of-network coverage with an HMO.
- Availability: If you have access to many providers in the area, you could see whether your favorite doctors are already part of an HMO. If you decide to join an HMO, you need to make sure you can find doctors who are in your network.
Consider these factors carefully before you decide what insurance plan is right for your needs.
When can you enroll in HMO vs. PPO insurance?
Open enrollment is a window of time when you can enroll in an HMO or PPO insurance plan on the open market. This is a designated period when you can start, stop, or change your health insurance. Typically, it starts in November and lasts until the second week of January the following year. For example, federal open enrollment for 2023 is between November 1st, 2022, and January 15th, 2023.
Prior to November, you should take a look at your health insurance plan to make sure it still meets your needs. Your healthcare needs may change from time to time.
Are PPOs and HMOs the only insurance options?
No, there are other options for health insurance. For example, you might also be interested in an EPO plan or POS plan. Each option has its own benefits and drawbacks, which is why you should take your time to compare coverage.
As it currently stands, 44% of people enrolled in employer-sponsored health benefits belong to PPOs, while only 19% belong to HMOs. However, the amount of people enrolled in PPOs has decreased by about 16% over the last decade or so. With a variety of types of insurance coverage, some people are looking outside these two main options.
When comparing plans, you want to think about what your priorities are as well as your budget.
Finding the right plan for you
When searching for the right insurance coverage at the right price, licensed brokers like eHealth can help. We offer a wide range of insurance plans with licensed agents in each state to help you find the best plan for your needs. All our services are available at no cost to you, with 24/7 support to help you manage your healthcare over the long term.
Although plan pricing is regulated, our expertise and experience will help you get the best coverage and often at a lower cost than plans offered through the marketplace. We can help you choose your coverage through chat, on our website or over the phone, so get a health insurance quote today and get all of the information you need to select the best plan for you and your family.