PPO vs. HMO: What is the difference?

The right healthcare plan varies from family to family and person to person. As with any big decision, knowledge is power. Whether you receive insurance through your employer or you’re self-insured, you typically have a choice between the two most common types of managed care plans – health maintenance organizations (HMOs) or preferred provider organizations (PPOs). Both plans have advantages, and ultimately the right plan for you will depend on your needs.

With a PPO, you will have more flexibility and access to a greater number of physicians; however, you also may have more costs, as these plans can be more expensive than other options. HMOs tend to be less expensive, but there are limits to who you can see under the plan. Below, we provide a detailed look at both types of insurance plans to help you make an informed decision.

Preferred Provider Organizations

With a PPO plan, a network of primary care doctors, specialists, hospitals and other “preferred” providers are available for you to use throughout the state. PPO is a good choice if you want more flexibility in selecting a doctor; with this plan, you can visit providers who are out-of-network. In addition, you can see a specialist without a referral. Specified plan limits on out-of-pocket expenses is another benefit of PPOs.

With a PPO, you typically have a copayment and/or deductible payment at appointments, depending on your plan. Costs will also vary based on if you see an in-network or out-of-network provider. For example, you may be reimbursed 100 percent if you receive treatment from a participating provider, but only be reimbursed 70 percent if you go to a non-participating provider.

Health Maintenance Organizations

An HMO plan is a state-licensed policy that delivers physician and hospital services to holders directly, or through contracts with affiliated providers. With an HMO, you select a primary care physician who is in-network. You may only go to the primary care physician, or to other specialists that your primary care physician refers you to. While you can switch primary care providers, you can only see the physician you are currently assigned to if you are sick. While not as flexible, HMOs tend to be less expensive than PPOs, with lower premiums and fewer out-of-pocket expenses.

Do you have other health insurance questions? Ask your health insurance question, see answers and learn more on Health Insurance Central.

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