PPO vs HMO: What’s the difference?

There are two main types of healthcare plans for people to make the selection easier, one is the “Preferred Provider Organization” plan (PPO) and the other is the “Health Maintenance Organization.” (HMO). Both have their benefits and disadvantages when it comes to coverage options, and depending on your situation you might want to go for either one.

Discussing the differences and how the plans work will help determine the best one for you.

The PPO Plan.

This plan lets you see any in-network healthcare provider/physician you want without any referrals. The insurance that gave you the plan will have a network of doctors that you can pick from and the services will be provided and covered at a higher rate. You’ll still have to pay for annual deductibles and some co-payments, but going outside the plan is often more expensive.

If you want to have a wider selection of people to pick from, have claims be covered, and visit specialists without referrals, then the PPO plan is a good pick to go on.

The HMO Plan.

In contrast, the HMO plan has you pick a primary care physician who will care for your healthcare needs, but you will have to get a referral from them before seeing a specialist. You’ll be able to pay for less out of pocket expenses and expenses like deductibles and co-payments will be minimal. But if you work with a provider outside of your network, then you might not get coverage.

HMO plan gives lower premiums and expenses and has coverage for preventive care. If you don’t mind staying within your network it can be a good plan.

The differences and cons of each

The main difference is the network size that you can work with, as well as who you can see.

  • HMO plans only let you see people within their network, and you have to follow that networks’ rules in exchange for lower costs. You won’t get any coverage for seeing doctors or hospitals outside of the network, and if you don’t get a referral from your physician then you could have to pay out of pocket.

  • PPO plans give higher deductibles and are more expensive to start off with. However, they don’t restrict you to just one network and will offer at least some coverage with out of network providers.

Which one to get?

If you want to get an HMO plan, then take a look at the network in your area and see if the services offered by it are what you need in a healthcare plan. If they are, then feel free to go with the HMO plan. If you want nationwide coverage that is available everywhere, then you’ll probably need to go with the PPO plan to receive coverage even if it is out of the network, because you’ll at least get some coverage outside the network.

As always, it’s primarily up to you and your healthcare needs, but the PPO plan gives you a lot more for its price tag.

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