HMO vs. PPO – What’s the Best?

Choosing a suitable health insurance plan can be a confusing process. Co-pays, deductibles, primary care physicians, HMOs, PPOs—it’s easy to get overwhelmed! But whether you get coverage from your employer or through an individual policy, it’s important to have proper health insurance to protect yourself and your finances should you require care.

It’s also beneficial to look at rolling all of your plans into one as some companies like will give you a better rate if you also include your life sinsurance, car and business insurance policies all together.

Two of the most common group health plans are Health Maintenance Organizations (HMO) and Preferred Provider Organizations (PPO). Both can be affordable healthcare options, but they do have significant differences. So, HMO vs. PPO: what’s the difference between the plans, and which plan best fits your needs?

Why Do I Need Health Insurance?

As you probably know, without health insurance, you will be left footing the bill should you or a family member require medical treatment.

With adequate health insurance, a simple ear infection would be cleared up with a minimal co-pay at the doctor’s office and a small pharmacy charge for the antibiotics. Without coverage, the same ear infection would cost you 100% of the bill for a trip to a doctor’s office in addition to the astronomical cost of buying antibiotics without insurance. A simple visit could cost hundreds of dollars!

Also, you are more likely to receive routine physical examinations and preventive care if you have health insurance. Identifying potentially serious conditions in their earliest stages is essential for long-term health. So, the matter of HMO vs. PPO isn’t your main concern if you’re uninsured, because any decent health plan is better than nothing!

HMO – The Basics

The main feature of most HMO plans is the primary care model. You must select an in-network primary care physician to coordinate all of your medical care. If your preferred doctor is not in your HMO network, you must select another in order to have your medical visits covered by insurance.

When you feel sick, you will visit your primary care physician first—unless it is an emergency. They will determine whether or not you need to see a specialist. If you choose to visit a specialist without a referral from your primary care physician, the visit will not be covered by your HMO policy.

With an HMO plan, consumer costs tend to be much lower than with a PPO. HMOs typically have no deductible and low co-payments, resulting in minimal out-of-pocket costs. However, the tradeoff is that HMO plans limit your care to in-network physicians.

PPO – The Basics

The most appealing feature of the PPO plan is that it generally offers a much broader network of doctors. Those who opt for the PPO plan will be able to see almost any doctor of their choice, provided they are part of the network. Patients aren’t tied down to a single primary care physician, and a referral is not required to see a specialist. In-network care is encouraged through lower co-pays and more comprehensive benefits, but out-of-network care may still be partially covered.

The freedom enjoyed under a PPO plan doesn’t come without a price. Premiums are typically higher than HMOs, and deductibles typically range from $500 up to $2,000.

HMO vs. PPO: How Do I Decide?

PPO might be worth considering if you can afford higher premiums, want the freedom to choose from a wide network of doctors, or frequently visit specialists such as chiropractors or podiatrists. HMO may be best if you don’t mind being restricted to a limited number of in-network doctors, need to keep your out-of-pocket costs at a minimum, or can’t afford to have a high deductible.

Remember, these are just general guidelines; contacting a certified insurance agent or family physician for specific details is the best way to determine which plan best fits your needs.