HMO or PPO: Picking the Right Insurance

The terms HMO and PPO get thrown around when discussing insurance, but what do they really mean? HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization) are two types of health insurance plans that offer different kinds of coverage. We’re going to highlight their qualities and differences to help you decide which plan is best for you.


HMO plans are known for their lower costs when compared to PPO plans and you usually pay less out of your pocket. If there is a deductible to pay, it is usually a nominal cost. These types of health insurance plans are slightly more restrictive than PPO plans, which is why they end up being more affordable.

PPO plans are pricier and require higher monthly premiums, but this is because they offer more variety in comparison to HMOs. You are allowed to choose a provider that is in-network or out-of-network whether or not you have a referral. Keep in mind that the price you pay out-of-pocket will increase with a PPO plan’s level of flexibility.

Out-of-network coverage

An HMO plan will not cover your medical costs if they come from an out-of-network physician or hospital. There are exceptions to this if a medical emergency arises.

As mentioned previously, PPO’s offer more variety in that you can visit hospitals and physicians out-of-network. Visiting outside of your network will be coupled with a higher fee though, and you will also need to pay a deductible.

Referrals and claims

HMO plans require Primary Care Physician (PCP) referrals, but there is a small chance you will never have to file a claim because you can only seek medical care from in-network providers. You don’t have to worry about getting reimbursed for charges because your insurance pays the provider.

PPO plans don’t require referrals, but they do require that you file a claim if you’re looking to receive a reimbursement after paying an out-of-network provider for medical care.

Designating a Primary Care Physician (PCP)

An HMO plan typically requires that you designate a PCP, who decides the treatment you’ll receive.

PPOs give you the ability to see whichever doctor you desire without needed a PCP to determine and authorize treatment. You’ll save money if you choose a provider that is within your network.

Which insurance plan do you have and which works best for you? We’re here to offer health insurance protection and several other types of insurance.  opens in a new windowContact our team of experience professionalsif you have any questions or comments.