PPO vs HMO: What is the difference?

Health insurance is one of the most important investments you can make in your life. But, when it comes to choosing between an HMO plan and a PPO plan, what’s the difference and which one should you choose? Let’s break down the differences and similarities between these two types of health plans.
PPO vs HMO: What is the difference?

What exactly is the difference between an HMO plan and a PPO plan? Knowing the difference between these two types of insurance plans can help you make an informed decision when selecting a plan that fits your budget and lifestyle. Let’s take a look at HMO vs PPO plans so you can decide which one is right for you. Health insurance is a necessary expense for most people. With the increasing cost of health care, it’s important to make sure that you are choosing the right plan for your needs.

Understanding the Basics

HMO stands for Health Maintenance Organization, while PPO stands for Preferred Provider Organization. Both types of insurance plans provide coverage for medical services like doctor visits, treatments, hospital stays, and prescription drugs. The main difference lies in how they cover those services.

What are HMO Plans?

HMO plans, also known as Health Maintenance Organizations, are a type of health insurance that offers comprehensive coverage and lower cost options. These plans typically have a network of preferred doctors and facilities that you must use in order to receive the benefits of the plan. HMO plans focus on preventive care and will typically only cover treatment if recommended by your primary doctor. The premiums for HMO plans are typically lower than those of other types of health insurance and they can often offer more predictable out-of-pocket costs.

With an HMO plan, you will have access to a network of doctors who have agreed to provide their services at discounted rates in exchange for being part of your insurance provider’s network. You will be required to choose a primary care physician (PCP) from within this network who will oversee all of your medical care needs. Your PCP will refer you to specialists within the network whenever necessary. You will likely pay lower premiums with an HMO plan than with a PPO plan since there are fewer out-of-network costs associated with this type of coverage.

What are PPO Plans?

PPO plans, also known as Preferred Provider Organizations, are a type of health insurance that provides more flexibility than an HMO plan.

A Preferred Provider Organization (PPO) provides more flexibility than an HMO as far as choosing providers goes. You can choose any doctor or specialist within your provider’s network without having to select a PCP first, although it's still recommended that you do so in order to receive maximum coverage benefits from insurance companies. The downside is that you may end up paying more out-of-pocket expenses if you choose providers outside the network; however, if this is something that concerns you, many insurers now offer hybrid plans which allow members access to both networks with just one policy and one set of premiums paid each month.

Key differences between PPO and HMO plans

PPO vs HMO: Access to Specialists

PPOs and HMOs differ greatly when it comes to access to specialists. HMO plans typically require the approval of a primary doctor before you can see a specialist, while PPO plans allow you to go directly to the specialty provider with no prior approval. Additionally, many HMO plans limit the type of specialists that you can see and may restrict care based on your location. On the other hand, PPO plans usually offer more freedom in terms of seeing any specialist who is within their network regardless of location.

PPO vs HMO: Hospitals & Other Providers

When it comes to hospitals, PPO and HMO plans have different advantages. With an HMO, you are typically limited to a specific network of hospitals; if you choose to go outside of that network, your costs may be significantly higher. PPOs, on the other hand, offer more freedom in terms of choosing any hospital within their network without increased cost. However, there may still be restrictions on certain services and treatments available at certain facilities depending on your plan.

PPO vs HMO: Premium Costs

When it comes to premium costs, HMO plans tend to be the more affordable option. This is because they usually have lower monthly premiums and deductibles than PPO plans. However, many PPOs offer more coverage and flexibility than HMOs, and as a result may also come with higher premiums. Ultimately, what you pay for each plan depends on the specifics of your coverage and your provider’s rates.

PPO vs HMO: Plan Costs

It's important to consider the costs associated with both PPO and HMO plans when choosing which coverage is right for you. Generally speaking, PPO plans are more expensive than HMOs due to the increased flexibility they offer. The monthly premium and deductible amounts can vary significantly from one plan to another; it's best to research your options carefully before making a decision. Additionally, some providers may offer discounts or other incentives that could make a certain plan more affordable in the long run.

PPO vs HMO: Filing Claims

When it comes to filing claims, HMO plans tend to be simpler and more straightforward than PPOs, since there is typically no need for prior authorization or referrals for treatment. However, HMOs have more limited provider networks and services, which means you may have fewer options when it comes to getting the care you need. On the other hand, PPO plans offer more flexibility with provider networks and cover a wider range of treatments without requiring prior authorization or referrals. It's important to consider your needs carefully before choosing a plan in order to get the best value for your money.

When can you enroll in HMO or PPO insurance?

The timeline for enrolling in either an HMO or a PPO plan can depend on where you live and the type of insurance provider you're dealing with. In general, most people have the opportunity to sign up for a new plan during the annual Open Enrollment period, which typically runs from November to January. Some employers may also offer special enrollment periods if certain qualifying circumstances arise. It's important to read the details of each plan to fully understand when you'll be able to take advantage of it.

Are PPOs and HMOs the only insurance options?

PPOs and HMOs are the two most popular types of health insurance plans, but they are not the only options available. In addition to these two main categories, consumers can also choose from high-deductible health plans, point-of-service (POS) plans, short-term plans and more. Each of these insurance plans has its own unique advantages and disadvantages, so it's important to weigh your options carefully before deciding which policy is right for you.

Things to consider when choosing between HMO and PPO

When deciding between an HMO and a PPO plan, it's important to consider all your options. Think about the deductibles, co-pays and premiums associated with different plans, as well as the amount of coverage you need and where you need it. It's also important to look at the list of approved providers for each plan to make sure that your preferred doctors are included. Finally, take some time to read up on the coverage provided for prescription drugs and other services in order to get the best value for your money.

Which One Should I Choose?

Knowing the difference between an HMO and a PPO can help you make the best decision for your needs. HMO plans are focused on preventive care and having a regular doctor that you see for all of your medical needs. These plans typically have lower monthly premiums and out-of-pocket costs, but they also have more restrictions. PPO plans, on the other hand, offer more flexibility when it comes to choosing your doctors and providers. These plans usually have higher monthly premiums and out-of-pocket costs, but they may be a better fit if you need to see specialists or want more freedom in your healthcare choices.


When deciding whether an HMO or PPO plan is right for your needs, it’s important to consider factors like cost, flexibility, and convenience before making your final decision. Researching different plans available from various providers can help ensure that you get the most value out of your health insurance policy and find a plan that works best for you and your family. As long as you understand the basics of each type of policy—HMO vs PPO—you should be able to make an informed choice about which type works best for your lifestyle and budget requirements! Still confused? Find the best health insurance plan on Coverage Guru that fits your health and financial needs.