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HMO vs. PPO Insurance Comparison

If understanding PPO and HMO insurance has been challenging, you’re in the right place. HMO and PPO are the most common health insurance plans employers offer year after year. In 2021, 46% of covered workers enrolled in PPO plans, while 16% enrolled in HMO plans, according to the 2021 Employer Health Benefits Survey. What is the difference between HMO and PPO plans? In short, the differences between HMO coverage and PPO coverage are flexibility and cost. Learn more by reading the following HMO and PPO overview.

HMO Plans vs. PPO Plans

HMO Advantages

  • Primary care physician coordinates treatment
  • Budget-friendly health insurance
    • Low-cost monthly premium
    • No or low-cost deductible
    • No or low-cost copayment

PPO Advantages

  • Flexibility of doctor and hospital choice
  • Large network of services
  • Primary care physician not required
  • Coverage available for out-of-network services

HMO Disadvantages

  • Restricted network of services
  • Must have a referral to see a specialist
  • No coverage for out-of-network services

PPO Disadvantages

  • Expensive health insurance
    • High monthly premium
    • High deductible
    • Possible copayments
  • Must pay the total cost of services until health insurance deductible reached


A network is a group of physicians, specialists, and facilities with a payment agreement with the insurance provider. HMOs and PPO health plans provide a network that will meet your needs. Your health insurance policy determines how flexible your service options are. HMO plans offer a local network of services, which is something to keep in mind if you travel often. You will only benefit from insurance coverage if health care providers are in-network. If you need treatment out-of-network, you will need to pay the total cost out of pocket unless it’s for an emergency.

PPO plans always have a flexible, extensive network. Even though it is more beneficial for you to find in-network health care services, your plan will provide some coverage to help with costs if you need to go out-of-network. Both plans cover you if there’s an emergency.

Networks vary by plans and health insurance providers, so be sure to do your research before deciding. Check with insurance providers to see if their available plans offer you coverage for your current doctor.


HMOs make it mandatory to have a primary care provider (PCP) to receive coverage. Why? Because health insurance providers believe the PCP knows how and when to find a specialist. Unless a PCP provides a referral for secondary health care, you will need to pay any treatment costs on your own. HMOs are designed to prevent you from seeking treatment you don’t need and wasting money. The disadvantage is you could feel limited in your medical autonomy if you and your doctor disagree about secondary health care. The advantage is that you will have minimal paperwork and no need to coordinate services personally.

PPO does not require you to have a PCP for coverage. You are allowed to find in or out-of-network medical services, whether it’s for primary or secondary health care. A referral is not mandatory for treatment. To plan your budget accordingly, you should be conscientious about whether the health care service you’re considering is in-network or out-of-network.


In general, HMO is the budget-friendly health insurance policy of the two plans. HMO’s monthly premium is more affordable than PPO’s. Copayment and deductible costs are minimal if they exist at all for your insurance.

PPOs are more expensive than HMOs in every respect. There will be a deductible, and you have to pay the total price for medical costs until your deductible is reached. If your insurance has a copayment, you will have to pay a fixed amount each time you visit the doctor. The copay does not go towards the health insurance deductible. Choosing a higher deductible will decrease your monthly premium for your health insurance. PPO uses copays to deter people from having unnecessary treatments.


HMO and PPO dental coverage are the same as health care plans. The key difference with dental care is that insurers usually limit how much they will pay out in a calendar year under PPOs. Let’s say your dental care limit is $3,000 for the calendar year. If your dental care limit is reached by July 10th, you will have to pay for dental costs for the rest of the year. With HMO dental care, plans are self-explanatory.

HMO vs. PPO Medicare Coverage

Medicare is federal health insurance available for people 65 years of age and above, young people with disabilities, and people with End-Stage Renal Disease (ESRD). There are two kinds of plans, but let’s focus on Medicare Advantage. Medicare Advantage plans offer HMO health plans and PPOs for people who would like more comprehensive health care insurance.

Medicare-approved private insurance providers offer HMOs and PPO health plans. They have to follow Medicare’s coverage rules. Coverage for vision, dental hearing, and out-of-network health care are available with these plans. You will find that HMO and PPO plans for Medicare health insurance work the same as regular HMO and PPO health insurance. The PCP requirements, flexibility, and comparison in costs are similar.

Which is Health Insurance Plan is Right For You?

Here are a few questions to ask yourself to make your final decision for health care.

  • Do I value insurance costs or flexibility more?
  • Am I okay with my primary care doctor coordinating my medical treatments? Do I want to deal with minimal paperwork?
  • Do I need to see specialists frequently?
  • Do I have a PCP I wish to keep?
  • Is my current team of specialists in-network or out-or-network of potential providers?
  • Am I at least 65 years of age, have a disability, or have ESRD?
  • Do I travel often or spend most of my time locally?

If you currently have a doctor or pharmacy in your community that is in the network of health insurance providers you’re considering, find plans that are HMO. If you don’t have a doctor you see routinely, are usually on the road, prioritize flexibility, and don’t need a specialist, find plans that are PPO. Find a federal health plan with HMO and PPO options if you are 65 years of age, have a disability, or have ESRD. If health plan costs are at the top of your list of priorities vs. the choice of a doctor, see what providers have plans that are HMO.

Plans are not one size fits all, so do your due diligence as you look for new insurance providers with a PPO health plan or HMO dental insurance. Compare all of your HMO and PPO options.

How to Shop for Health Care Plans

  • Your employer
  • The federal government healthcare marketplace
  • Your state government’s healthcare marketplace
  • Contact health insurance providers directly
  • Receive a quote from an insurance broker
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