The one sentence summary
When seeking medical care, a PPO allows you to schedule medical care directly to a larger network of providers, while an HMO requires you to see a primary care doctor who refers you to a specialists.
The Difference between PPO’s and HMO’s
|Monthly Premium||varies; slightly higher||varies; slightly lower|
|Out-of-Network||May cover a %||Not covered|
|Primary Care Physician||No||Yes|
|Specialist requires referral||No||Yes|
PPO’s and HMO’s are types of health insurance; almost all health insurance plans are one or the other.
The main difference is in how you receive care. When you join an HMO, you choose a primary care physician who will be your first stop for all medical needs. For some ailments, they can treat you; for others, they will refer you to a specialist.
PPO plans do not require a referral from a physician. You simply schedule care with a medical provider (prescription drug service, doctor, lab, surgeon, etc.) that fits your needs. In this way, there is more choice and flexibility. PPO plans have a large network of choices and cover more for out-of-network care.
How to choose
Here is one way to choose between a PPO vs. HMO:
- Determine whether you require a primary care physician or not. If yes, then you need an HMO. If not, you can use either an HMO or a PPO.
- Get a bunch of quotes and look at the main variables. Compare monthly premiums, co-pays, deductibles, co-insurance rates, and out-of-pocket max. A great tool for this is eHealthInsurance as it allow you to compare numerous quotes in seconds
- Narrow down your choices and see how convenient the coverage is to your location and the quality of care offered.
Once you consider these variables, you should have a pretty good idea of which plan best fits your needs.
The big picture
You really can’t go wrong with whichever you choose. If you have an HMO, you will develop a trusted relationship with a physician who can refer you to the proper specialist as needed. With a PPO, you can act more independently and quickly schedule your care with a wider variety of providers. Personally, I would be more concerned with the plan’s price (monthly premium and out-of-pocket max) and how convenient the coverage is for my location.