Insurance Plans

HMOs and PPOs are two common types of health insurance plans. If you’re trying to decide which to choose, it can help to know the basics of both, plus key differences. The following are comments from and Written by Kara Mayer Robinson on July 18, 2023 | Medically Reviewed by Sarah Goodell.

PPO Insurance:

With a PPO, or preferred provider organization, there’s more flexibility where you seek care. You can see doctors who are out-of-network. You can also see a specialist without getting a referral. But if you get care from a provider that’s in the PPO network, you pay less. Your out-of-pocket costs will be lower and your coverage will be more thorough. If you choose care from a provider that’s out-of-network, your out-of-pocket costs will be higher. You’ll pay more for some services, and others may not be covered at all. Your PPO has agreements with in-network providers to pay a set fee for each service. PPOs usually have a set rate they will pay for an out-of-network service or provider. If you go out-of-network and the doctor or medical facility charges more for a service, you have to pay the difference.

HMO Insurance:

An HMO, or health maintenance organization, is a plan that offers members care within a specific network of doctors, hospitals, and other medical providers. These are called in-network providers. Your costs are typically lower with an HMO because it already has agreements in place with providers. They pay less to providers they have contracts with, so you pay less for the plan. If you use a provider that isn’t in the HMO’s network, known as an out-of-network provider, the plan typically won’t cover your visit unless it’s an emergency. As an HMO member, you pay a monthly premium and a copay when you seek care. You choose a primary care doctor to coordinate your care. If you need to see a specialist, your primary care doctor must give you a referral.