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HMO vs. PPO: Differences?

A Medicare Advantage Plan is an addition to Original Medicare. Medicare Advantage Plans typically offer extra coverage options, like gym membership or dental insurance. These plans are offered by private insurance companies. There are many different types of plans. Today we will compare the two popular plans, the Health Maintenance Organization (HMO) vs. the Preferred Provider Organization (PPO). Read on to learn more about the different types of Medicare Advantage Plans.

Medicare Advantage Plan Types

There are 6 types of Medicare Advantage Plans:

  • Health Maintenance Organization (HMO)

  • Preferred Provider Organization (PPO)

  • Private Fee-for-Service (PFFS)

  • Special Needs Plans (SNPs)

  • HMO Point-of-Service (HMOPOS)

  • Medical Savings Account (MSA)

Each plan type has different strengths and weaknesses. Two of the more popular options, the HMO and PPO, are very different from each other. The PPO offers more flexibility for a higher monthly premium. The HMO offers less freedom in choosing your providers but a lower monthly premium.

HMO Overview

An HMO is a type of plan that prefers in-network providers. The insurance companies form an agreement with the in-network providers to provide care to patients for a certain amount of money. As the patient, you can generally only see the in-network providers and be fully covered. Out-of-network providers will cost significantly more out-of-pocket.

An HMO is a good option for someone who prioritizes affordability over flexibility. Your copay, monthly premium, and coinsurance is lower than other plan types. However, you are significantly limited by the providers and hospitals you are able to receive care from. For example, if you are traveling and out-of-network, you may be liable for all costs. Unlike other plans, you are also required to find a primary care physician (PCP). Additionally, your PCP has to refer you if you need to see a specialist. There are additional rules as well. For example, some services require q prior authorization, which can delay treatment.

PPO Overview

A PPO is in many ways the opposite of a HMO. A PPO prioritizes flexibility for higher costs. Like with a HMO, insurance companies offering a PPO also make agreements with providers and hospitals. The providers offer their services for a specific amount billed to the insurance company. Unlike a HMO, a PPO still pays for out-of-network providers. While it is cheaper to go in-network, a PPO often covers a significant amount of out-of-network care. This is in exchange for higher copays, monthly premiums, and coinsurances.

As stated above, the major advantage of a PPO is the flexibility. People can be seen by both in-network and out-of-network providers, do not have to have a PCP, and do not need a referral to see a specialist. Again, the cost of a PPO is higher than a HMO.


There are 6 types of Medicare Advantage Plans. Two of the most popular, HMO and PPO plans, are very different from each other. PPO plans emphasize flexibility and cost a bit more while HMO plans sacrifice flexibility for better affordability. For any questions, contact us at 423-240-0794 today.

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