What are the main differences between HMO and PPO health insurance plans? Who is an HMO vs PPO best for? We spoke to the experts to break it down.


There are plenty of decisions to make when picking a new health insurance plan, but perhaps the hardest is choosing between an HMO and PPO. Those two acronyms can be confusing, especially if you don’t know what they mean. Here’s exactly what an HMO and PPO are, the differences between them, and how you can decide whether an HMO vs PPO is the best fit for you and your healthcare priorities.

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What it stands for: Health Maintenance Organization

What it is: If you chose an HMO, you will likely have to choose one primary care physician who is in the insurance company’s network, who in turn will become your “gatekeeper” of care. So, if you have a doctor you already love, make sure he or she is in-network before switching.

This doctor will become your go-to for everything. If you want to see a specialist, such as a dermatologist, you will need to see your primary care physician first. He or she will then give you a referral. If you decide to see a specialist without a referral, first you will pay 100 percent of the out-of-pocket cost for the specialist visit.

“With an HMO you generally do not have any coverage, at all, for out of network care unless it is a bonafide emergency,” Louise Norris, health care expert and author of The Insider’s Guide to Obamacare’s Open Enrollment, shared with Real Simple. “So, if you go outside the network you are just paying the entire bill yourself.”

With an HMO, you will also be responsible for copayments. These payments are a fixed amount you pay for a covered health care service after you've also paid your deductible.

And, like having to see a specific in-network doctor, HMO health insurance plans typically require people to also use in-house pharmacies to fill any and all prescriptions.

Who an HMO plan may be right for: Choosing an HMO may be a good idea for anyone watching their wallet as it is typically the more affordable plan when it comes to premiums and copayments at the doctor’s office. According to consumer spending tool Value Penguin, the average monthly HMO premium in 2018 was $230. But remember, with that value also comes far fewer choices and less flexibility.

What's the Difference Between HMO and PPO? Experts Explain
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What it stands for: Preferred Provider Organization

What it is: Though PPO health insurance plans come with their own lists of “preferred providers,” they do allow for more flexibility when choosing a doctor. With a PPO, you will have your choice of providers and can go see a specialist without pre-approval from your primary care physician. Though, be warned: Your insurance may still only cover part of the service.

“When you have a PPO and you use an out of network provider, you can get some coverage, but your out of pocket costs can still be fairly high,” Norris cautioned.

But, unlike an HMO, PPO users can also go to nearly any pharmacy they want to fill their prescription medications, making that aspect of healthcare perhaps a bit more convenient.

Who a PPO plan may be right for: A PPO may be a good option for anyone who values choice and people looking to see specialists whenever they please. Though, again, that choice comes at a price. According to Value Penguin, the monthly average premium on a PPO was $251 in 2018. That marks an average of $21-a-month higher than an HMO.

According to Norris, you’re more likely to find PPO options among employer-sponsored health plans (a plan offered by the company you work for), where there might even be several PPO options. In the individual insurance market (including on the health care exchange), however, this option is close to disappearing. If you do see a PPO plan as a choice on the exchange in your state, make sure to look into if it’s a good fit for you before automatically opting for an HMO option.