HMO vs. PPO Making the Right Choice

If you are having difficulty choosing between HMO and PPO, the best thing you can do is to compare the two and see which matches your needs the closest. The following comparison will allow you to make the right choice. Here is your easy guide.

What They Are

HMO stands for Health Maintenance Organizations, while PPO stands for Preferred Provider Organization. HMO is one type of health insurance where providers that are under contract with an organization provide you with health coverage at a lower premium.

PPO, on the other hand, is also a type of health insurance, but the assured can choose the physicians or hospitals they prefer to consult with and visit. Because of this, PPO premiums are higher compared to HMO premiums.

What They Cover

HMO covers basic medical and preventive health care needs. These include the following: physician consultation and check-ups, hospitalization, and immunization. PPO covers both basic and special medical needs.

When it comes to emergency treatment, PPO may provide better coverage than HMO does. With HMO, you might have to pay for your emergency treatment when you seek them outside of the network. Reimbursement of such own-pocket expense is subject to the evaluation and approval of your HMO. PPO covers for such emergencies.

Choosing Where to Get Treatment

PPO is more flexible in allowing you to choose where to get your medical treatment or health care. Your provider maintains a network of health practitioners and hospitals from which you can choose where to go to receive medical treatment or to satisfy your health care needs.

HMO, on the other hand, will require you to consult with the primary care physician under its network. This physician may refer you to a specialist, as necessary.

The difference is that with PPO, you can get direct medical and health care treatment from a hospital or physician of your choice, as long as you choose from those in their list of networks. Whereas with HMO, the primary physician of the HMO network will handle your entire medical needs before referring you to any specialists in their network, and only if necessary.

Limitations or Restrictions

HMO has more restrictions compared to PPO. The HMO sets these restrictions. For instance, you need to consult with their primary care physician for diagnosis of your condition. Only after consultation and recommendation of their physician can you see a specialist. With PPO, you do not have to get referrals and you can go straight to any specialist in their network.

Another example of how restrictions work is consultation with physicians. With PPO, you can choose any physician listed in their network, or you may also consult with physicians outside the network (although there will be a certain percentage of fee that you will have to shoulder for this). With HMO, the requirement is to see their primary care physician first to get the necessary referral.

Method of Payment

HMO enables you to pay your medical provider simply by swiping your HMO card without having to accomplish forms. PPO, on the other hand, will require you to fill forms for reimbursement, especially when you see treatment outside of their networks.

Cost of Health Coverage

This is where HMO wins over PPO. HMO plans cost less than PPO plans in terms of premium. However, when it comes to restrictions, HMO costs more than PPO plans do. Put it this way, PPO is more expensive but with more flexibility and fewer restrictions. HMO, meanwhile, costs less than PPO, but is more restrictive with less flexibility.

Evaluating the Pros and Cons

The advantages of HMO:

  • Premiums of HMO plans are relatively more affordable than PPO, and even when compared with the other types of health insurance. HMO usually caters to large companies or corporations that offer these plans as part of their fringe benefits.
  • There are no forms to accomplish during consultations, as the plan holder only has to show the HMO card for swiping. There are no deductibles to worry about, and co-payment is at a minimal amount.

Just a little reminder: if you are currently working for a company or corporation, check if your company offers HMO plans as part of your benefit package. It also helps to check if the coverage is sufficient for your needs, as you may have to get additional health insurance.

The disadvantages of HMO:

  • You can only choose from their network of doctors and hospitals. To avail of the services of specialists, you will need to consult the primary care physician. Only upon referral shall you be able to get treatment from a specialist.
  • You cannot expect full privacy for your treatment. This is because HMO peruses medical records and findings for their purposes, usually to evaluate their network of physicians. People other than the physician may review your records.

The main advantages of PPO:

  • PPO has a wider range of services and network of physicians and hospitals. The network is extensive that you can practically consult with any of your preferred physicians. With a minimal payout, you can still see physicians that are outside of the network. You will not need any referral if you need to see a specialist whether in-network or out-network.
  • You will enjoy greater flexibility with PPO plans, and this flexibility comes most handy during medical emergencies. PPO plans will usually shoulder the larger percentage of the cost of treatment should you find the need to get it outside of their network.


  • Premiums are generally higher than HMO and some other types of health insurance.
  • You will have to pay for deductibles.
  • In certain instances, such as with out-network consultations and treatment, you will have to shoulder the entire cost first and just reimburse the amount that covers the share of your PPO provider.

Comparing their pros and cons and matching the comparison against your needs and preferences will surely enable you to make the right choice between the two health insurance types. If you are generally in good health condition, you will benefit more from HMO.

While it may cost you a little more, there is much to benefit from PPO if your health condition is unpredictable, and you have a medical history of needing and seeing specialists.

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