PPO vs. HMO Medical Insurance: What's Right For You?

HMO medical insurance and PPO medical insurance both have their costs and benefits. Finding the insurance that best suits your needs is important.

The Difference and the Benefits

HMO (Health Maintenance Organization) medical insurance is provided by a network of health professionals who work for a set fee. HMOs employ doctors, mental healthcare workers, hospitals, and other specialists, and are designed to save people money but still offer a broad spectrum of healthcare options. An HMO’s co-pay and prescriptions rates are generally low with no deductible to meet. HMO employees work directly for the HMO.

PPO (Preferred Provider Organization) medical insurance is provided by a network of private-practice doctors, care facilities, hospitals and labs that also work for an agreed set rate. As compared to an HMO, patients have more control in choosing a doctor or specialist without requiring a referral. If you have a serious health issue, a PPO plan will give you a wider choice of medical treatments and service providers.

The Drawbacks of an HMO Plan

HMOs are in the healthcare business to make money. As a result, if you require treatment for a chronic medical condition or have other severe healthcare issues, an HMO has the power to increase your premiums or not accept you in the first place. If your treatment will require numerous visits and tests, it will cost the HMO a lot of money.  As a result, the HMO will usually require that all visits to a doctor be approved before you go.

HMO plans can also be very restrictive. The insured can only see doctors on the HMO list, and must always see their primary care doctor beforehand, such as before seeing a specialist. Your primary care physician must give you a referral if they cannot treat you themselves. HMOs can also have a quota on the number of patients the doctor sees per day.

Be certain that the HMO will cover your labs or any other tests you might need.

The Drawbacks of a PPO Plan

While great for those who have the money and want the freedom of choosing their healthcare providers and treatments, PPO medical insurance is not so great for those who cannot afford the co-payment.  The co-payment can sometimes range into hundreds of dollars, depending on the type of treatment or tests you would need. If an out-of-network doctor is chosen by you, it will cost you more out-of-pocket as well.

PPOs can certainly cost more than the HMO medical insurance plan. Due to PPO plans only covering around 80% of the fees for services, the co-payment will be higher than the HMO co-pay. The insured is responsible for usually 20% of all medical treatment. There is also deductible that you will need to meet each year if you have a PPO plan. While there is more freedom in choosing your own medical care, you may have to fill out claim forms you choose to go with a PPO plan.


Many employers offer both plans for the employees to choose from. You must decide which one will be better for you and your family.


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