HMO vs. PPO Health Insurance

It's important to understand HMO vs. PPO health insurance if you're planning on getting healthcare coverage through your employer. Both are types of group health insurance, and HMO health insurance is similar to insurance co-ops, while PPO health insurance has more restrictions. Read our HMO vs. PPO health insurance guide below for more information and helpful tips.

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Natasha McLachlan is a writer who currently lives in Southern California. She is an alumna of California College of the Arts, where she obtained her B.A. in Writing and Literature. Her current work revolves around insurance guides and informational articles. She truly enjoys helping others learn more about everyday, practical matters through her work.

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Laura Walker graduated college with a BS in Criminal Justice with a minor in Political Science. She married her husband and began working in the family insurance business in 2005. She became a licensed agent and wrote P&C business focusing on personal lines insurance for 10 years. Laura serviced existing business and wrote new business. She now uses her insurance background to help educate...

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Reviewed by Laura Walker
Former Licensed Agent

UPDATED: Nov 30, 2020

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There are some employers that make employees and their family member a selection of healthcare plans. In order to make the right decision to meet your personal, economic, family and medical needs, it is important to know the difference between HMO and PPO healthcare programs.

This guide will describe the differences between HMO vs. PPO health insurance. Your health is a very important decision, and having all of the facts will help you to make a better decision about the insurance that you choose.

HMO Health Insurance Plans

Also known as Health Maintenance Organization, HMO plans are similar to insurance co-ops; certain physicians and other healthcare providers band together under a particular insurance company. They then offer fixed rates to people that are insured through this insurance company.

It is possible that under an HMO you may not be able to retain the services of your family doctor, if the doctor does not belong to that HMO.

In most cases, you will be assigned to a Primary Care Physician. This doctor will be your initial contact for health coverage. In cases where a specialist is required, you will have to first go through your Primary Care Physician to get a referral to the specialist.

HMO plans are usually the least expensive plan to take. The co-payments are usually relatively low, or non-existent, and the premiums are usually less than those paid by a PPO.

Many people feel like they do not get the personal treatment that they are used to under an HMO.

It is often the case that physicians that belong to an HMO will keep treatment to a minimum, as they are working for lower rates. They also tend to try and see as many patients per day as they can to increase their company’s profitability.

PPO Health Insurance PLans

PPO’s are also known as Paid Provider Organizations. These plans are rooted in a large group of caregivers, very much like an HMO. PPO’s, however, have fewer restrictions.

The PPO organizations are typically loosely organized, allowing the insured person and caregivers more flexibility in making decisions and taking more actions independent of outside influence.

It is easier to stay with your preferred doctor in a PPO, but if your physician is not a member of your PPO, you will have to either pay for any treatment in whole from your personal income, or you may have to pay the difference between your provider’s charges and the PPO’s set price for the same visit to a member provider.

PPO’s are usually pricier than HMO’s, but they are very popular nonetheless. Many people choose the option to go with a PPO because they offer more flexible options.

It is easy to understand why many people would choose the PPO plan, especially when going with an HMO would result in no longer being able to see the family doctor who knows you and your medical history well and that you are more comfortable seeing.

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