What are the main differences between a PPO and an HMO?


Editorial team Published on

The main difference between an HMO and a PPO is that an HMO (Health Maintenance Organization) requires you to see doctors within a strict local network and get referrals to see specialists, while a PPO (Preferred Provider Organization) gives you the freedom to see any doctor or specialist without a referral, both in and out of network.

Here is a breakdown of how they compare in cost, network rules, and doctor choices.

Key Differences at a Glance

  • Cost:
    • HMO: Features lower monthly premiums (the set price you pay each month for insurance) and lower out-of-pocket copays, with little to no deductible (the amount you pay before insurance kicks in).
    • PPO: Costs more overall, with higher monthly premiums, higher deductibles, and higher costs for out-of-network visits.
  • Network Rules:
    • HMO: Does not cover any care outside of its network, except for true medical emergencies.
    • PPO: Covers out-of-network doctors, but you will pay a much higher fee or a separate deductible if you use them.
  • Primary Care Physician (PCP) and Referrals:
    • HMO: Requires you to pick a primary care doctor who coordinates your care and gives you a written referral before you can see a specialist.
    • PPO: Does not require a primary care doctor, and you can book an appointment with a specialist directly.

Which one should you pick?

  • Choose an HMO if you want to save money on monthly bills and do not mind staying inside a specific network of doctors.
  • Choose a PPO if you want maximum freedom to choose your own doctors and need coverage to see out-of-network specialists.