HMO vs. PPO

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Medicare Advantage Plans, sometimes called Medicare Part C, allow you to combine Medicare Parts A and B coverage in one policy.

During Medicare Open Enrollment, you have an opportunity to switch to a Medicare Advantage Plan or make changes to an existing plan. For instance, you may want to change from an HMO plan to a PPO plan or vice versa. Understanding the differences between Medicare HMO and PPO coverage can help you decide which plan best fits your needs.

Key Takeaways

  • Medicare Advantage Plans are offered by private insurance companies and combine both Medicare Part A and Part B coverage.
  • If you enroll in Medicare Advantage, you may choose from a health maintenance organization (HMO) or preferred provider organization (PPO).
  • Whether it makes sense to choose an HMO vs. PPO for Medicare Advantage can depend on your health care needs, preferred doctors and what you’d like to pay out-of-cost for care.
  • If you have a Medicare Advantage Plan, you can make changes to your coverage during the annual open enrollment period.

Medicare Advantage Basics

Medicare Advantage Plans offer an alternative way to get Medicare Part A (hospitalization and inpatient care) and Part B (medically necessary and preventive services) coverage. These plans are offered by private insurance companies that are required to adhere to Medicare rules and regulations.

Most, though not all, Medicare Advantage Plans include Part D coverage as well, which extends to prescription drugs.

If you choose Medicare Advantage in lieu of Original Medicare (Part A and Part B), you can choose from several different types of plans, including:

Each plan option entails different coverage and different costs for Medicare Advantage recipients.

Important

Less common types of Medicare Advantage Plans include HMO Point-of-Service (HMO-POS) Plans and Medicare Medical Savings Account (MSA) Plans.

Medicare HMO Plans

Medicare HMO plans are similar to other types of HMO plans. When you’re covered under this type of plan, you’re generally required to use in-network providers. There are some exceptions if you require:

  • Emergency care
  • Out-of-area urgent care
  • Temporary out-of-area dialysis

You’ll typically need to choose a primary care doctor when you participate in a Medicare HMO plan. A referral may be required to see a specialist in most cases, but there are exceptions for certain annual screenings, such as mammograms.

Keep in mind that with Medicare HMOs, if you receive care from an out-of-network provider and no exception applies, you may be responsible for the full cost.

Note

If you enroll in an HMO plan that does not include drug coverage, you can’t join a separate Medicare drug plan.

Medicare PPO Plans

Medicare Preferred Provider Organization plans (PPOs) feature a network of doctors and other health care providers but you can also seek care out-of-network, including specialist care. However, you’ll generally pay less for care when you stay in the plan’s network. Urgent care services and emergency care are always covered by a Medicare PPO plan.

Prescription drugs are often included in Medicare PPO plans, though that’s not always true. Similar to Medicare HMO coverage, if you enroll in a PPO plan that doesn’t include prescription drugs you can’t enroll in a separate Medicare Part D plan.

You generally don’t need to name a primary care provider with Medicare PPO plans, nor do you always need a referral to see a specialist. Again, using specialists and providers in-network will usually cost you less than visiting doctors or facilities out-of-network.

Tip

Medicare Advantage Plans have a yearly limit on how much you’ll pay out-of-pocket for all Part A and Part B services. Once you reach this limit, you pay nothing more for those services.

Medicare HMO vs. PPO: Which Is Better?

Whether it makes sense to choose an HMO vs. PPO for Medicare Advantage coverage can depend on your overall health and where you prefer to receive care. Cost can also play a part in determining which type of coverage is more appropriate.

With HMO plans, it’s not uncommon to see lower premiums, as you’re essentially locked into using the network’s physicians and providers. A PPO plan, on the other hand, may entail higher premiums but you’ll have more flexibility in deciding where to receive care. And you can still save money by using the preferred providers within the plan network.

An HMO plan may be more convenient since you likely won’t have to file any claims yourself as long as you’re using in-network providers. With a PPO plan, it’s possible that you may have to pay for care up front, then file a claim for reimbursement if you’re using an out-of-network doctor, facility or specialist.

If you’re planning to enroll in a Medicare Advantage Plan for the first time, comparing HMO vs. PPO plans can help you decide if one is better than the other. When comparing plan options, pay attention to:

  • Premium costs
  • Copays and coinsurance
  • Network coverage

Consider talking to your current health care providers to determine whether they’re part of a particular Medicare HMO plan network. If not, find out whether you’d be able to continue seeing them through a PPO plan instead.

Once enrolled in a Medicare Advantage Plan, you still have an opportunity to make changes to your coverage. If you initially choose an HMO plan, for example, you might decide later that you want to switch to a PPO plan. You can make those kinds of changes during the Medicare Advantage open enrollment period, which extends from Jan. 1 to March 31 each year.

What Is the Difference Between a Medicare PPO and a Medicare HMO?

A Medicare PPO plan allows you to visit doctors in-network or out-of-network, with preferred providers typically costing less. A Medicare HMO plan requires you to use the network’s providers, with a few exceptions for emergency care and out-of-area urgent care.

What Are the Advantages of an HMO or PPO for a Medicare Recipient?

An HMO plan can potentially offer Medicare recipients lower premiums for care, compared to PPO plans. With a Medicare PPO plan, you might pay more for coverage since you can see out-of-network providers. However, that flexibility may be appealing if you’d rather not be locked in to visiting certain providers or if your current primary care doctor is outside an HMO plan’s network.

Why Would a Person Choose a PPO Over an HMO?

You might choose a PPO in place of an HMO for Medicare coverage for convenience. With a PPO, you can choose which doctors you’d like to see and your healthcare facilities. You don’t necessarily need to name a primary care doctor, and you may not need a referral to see a specialist. HMO plans, by comparison, tend to be much more stringent with which providers you can use.

Bottom Line

Medicare Advantage Plans can be attractive to older adults who may be hoping to save money on out-of-pocket health care costs. While an HMO might be appropriate for some, others might find a PPO plan works better for them. Researching beforehand can help you to make the right choice for Medicare coverage if you’re enrolling for the first time or changing plans during open enrollment.

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