What Is the Difference Between HMO and PPO Health Plans?


Quick Answer

Health Maintenance Organization plans only include specific hospitals and doctors, whereas a Preferred Provider Organization plan allows policyholders more freedom in deciding on their doctors and hospitals. While policyholders are allowed to see any physician they wish, only PPO plans cover costs incurred by visiting a non-network doctor.

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Full Answer

Additional aspects of HMO health plans are that they only pay for a certain number of treatments, visits and tests; policyholders have to decide on a primary care physician to determine their future treatment; and the premiums are usually lower than those of PPO health plans. These health plans also often have either no deductible or a lower deductible than that of a PPO plan.

PPO plans allow policyholders to see any health care provider they desire without first having to consult with a primary care physician to determine treatment. Plans usually have deductibles and higher premiums. Even though policyholders have the freedom of choosing any physician or hospital they wish, their benefits are usually better if they remain inside of their network.

When deciding between an HMO health plan and a PPO plan, a person should consider his overall health, the network he most likely belongs to and his finances. Those who decide on a PPO plan should check to see if they have to pay a yearly deductible in addition to a copayment for medication, medical procedures and physician's visits.

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