The differences between PPOs and HMOs. Which one is right for you?

Learn about the differences between PPO and HMO plans to make an informed decision about which one is right for your healthcare needs.

Jeremy Wolf

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Jeremy Wolf

Adam Stevenson

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Adam Stevenson

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When it comes to health insurance plans, most people are familiar with the terms PPO (Preferred Provider Organization) and HMO (Health Maintenance Organization) and while both provide coverage for medical expenses, they cater to different individuals' needs. In this blog post, we will explore the differences between PPO and HMO plans to help you make an informed decision about which one is right for your healthcare needs.


HMO Health Insurance Plans

HMO plans emphasize maintaining overall health and preventive care. They have lower premiums and out-of-pocket expenses, making them an attractive option for those who don't anticipate needing specialized medical care frequently. However, they have some limitations:

  1. Network Restrictions: HMOs only cover medical services provided by doctors and healthcare facilities within their network. Seeking care outside of this network will result in the patient being responsible for the entire bill, except for emergencies.

  2. PCP Referral System: Before seeing a specialist, HMO enrollees must obtain a referral from their Primary Care Physician (PCP). This process ensures specialist visits are medically necessary.

  3. Geographical Limitations: HMO plans often operate within specific geographic areas, requiring enrollees to live or work within those regions to be eligible for coverage.

  4. Low or No Annual Deductible: HMOs have a low or no annual deductible, allowing patients to access healthcare services without significant upfront costs.

PPO Health Insurance Plans

PPO plans offer greater flexibility and choice when it comes to healthcare providers. They may have higher premiums, but they provide the following advantages:

  1. Wider Provider Network: PPO plans offer access to a broader network of healthcare providers, allowing patients to choose from a larger pool of doctors and specialists.

  2. No PCP Referral Required: Unlike HMOs, PPO enrollees do not need a referral from their PCP to visit a specialist. They have the freedom to see the specialists they need directly.

  3. Out-of-Network Benefits: PPO plans typically cover out-of-network providers, albeit at a lower rate. This feature can be beneficial for those who have established relationships with specific doctors.

  4. Higher Deductibles: PPOs generally have higher deductibles compared to HMOs. This is because enrollees are paying for the increased flexibility and access to a larger provider network.

Additional Considerations When Making Your Choice

  1. Copay: HMO plans usually require copayments for non-preventive medical visits, while PPO plans may or may not have copay options depending on the specific plan.

  2. HDHPs: Both HMOs and PPOs can be offered as High Deductible Health Plans (HDHPs). HDHPs, often combined with a Health Savings Account (HSA), are an option for those seeking lower premiums and are in good health.


Selecting the right health insurance plan is crucial in ensuring that your medical needs are adequately covered while keeping costs manageable. HMO plans are suitable for individuals focused on preventive care, lower premiums, and a smaller network of providers. On the other hand, PPO plans offer more flexibility, a broader provider network, and the freedom to see specialists without referrals. Understanding the differences between PPOs and HMOs will help you make an informed decision that aligns with your health requirements and financial situation. Always evaluate your healthcare needs and consult with a professional to find the best fit for you.

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Written byJeremy WolfCustomer Success and Broker Operations Lead at Thatch

Jeremy Wolf, former professional athlete, is dedicated to enhancing healthcare access. As Customer Success and Broker Operations Lead at Thatch, Jeremy focus on providing customers with everything they need to navigate the complex health insurance space.

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