Skip to main content

HMO vs PPO Insurance Plans — Which One Is Better?

Published January 11, 2021

4 minute read

Cora Walker

By Cora Walker

Reviewed by Expert Riley Adams, CPA

One of the trickiest decisions you may need to make about your healthcare is the question of going with an HMO vs a PPO plan. Both HMO and PPO health insurance plans may appear similar on the surface. However, they might have major differences if you’re trying to decide on a healthcare plan. There are some key differences between the two, which we will tell you all about. Ultimately, though, which one is best for you depends on your individual needs and priorities.

HMO stands for Health Maintenance Organization. These are made up of a smaller provider network, with stricter controls over the care you receive. They tend to come with lower premiums and deductibles, but this is not guaranteed. It will vary between plans and companies. On the other hand, PPOs (or Preferred Provider Organizations) come with more freedom, but you typically pay a little more for them.

If you live in the United States, you probably rely on private healthcare companies to cover medical costs throughout your life. Almost no decision is as intimidating as trying to balance what you can afford with trying to predict what healthcare you might end up needing. Additionally, navigating through a patchwork of acronyms, monthly rates, and coverage options is hard work. What’s even worse? It’s downright stressful. However, it’s also important research that will help give you all the tools to make the best possible choice for your circumstances. Here are some quick, key points about the differences between HMOs and PPOs.

Preferred Providers vs Out of Network Coverage

One of the biggest differences between a PPO plan and an HMO plan comes in the form of whether “out of network” primary care physicians, specialists, or procedures are covered at all.

As a rule of thumb, HMO’s do not cover out of network costs. That means you are expected to exclusively see doctors included in the plan. Since HMOs tend to be smaller, this can make it difficult to find a specialist. It may also mean you end up waiting longer for more bespoke care.

PPOs on the other hand will usually cover out-of-network providers at a higher cost. “Preferred” is the key word here. You will still end up paying more for in-office visits and deductibles, but PPOs make it easier to seek care outside the scope of your plan or company.

Primary Care Physician in HMO vs PPO

This is probably where we see the biggest difference between PPOs and HMOs. With a PPO you are not required to have a primary care physician. On the other hand, having one is necessary in an HMO to access any further care.

In an HMO, your primary care physician is your go-to for all non-emergency issues that you have. To see a specialist, you need to have a referral from your primary care physician. Doctors are doubtlessly knowledgeable and skilled, but they sometimes bring biases into their profession. So it can be frustrating (or even dangerous) to be denied further care or tests without checking in with your healthcare gatekeeper, especially when you know something is wrong.

Your options are much better with a PPO. There is no requirement to get a referral to see a specialist. This can help fast-track you to additional medical advice or essential testing.

HMO vs PPO: Which One is Cheaper?

The simple answer? It depends. Prices will vary depending on the firm, plan, and your individual needs.

If you’re just looking at premiums and your month-to-month cash flow, then HMOs are generally cheaper. HMOs average $263 per month for single coverage, while PPOs average $292. However, keep in mind that an HMO plan dictates more of your care and has more limited options if something comes up that you need to step out of network for. If that happens, they can rapidly become the more expensive option.

What About EPO Plans?

EPO stands for Exclusive Provider Organization and is a variant of the HMO model that allows for more personal choice. Unlike HMOs, you do not need to have a primary care physician and can go right to specialists. However, those specialists absolutely must be in-network. If they are not, your plan will not cover them at all. As with HMOs, which medical professionals you have access to will be strictly determined by the plan.

In The End…

It’s worth remembering that despite PPO plans tending to be more expensive, more adults are enrolled in them than in HMO or EPO plans. If you can afford it, the freedom you gain makes a PPO the better option for most people. However, you know your own budget and healthcare needs better than anyone else. Deciding between PPO and HMO (or EPO) plans will essentially come down to what you need to prioritize.

Notebook with PPO vs HMO Written On It


Cora Walker


Cora is a Northwest-based writer and editor who wants to make information as accessible as possible in the internet age. Video games are this writer’s primary vice. With a degree from the University of Washington as well as 5+ years of experience in web writing and publishing, Cora is here to share financial tips from experts and talk about good habits.

Explore Insurance

Auto Insurance

The Best Car Insurance For Millennials

Millennials, also known as Generation Y, are the demographic sandwiched between Generation X and Generation Z. They are typically considered to be propleg born between 1981 to 1996. Most Millennials are the children of baby boomers and early Generation Xers. Today, most Millennials are between the ages of 25 and 40. They are working, raising […]

Read More about Post Title

6 minute read

professional indemnity insurance Insurance

Professional Indemnity Insurance: Who Needs It and What Does It Cover?

Professional indemnity insurance is one of many types of business insurance. Most companies should investigate getting it, as a part of establishing their enterprise. Other types of business insurance include public liability insurance, employers’ liability insurance, and product liability insurance. However, professional indemnity insurance covers a variety of fields. It also offers protection that many […]

Read More about Post Title

5 minute read

See All In Insurance

More from WalletGenius

Home Ownership

How To Win a Home Bidding War

I haven’t really talked about this publicly before, but we had to win a bidding war to buy our house last year. To make matters worse, it was right before the onset of the pandemic, making everything that much more stressful. Luckily, we succeeded and my family now enjoys living in a bigger, newer home. […]

Read More about Post Title

10 minute read

young couple redecorating a house Home Ownership

How To Redecorate Your House On a Budget

I’m not sure if it’s because everyone has been stuck inside due to the pandemic or just a coincidence. Whatever the reason, it seems like everyone I know has recently been updating their homes. Whether it’s a minor or major redecoration, all this time indoors has spawned a bunch of amateur interior designers. If you’ve […]

Read More about Post Title

7 minute read

Woman at Farmers' Market Save Money

How To Save Money Shopping At The Farmers’ Market

Buying from a road-side produce stand or a locals farmer’s market is an amazing experience. They are some of the best options for getting fresh (and often organic) fruit, vegetables, meats, and other products, while still supporting local farmers. Farmers’ Markets are certainly a better choice for fresh, high-quality, in-season produce. The prices there are […]

Read More about Post Title

7 minute read

stock market short seller Investing

How to Short a Stock: A Complete Guide

I first learned about short selling from my Dad. It was in the dot-com crash of the early 00s, when practically every investment was going down. Many people lost their savings because they plowed too much money into ridiculously-valued tech stocks. Looking back in retrospect, these stocks were already so high that they had no […]

Read More about Post Title

11 minute read

Man happy about investing Investing

What Are Bearer Bonds (and How Do They Work)?

A bearer bond is a fixed-income security, very similar to a regular bond. However, a bearer bond is owned by the holder (or bearer) rather than by a registered owner. The coupons for interest payments are physically attached to the bearer bond. The bondholder is required to submit the coupons to a bank for payment […]

Read More about Post Title

5 minute read

Trusted provider of accurate rates & financial information