HMO vs PPO—what's the difference?

Learn the difference between these networks.



HMO vs PPO, what is the difference? How do I know which one is right for me? If you’ve asked yourself these questions—you are not alone. When hunting for the right health insurance coverage, you need to understand the difference between these two networks options. 


Health Maintenance Organization (HMO)

group health ppo vs hmo

HMO stands for Health Maintenance Organization. The HMO network contains a small network of doctors and hospitals and requires referrals from your primary care physician when seeking health services from a specialist. 

Health care providers must meet specific qualifications to be eligible to participate in the HMO network. The cost for their services are negotiated and established by the health insurance carriers.  Each carrier’s HMO network brings health care providers potential patients and the provider in turn charges less for their services. This controlled network allows carriers to charge you lower premiums on health insurance plans.


Preferred Provider Organization (PPO) 

group health ppo vs hmo

PPO stands for Preferred Provider Organization. A PPO is typically a larger network that does not require referrals to visit specialists.

A PPO allows you to choose which hospitals or doctors you want to handle your health care needs. Compared to the HMO, the PPO network is more flexible and gives you more freedom of choice. Unlike the HMOs, this insurance plan will allow you to visit doctors and hospitals outside their network, but having flexibility can come at a cost.

Differences to Consider 

Access to Providers

If electing an HMO, you need to designate a primary care physician (PCP). Your PCP will be responsible for coordinating your healthcare services so it’s important to find one you can trust. If you don’t like the choice you made don’t worry. You can designate a different PCP every day. There’s no limitations on changing your mind.  This not an issue with the PPO. You can visit any specialist of your choosing without consulting a PCP first.

Visiting Specialists

With the HMO network, your PCP will be responsible for coordinating all your healthcare services so before you see a specialist you will need a referral from the PCP. With a PPO plan, you can see any specialist without consulting your primary care physician first. 


Traveling Out-of-State

If you travel often, Most PPOs will allow you to see a healthcare provider in another state. So if you fear that you’d fall sick when far away from home then the PPO plan will work well for you. A HMO plan will limit you to your home area and even if it allows for emergency health care benefits in other states, you will need the consent of your PCP first.

Out-of-Network Services

PPOs and HMOs are networks. There are several health insurance plan options within each network. And within each plan a set deductible amount. There is an unlimited deductible when receiving out-of-network services meaning there is no cap on your expenses. For this reason, it is recommended you always remain In-Network. 

Which one is right for me?


If you prefer to choose from a number of specialists without needing a referral, then the PPO is your best bet.

  • You won’t need a referral to see a specialist
  • You have the option to go out of network or out of state (although we highly recommend you stay in-network)
  • Premiums are usually more expensive due to access to larger options of doctors and hospitals
  • Offers flexibility in your health care, you can choose which physicians you want to see—no referrals required
  • Out-of-pocket costs are determined by where you go and who you see

If you are okay with paying more to have freedom and flexibility in choosing which doctors or hospitals to visit when the need arises—go with PPO.


The HMO plan is a good deal if you are comfortable with a given hospital system or a certain doctor. All you need to do is enroll into a health insurance plan that your desired PCP is participating in.

  • The number of doctors and hospitals accepting this network depends on where you live.  For example, the Blue Focus Care HMO offered by Blue Cross Blue Shield of Illinois is available in Cook County but not in Southern Illinois.
  • Your premium will be lower due to the restrictions on doctor and hospital access.
  • You need to designate a Primary Care Physician (PCP) and a referral is required from this PCP to see any specialists.
  • Requires a primary care physician, who manages your health care needs and refers you to specialists that are within your plan’s realm of coverage
  • Out-of-pocket costs are easily predicted (set dollar amount on multiple services)

If you want all your health care needs handled by a single doctor or hospital, then the HMO network is ideal for you.

Comparing Costs:

  • Monthly premium: HMO $$, PPO $$$
  • Deductible: what you'll be expected to pay for health care services before your health insurance company will begin covering costs
  • Co-pays: for doctor visits and prescription medications
  • Coinsurance: the amount you'll be expected to pay after you've reached your deductible

Determining which one is better depends on your individual health care needs. Think first of what you have preferred in the past for means of accessing healthcare. 


Questions? Talk to a licensed agent

Need help finding the right plan for you?  Or simply have further questions?  Give us a call so that a licensed agent can help you with your questions and concerns.  Call us at (855)-563-6993 or have us call you.

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