HMO and PPO plans both rely on in-network providers. PPO plans cover out-of-network providers but at a higher cost. There may also be differences in availability, coverage, and monthly premiums.
Medicare Advantage (Part C) is a popular option for beneficiaries who want all their Medicare coverage options under one plan.
There are many types of Medicare Advantage plans, including Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs).
This article explores the differences between Medicare Advantage HMO and PPO plans and how to determine which type of plan might be best for your needs.
Medicare Advantage PPO plans offer flexibility for people who want to use both in-network and out-of-network providers. Under a PPO plan, choosing a primary care physician (PCP) is not required, and neither is a referral for specialist visits.
However, that flexibility comes at a higher cost.
With a PPO plan, you will pay less for services from in-network providers and more for services from out-of-network providers.
Coverage
Medicare PPO plans generally cover all the services that Medicare Advantage plans cover, including:
Depending on the plan, you may also be covered for dental, vision, and hearing visits.
If you receive hospital or medical services under a PPO plan, using in-network providers can help you avoid paying higher fees. Since each Medicare Advantage PPO plan is different, you will need to research the specific plans offered in your area to find out exactly what else is covered in each individual plan.
Costs
Medicare Advantage PPO plans have the following costs:
- Plan-specific premium: The average monthly plan premium among Medicare Advantage enrollees in 2024 is $18.50 per month.
- Part B premium: In 2024, your Part B premium is $174.70 per month or higher, depending on your income.
- In-network deductible: This fee is usually $0 but may be as high as $500 or more, depending on which plan you enroll in.
- Drug deductible: These deductibles can start at $0 and increase depending on your PPO plan.
- Copayments: These fees may differ depending on whether you’re seeing a primary care doctor or a specialist and if those services are in-network or out-of-network.
- Coinsurance: This fee is generally 20% of your Medicare-approved expenses after your deductible is met.
Unlike Original Medicare, Medicare Advantage PPO plans also have an out-of-pocket maximum. This amount varies by plan, provider, and location, but it’s generally in the $5,000 range.
With a PPO plan, you will owe additional fees for seeing out-of-network providers. This means that if you choose a PCP, visit a hospital, or seek services from a provider who is not in your PPO network, you may pay more than the average costs listed above.
Medicare Advantage HMO plans do not offer as much provider flexibility as a PPO, except for emergencies and out-of-area urgent care and dialysis. In some cases, you may also be able to use out-of-network providers, but you will pay 100% of the services yourself.
Under an HMO plan, you are required to choose an in-network PCP and will also be required to have a referral for in-network specialist visits.
Coverage
Like PPO plans, HMO plans cover all the services that Medicare Advantage plans usually cover. Each plan also has a list of included “extras” such as gym memberships, hearing aid coverage, and transportation to medical appointments.
Costs
Medicare Advantage HMO plans have the same baseline costs as PPO plans, including the monthly plan and Part B premiums, deductibles, copayments, and coinsurance. As required by law, your HMO plan will also have a yearly out-of-pocket maximum on costs you owe.
Since HMO plans require that you seek services in-network, you generally won’t have to manage additional fees unless you decide to use out-of-network providers. In emergency situations, you may owe additional costs, but you will need to check with your plan to see what these fees are.
There are a lot of similarities between Medicare Advantage PPO and HMO plans, such as the costs of premiums, deductibles, and other plan fees. Most differences between the two types of plans are primarily based on coverage and costs of in-network and out-of-network services.
Below is a comparison chart of what each plan offers in terms of coverage and costs.
| Will I have in-network providers? | Can I use out-of-network providers? | Is a PCP required? | Do I need specialist referrals? | Are there standard plan costs? | Are there additional costs? | |
|---|---|---|---|---|---|---|
| PPO | yes | yes, but at a higher cost | no | no | yes | for out-of-network services |
| HMO | yes | no, except for emergencies | yes | yes | yes | for out-of-network services |
No matter what type of Medicare Advantage plan type you choose, always pay close attention to the specific coverage options and costs associated with the plan you choose. Because Advantage plans are offered by private insurance companies, they may differ in what they can offer and what they decide to charge.
Choosing the best Medicare Advantage plan depends entirely on your personal medical and financial situation. What works for another person may not work for you, so it’s important to do your research on the plans in your area.
Here are a few things to consider when choosing whether to enroll in a PPO or HMO Advantage plan:
- Provider networks: If you value provider flexibility, a PPO plan may be your best option. If you’re fine with using only in-network providers, an HMO plan could work for you and cost less.
- Coverage: Your coverage options are specific to each plan, but there is usually no major difference between the coverage options of most PPO and HMO Advantage plans.
- Costs: Medicare Advantage PPO and HMO plans differ in their costs depending on what state you live in and what type of coverage you’re looking for. There may be additional costs associated with your plan depending on whether you stay in-network or not.
- Availability: Medicare Advantage plans are location-based, meaning that you must enroll in the state in which you currently live and receive medical services. Some private companies will only offer one type of plan, while others will have multiple types to choose from.
Medicare Advantage PPO and HMO plans are a great insurance option for people who want to receive Medicare coverage under one umbrella plan.
While there are similarities between the two types of plans, there are also differences in availability, coverage, and cost.
When choosing the best Medicare Advantage plan structure for you, make sure to consider your provider preferences, financial situation, and medical needs.