HMO vs PPO: Which Health Plan Is Right for You?

HMO and PPO are the two plan types most people choose between. They both cover the same essential health benefits required by the ACA. The difference is in how you access care and what you pay for flexibility. PPOs dominate the employer market at 47% of covered workers, while HMOs cover about 13%.

The Core Differences

HMOs require you to choose a primary care physician who coordinates your care and writes referrals for specialists. You must stay in-network except for emergencies. PPOs let you see any provider without referrals. You can go out of network, though it costs more. Neither approach is better in the abstract. It depends on what you need.

Cost Comparison

HMOs are generally cheaper. Average single HMO premium through an employer: about $8,300 per year. Average single PPO premium: about $8,800. HMO deductibles tend to be lower too. Many HMO plans use copays for most services, so your costs are predictable. PPOs use more coinsurance, which means your costs vary based on what you need.

Pick an HMO If

You want the lowest premiums. You don't mind referrals. Your preferred doctors are in the HMO network. You rarely need care outside your home area. You prefer predictable copays over variable coinsurance.

Pick a PPO If

You want to see specialists without a referral. You travel or need care in multiple areas. You have doctors you want to keep who aren't on HMO networks. You want the option to go out of network, even if it costs more. You're willing to pay a higher premium for that freedom.

A Third Option: EPO

If you like the no-referral approach of a PPO but don't need out-of-network coverage, look at EPO plans. They skip the referral requirement but keep you in-network only, with premiums usually lower than PPOs. Only about 3% of employer-covered workers have EPOs, but they're growing on the ACA Marketplace.