Introduction
So you decided to go with Medicare Advantage but aren’t sure whether to choose a PPO or an HMO version. Coming up next, we’ll very briefly summarize the differences between these two plan types.
Medicare Advantage Plans and Doctors
When you’re in a Medicare Advantage plan, you can see any doctor who accepts Medicare, but is that doctor in network with your plan? Preferably, you want to be in-network as it will cost you less. Really, where a PPO and an HMO separate is access to doctors and plan benefits. Let’s take a look.
What is a PPO?
A PPO is a Preferred Provider Organization. Most employer health plans are on a PPO chassis, so that might feel familiar to you. A PPO gives you access to in-network and out-of-network providers. In-network will cost you less; out-of-network will cost you more. The plan pays less when you’re out of network.
What is an HMO?
An HMO is a Health Maintenance Organization, but it only provides in-network benefits. There is literally no coverage out of network unless it’s an emergency, and emergencies don’t last forever. So once you’re stabilized, there is a chance you could be reclassified as out-of-network all of a sudden and no longer have any coverage for services received thereafter. That is a big risk you take with an HMO when you’re in an emergency, so please watch out.
PPO vs. HMO Benefits in Medicare Advantage
Now let’s quickly summarize how a PPO plan’s benefits compare to an HMO plan’s benefits in the Medicare Advantage space. In general, an HMO Medicare Advantage plan is going to have stronger benefits overall, meaning some of the co-pays are likely less than a PPO. The medical max-out-of-pocket limit is usually lower, and finally, you’ll probably see stronger extra benefits included in the plan, such as dental, vision, hearing, over-the-counter, and flex benefits.
Why Are HMO Benefits Stronger?
Why is this? Well, it kind of makes sense because with an HMO, the insurance carrier knows that you are more than likely going to stay in-network to receive your care. Based on this, they are able to build a stronger benefit design. But in a PPO, the insurance carrier knows that more policyholders will purposely or accidentally receive care out of network, so they have to accommodate for that, which does impact what they can provide in overall plan benefits.
PPO vs. HMO: Which to Choose?
This doesn’t mean one is better than the other; rather, it just means there is a give and take when it comes to the reasons why you choose a PPO or an HMO. If you want more flexibility and want to be prepared for the “what-ifs,” then consider a PPO. If you prefer the benefits of an HMO and you’ll always make sure to be in-network, then you can consider an HMO.