There are many similarities between Medicare Advantage HMO & PPO plans. The right plan for you will depend on your financial situation & medical needs.
When selecting your Medicare plan, you are likely to have three main options: Original Medicare, Medicare Advantage HMO plans, and Medicare Advantage PPO plans.
Unlike Original Medicare, both Medicare Advantage HMO and PPO are private insurance plans, sometimes called Medicare Part C. There are some important differences between these two choices, so let’s break down the key details you need to know.
A common question from people exploring their healthcare options is, “what do HMO and PPO stand for?” In this case, HMO stands for health maintenance organization.
A Medicare Advantage HMO plan is a type of Medicare Advantage plan. HMO plans must cover the standard Medicare Advantage services—Medicare Part A (hospital insurance), Medicare Part B (medical insurance), and Medicare Part D (prescription drug coverage). In some cases, HMO plans also offer extras, like coverage for transportation to medical appointments or hearing aids.
These plans typically offer lower premiums—or $0 premiums—and potentially lower out-of-pocket costs than PPO plans. You will have an out-of-pocket limit for in-network care as required by law. In 2023, the maximum out-of-pocket limit (MOOP) will be $8,300, an increase from the 2021 and 2022 limit. However, many plans set limits below the legally required maximum, keeping your costs even lower.
If you opt for an HMO plan, you’ll need to choose an in-network primary care provider. You will usually need a referral to see a specialist, too. Other than emergency cases, you won’t be able to use out-of-network providers under an HMO plan, unless the plan is specifically an HMO-POS, where you may be able to access some benefits out of network.
Your other option for Medicare Advantage is a preferred provider organization, or PPO plan. These plans are generally more flexible than HMO options. Though PPO plans have provider networks, they also allow you to see out-of-network providers. Keep in mind that you may need to pay higher fees if you see a doctor outside your network.
Under a PPO plan, you don’t need to choose a primary care provider, and you won’t usually need a referral to see a specialist.
In terms of costs, Medicare Advantage PPO plans may have a premium, deductible, copay, and coinsurance that you will need to pay. You may also owe additional fees for receiving services from a provider outside your PPO network. Like HMO plans, PPO plans are subject to an out-of-pocket maximum for in-network services. This limit varies by plan but is still subject to federally mandated caps. Like Medicare Advantage HMO plans, the in-network MOOP for 2023 will be $8,300, while the combined maximum for in-network and out-of-network care is $12,450.
There are a lot of similarities between Medicare Advantage HMO and PPO plans, so it can be hard to choose between them.
There’s no simple answer as to which plan is better—the right plan for you will depend on your financial situation and medical needs. You should compare Medicare Advantage PPO and HMO plans based on key factors including:
The majority of Medicare Advantage plans offered in 2021 were Medicare Advantage HMO plans. Medicare Advantage PPO plans were still widely available, however.
Choosing between Medicare Advantage HMO and PPO plans is a very personal process. Understanding the major differences between these two options should make picking the right plan for your needs much easier.
To get more information about the Medicare Advantage plans available in your area, reach out to a local licensed Medicare Advisor from Keen’s directory or call (888) 443-5336 (TTY: 711).