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Medicare Advantage PPO vs. HMO Plans: What's the Difference?

By Zawn Villines
The specific structure of the plan you choose dictates how much you pay for care and where you can seek treatment.

Medicare Advantage offers Medicare through a private insurer. Sometimes called Medicare Part C, these all-in-one plans often provide services original Medicare does not, such as vision and dental insurance and prescription drug coverage.

There are differences between Medicare Advantage plans. The specific structure of the plan you choose dictates how much you pay for care and where you can seek treatment. HMO plans limit you to a specific network of providers, while PPO plans offer lower rates to beneficiaries who seek care from a preferred provider.

Medicare Advantage HMO Plans

A health maintenance organization (HMO) requires you to seek care from in-network doctors, hospitals, and other clinicians. If you use a provider outside of the HMO network, the plan may not cover it.

There are certain exceptions to this coverage rule. The plan may cover out-of-network care if:

  • You need urgent treatment and are outside the plan's coverage area.
  • You need emergency care.
  • You have dialysis outside of the plan's coverage area.
  • The plan covers a certain treatment, but in-network clinicians in your area do not offer it.

Most HMOs require that you choose a primary care provider and get a referral for specialist care.

Medicare Advantage PPO Plans

Preferred provider organization (PPO) plans offer a list of preferred hospitals, doctors, and other providers. Enrollees get a discount for using these in-network clinicians. You'll pay a higher copay if you go out-of-network. You may also have a higher deductible for out-of-network care, or have limited coverage for non-preferred providers until you hit your deductible.

With a Medicare Advantage PPO, you don't have to choose a primary care provider, and do not usually need a referral to see a specialist.

Medicare Advantage HMO vs. PPO: Which is Better?

There's no right choice for everyone. Instead, Medicare Advantage beneficiaries should review the terms of specific plans available in their area. HMOs typically have lower monthly premiums, though fewer clinicians will be covered. This can be a problem if you are selective about your doctors or a doctor you like is not in-network.

PPOs generally offer a wider variety of clinician choices, but you may pay a higher monthly premium. And if you choose to seek care out-of-network, you'll pay more.