Medicare Advantage (Medicare Part C) is a popular Medicare option for beneficiaries who want all their Medicare coverage options under one plan. There are multiple types of Medicare Advantage plan options, including Health Maintenance Organization (HMO) plans and Preferred Provider Organization (PPO) plans.
Both HMO and PPO Advantage plans rely on using in-network providers; however, PPO plans offer flexibility by covering out-of-network providers at a higher cost. There may also be some differences in availability, coverage, and costs between the two types of plans.
In this article, we will explore the differences between Medicare Advantage PPO vs. HMO plans, and how to determine which type of plan is best for your needs.
Medicare Advantage PPO plans offer some provider flexibility for those who need it, though at a higher cost.
How it works
PPO plans cover both in-network and out-of-network providers, doctors, and hospitals. You will pay less for services from in-network providers and more for services from 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.
What it covers
PPO plans generally cover all the services that Medicare Advantage plans cover, including:
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.
Medicare Advantage PPO plans have the following costs:
- Plan-specific premium. These premiums can range from $0 to an average of $23.00 per month (in 2020).
- Part B premium. Your Part B premium is $135.50 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 percent 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 but is generally in the mid-thousands.
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 provider flexibility, except for emergency medical situations.
How it works
HMO plans cover in-network providers, doctors, and hospitals only, except for the case of emergency medical care or 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 percent of the services yourself. Under an HMO plan, you are required to choose a PCP, and will also be required to have a referral for specialist visits.
What it covers
Like PPO plans, HMO plans cover all the services that Medicare Advantage plans usually cover, including:
- hospital insurance
- medical insurance
- prescription drug coverage
When you seek hospital or medical services, you will need to choose from the list of in-network providers that your HMO plans covers. If you seek services outside of your plan’s in-network providers list, you may have to pay the full amount for those services. However, in emergency situations, such as when traveling, you may be covered depending on the specific terms of your plan.
Medicare Advantage HMO plans have the same baseline costs as PPO plans, including the monthly plan and Part B premiums, deductibles, and 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 deal with 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.
|Plan type||In-network providers||Out-of-network providers||PCP required||Specialist referrals||Standard Advantage Plan costs||Additional costs|
|PPO||yes||yes, but at a higher cost||no||not required||yes||for out-of-network services|
|HMO||yes||no, except for emergencies||yes||required||yes||for out-of-network services|
No matter what type of Medicare Advantage plan structure you choose, always pay close attention to the specific coverage options and costs associated with the specific plan you choose. Because Advantage plans are offered by private insurance companies, they may differ in what they can offer you and what they decide to charge you.
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:
If you value provider flexibility, a PPO plan may be in your best interest, as it offers coverage for both in-network and out-of-network services. However, this may only be an option for you if you have the financial means to visit out-of-network providers, as these medical bills can add up quickly. If you’re fine with using only in-network providers, an HMO plan will allow you to stay within network without the additional financial burden.
By law, all Medicare Advantage plans must cover at least Medicare Part A and Part B. In addition, almost all Advantage plans also cover prescription drugs, vision, and dental services. These 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.
Another thing to consider is whether the coverage offered by PPO and HMO plans will be impacted by your personal medical situation. For example,
Medicare Advantage PPO and HMO plans may differ in their costs depending on what state you live in and what type of coverage you’re looking for. No matter which structure you choose, all plan offerings can charge for premiums, deductibles, copayments, and coinsurance. The amount of each of these fees depends on the plan you choose.
Also, consider that there may be additional costs associated with your plan depending on which providers you’re seeing. For example, if you visit an out-of-network provider on a PPO plan, you will pay more out-of-pocket for those services.
Medicare Advantage plans are location-based, meaning that you must enroll in the state in which you currently live and receive medical services. This means that PPO and HMO plans may be different depending on where you live. Some private companies will only offer one type of plan, while others will have multiple structures to choose from. Where you live will determine the plan availability, coverage, and costs of whichever type of Medicare Advantage plan you choose.
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.
Whenever you’re ready to choose a Medicare Advantage plan, visit Medicare.gov for information about plans in your area.