The Difference Between PPO and HMO Health Insurance Policies | Byrne, Byrne & Company

By Laura K. Brestovansky

There are two main types of health insurance, PPOs (preferred provider organizations) and HMOs (health maintenance organizations). There are benefits and disadvantages toward each type of coverage and people considering health insurance coverage should do research before deciding which type of policy is best for them and their family.

PPO Definition

A PPO is a network of physicians, hospitals, labs and other medical professionals, each in private practice, that provide their services for a set fee. Patients can choose which facilities to visit.

HMO Definition

HMOs on the other hand are made of HMO employees. While they also work for a set fee, an HMO policy holder must go to the facility assigned by the HMO.

PPO Advantages

Many people prefer PPOs because of the freedom to choose the physicians and facility they use. They are also more likely to get health insurance coverage for chronic or severe conditions.

PPO Disadvantages

PPOs can be much more expensive than HMOs. Depending on the medication, treatment or test involved, you may be required to meet a deductible or co-payment that can cost hundreds of dollars. PPOs generally cover about 80 percent of service fees, according to Financial Web. You may also need to pay a deductible.

HMO Advantages

HMOs are designed to provide a variety of health care services at lower cot. Co-pay and prescription rates are usually lower and there is generally no deductible.

HMO Disadvantages

Patients in an HMO must go to the facility assigned to them, even if it is further away or doesn’t have convenient appointment times or if the patient does not have a good rapport with the professionals on staff. HMOs may also refuse care or increase the cost of your health insurance premiums if you have a chronic or serious medical problem. HMOs usually insist on pre-approving all doctor visits, and obtaining referrals for all specialist visits. From the doctor’s point of view, HMOS often have a quota on the number of patients she sees daily, thus she may not have time to give close attention to each patient.


Ask your employer, trade union or professional/civic organization about health insurance options. Ask relatives, friends and colleagues about their insurance coverage. Many health insurance companies offer online quote tools to help you select the best coverage, much like that offered by Insure Lane (see Resources section).

All health insurance policies, whether an HMO or a PPO, offer different coverage for different costs. It is best to carefully read all policies to ensure they offer the coverage you need and that you can afford any co-payments and deductibles.

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