HMO vs PPO: Networks, Referrals and Total Health Plan Costs

An HMO usually focuses coverage on doctors and facilities in its network and typically does not cover nonemergency care outside that network.

Some HMOs require referrals or have other managed-care rules. Check whether your chosen primary care doctor, specialists, hospitals and prescriptions are covered.

A PPO typically allows greater flexibility to use providers outside its network, often with higher member cost-sharing and different allowed charges.

Out-of-network access is not the same as unlimited reimbursement. Balance billing and separate deductibles may affect the final cost.

Calculate annual premium payments, expected deductibles, copayments, coinsurance and network-specific out-of-pocket maximums. Use your own likely needs rather than an invented average.

Services not covered by the plan, certain out-of-network charges and premiums may not count toward a plan's in-network out-of-pocket maximum.

Provider directories can change and sometimes contain errors. Before enrolling, check doctors and facilities with the plan and the provider's office.

Compare formularies, pharmacy networks, prior-authorization rules, specialty medication costs and whether a particular treatment is subject to coverage restrictions.

Emergency coverage is subject to federal and state protections as well as the policy. Avoid assuming an HMO network restriction means every emergency outside the network is excluded.

For urgent, planned or ongoing care, ask the insurer to explain the relevant benefit and current network status.

For each option, record a premium, deductible, in-network and out-of-network coverage, referral rules, out-of-pocket maximum and preferred providers.

The better plan depends on your situation; a plan with a larger network can still be more expensive, and an HMO can fit well when your care providers are included.