What is the difference between Medicare advantage HMO and PPO plans?
Medicare advantage HMO and Medicare advantage PPO plans are similar, but not the same. As Part C of Medicare, those plans are subsidized and regulated by Medicare, but provided by private insurance companies. If you are enrolled in an advantage plan, you still have to pay your monthly Medicare Part B premium, but your health care for Medicare approved services will not be paid by Medicare anymore, but by the plan.
Per law, advantage plan benefits must be equal to or better than Medicare Part A and Part B benefits of original Medicare. As the competition among insurance companies is high, many offer additional benefits for the enrolled, which may include prescription drug coverage, fitness or wellness programs, or even help with eyeglasses or hearing aids. Most Medicare advantage plans are set up as HMO (health maintenance organization) or PPO (preferred provider organization) plans, with a network of providers that have agreed to provide services to the plan members at negotiated rates.
Medicare advantage HMO plans
In a HMO’s, or Health Maintenance Organization, the insured have to select their primary care physician from the plan’s list of providers. If is is not an emergency, and you need to go to the hospital or if you must see a specialist, your PCP will have to give you a referral. If you use without an emergency a provider outside the plan’s network, or service area, or don’t get the referral, neither your Medicare advantage insurance nor original Medicare will pay for it.
Medicare advantage HMO plans have limitations when it comes to the choice of health care providers, but they are an affordable option to add extra benefits to your original Medicare. You may even be able to find a ‘zero premium’ plan with no additional monthly premium over what you have to pay for your Part B. Depending on your local area, you will have a small or large number of HMO plans to choose from, with different benefits and out-of-pocket costs.
Medicare advantage PPO plans
PPO plans also utilize a provider network, and you will have to use one of the providers in the plan’s directory in order to enjoy a lower co-payment. However, unlike HMO plans, with a PPO plan you will still be able to use Medicare approved health care facilities and providers out of network, for a higher co-payment than if you had used a health care provider from the plan’s network. You also do not need to obtain a referral in order to see a specialist. Before you do, make sure you fully understand your plan’s regulations, so you know which co-payments you will have to pay out of pocket.
The difference between Medicare advantage HMO and PPO plans
Medicare advantage PPO and HMO plans differ in two areas:
1. With a PPO you may obtain health care services from providers outside the plan’s network (although for a higher co-payment than if you use in-network services).
2. A PPO does not require that you get a referral before consulting a specialist
HMO plans are very popular among seniors on Medicare, because of their lower premiums and co-pays, while PPO plans are preferred by persons who like the freedom to seek medical services from providers outside the plan’s network by paying a higher co-payment.
Which option is better for you, depends on your individual medical and financial needs and preferences. In any case, make sure you diligently check out the directory of network providers, and the benefits and total costs (premium plus co-payments) for the plan, for before you decide. A good starting point is the plan finder tool at the Medicare.gov website.
