Medicare advantage HMO vs. PPO – Which is the right choice for you?
Medicare advantage plans are insurance provided by authorized private companies and replace your Medicare coverage. Each insurer is allowed to set its own benefits, as long as they are at least equal to original Medicare, and all must abide by federal guidelines. All plans provide Medicare Part A and Part B benefits, and many plans add prescription drug and other benefits such as wellness programs. As Medicare Advantage plans replace the original Medicare coverage, you will not have coverage through Medicare anymore. Most Medicare Advantage Plans are managed care plans, typically HMO (health maintenance organization) or PPO (preferred provider organization), but you will also find Private-Fee-for-Service (PFFS) plans.
Health Maintenance Organizations (HMO) and Preferred Provider Organizations (PPO) have been around for a long time in the insurance market. Both types use networks of hospitals, doctors and other health care providers that have agreed to participate in the plan.
Some of the most important considerations when selecting between a HMO or PPO plan is, whether the individual plan covers your doctor and your prescription drugs.
What Is The Difference Between Medicare Advantage HMO and PPO?
Medicare Advantage Health Maintenance Organization (HMO) Plans
HMO’s are the most affordable option to add additional benefits to your Medicare, but it comes with some limitations. What makes them a good choice for many Medicare beneficiaries is that they often provide extra benefits which are not covered by traditional Medicare. Your total costs, which consist of your monthly premium plus any out-of-pocket costs, will vary, depending on the plan you select and the services you use.
Typically, to be fully covered according to your HMO’s plan benefits, you are restricted to using the plan’s network of providers, unless you have an emergency. You have to choose a primary care physician (PCP) who will arrange your healthcare within the plan’s network. If you need a specialist or admittance to a hospital, you must first get a referral from your primary care physician.
The HMO will not cover non-emergency care received by an out-of-network provider, or outside the plan’s geographic service area, or visits to a specialist without referral. You also won’t have any coverage to see that provider through Medicare either, as an advantage plan replaces your original Medicare.
It is therefore essential that you check the plan’s list of providers and find out whether your doctor is in-network. If not, you will have to change the doctor in order to be covered by the plan. If your current doctor is within the plan’s network, you may enjoy comprehensive coverage with little or no extra costs other than your monthly Medicare Part B premium.
Because of the way HMO’s manage health care and subsidies by the government, HMO Medicare advantage plans can offer additional benefits for lower premiums and lower out of pocket costs for the enrolled.
Medicare Advantage Preferred Provider Organization (PPO) Plans
Medicare advantage PPO plans also use a network of health car providers, but give you the freedom to visit hospitals and doctors out of network. Typically, you will have a lower co-payment if you use healthcare providers inside the plan’s network.
Medicare advantage PPO plans usually do not require you to obtain a referral before consulting a specialist.
A PPO plan is great if you like the option to select your own doctor or specialist if the need arises, but generally don’t mind using network providers in order to get the most coverage at lower out of pocket costs.
It is also a good alternative if you live in two different states during the year, and want to be flexible where you receive medical care. However, make sure to check your plan policy, as co-payments for the use of non-network providers may be significant, depending on your plan.
Medicare Advantage HMO vs PPO – Which Is Better?
Medicare advantage HMO and PPO plans are in many regards very similar, as both have a network of health care providers you are supposed to use in order to be covered with the maximum benefits, according to your plan policy.
For seniors who don’t mind staying within a plan’s network of providers, and rather prefer lower premiums and co-pays, a Medicare Advantage HMO plan is a popular and affordable option.
If you like to be more flexible, and have the freedom to see a doctor, specialist, or hospital of your own choice, outside of the plan’s directory of providers, a Medicare Advantage PPO plan may be a good choice. However, you will have higher co-payments to utilize this freedom.
To be sure that you’ll be able to get the health care you need when you pick your insurance, check the list of doctors and which prescriptions a plan will pay for before you enroll.
