PPO vs HMO: Differences between Medicare PPO and HMO

Understanding all the different plans that are available in Medicare is overwhelming. To make matters worse there is no one health care plan that fits ALL the needs of a particular person. Once you know this you can try to find a plan that will meet most of your needs efficiently. Understanding the basic differences between PPO Plans, HMO Plans and Original Medicare will also help you narrow down the choices.

What is Original Medicare?

Original Medicare is run and managed by the Federal government. Original Medicare includes Part hospital insurance, which is premium free for eligible seniors. It also includes Part B, medical insurance, which is a premium-based insurance. Seniors can opt out of Part B if they want to. In addition to Part A and B, there is Part D, Prescription Drug Coverage and Medigap insurance which helps a senior to pay their co-pays, co-insurance and other costs not covered by Original Medicare. Part D and Medigap both require premiums on top of the Part B premium. The greatest advantage to Original Medicare is that it is almost universally accepted throughout the United States. This means that a person with Medicare can go to almost any provider and have their services covered.

HMOs and PPOs

HMO and PPO Plans are private insurance plans that have contracted with Medicare to provide insurance for eligible seniors instead of Original Medicare. These plans are included under Medicare Advantage Plans also known as Medicare Part C.

Both the HMO and PPO Plans have some extra benefits and some restrictions that do not apply to Original Medicare.

Advantages to HMOs and PPOs over Original Medicare

Both the HMO and PPO plans are managed by private companies rather than by the government so there is far more choice in the type of plans you can get. Both HMOs and PPOs can include extra care not available under Original Medicare including things like vision care, dental care and hearing care. Some plans also include Part D, Prescription Drug Coverage, within the plan. When you have a HMO or PPO Medicare Plan you only pay one premium, even though you may be able to add or drop extra types of coverage. These types of plans usually have cheaper premiums than Original Medicare.

Disadvantages to HMO and PPOs over Original Medicare

HMO and PPO Plans both cannot be used with a Medigap policy. Medigap is instrumental in controlling some patient's costs. For older people in poor health the inability to add Medigap is the most important reason not to get a HMO or PPO Medicare Plan. In addition, both HMOs and PPOs are managed care plans. This means that patients are required to use the plan's providers or they will pay more. With Original Medicare it is possible to use almost any provider. Another disadvantage to HMO and PPO plans is that they are usually confined to a specific location. This means that if you live in two different states and want to see the doctor the plan will only cover services in one area. Urgent and Emergency care is excluded from this limitation.

HMOs and PPO both use a preferred network but the PPO is more flexible. With a PPO you can use non-plan doctors and hospitals (you will have to pay more). In addition with a PPO you can see a specialist without a referral.

In summary, both PPO Plans and Original Medicare offer different advantages. Each member needs to assess his/her own need and then choose the plan that is best for him or her.