HMO vs. PPO: Which Medicare Advantage Plan Is Right for You?

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HMO and PPO. You may have heard of these abbreviations before, but do you know what they really mean when it comes to Medicare coverage? If not, don't worry, you're in the right place. We're breaking down these Medicare Advantage plan types so you can be better equipped to plan type for your health needs.

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Health Maintenance Organization (HMO) plans

With Medicare Advantage HMO plans, coverage includes:

  • Part A (hospital insurance)
  • Part B (medical Insurance)
  • In most cases, prescription drug coverage (Part D)
  • In some cases, vision, hearing, and dental coverage

While HMO plans tend to offer you more benefits than Original Medicare, there are rules and restrictions to your coverage. Rules for HMO plans include:

  • You must see doctors and go to hospitals that are in your plan's network in order to get coverage, except in the case of an emergency
  • You typically need a referral to see specialists

Costs, coverage, rules, and restrictions vary across all Medicare Advantage HMO plans, so it's important to research the particular HMO plans you're interested in before choosing one. Remember, you'll want to make sure the doctors and hospitals you go to are in network with the HMO plan you want to join. Otherwise, you might not be covered for services you receive out of the plan's network.

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Preferred Provider Organization (PPO) plans

Similar to HMO plans, Medicare Advantage PPO plan coverage includes:

  • Part A (hospital insurance)
  • Part B (medical Insurance)
  • In most cases, prescription drug coverage (Part D)
  • In some cases, vision, hearing, and dental coverage

While benefits may be similar to HMO plans, the rules and restrictions associated with Medicare Advantage PPO plans are different. Rules for PPO plans include:

  • You can see any doctor and go to any hospital, but you'll likely pay more for seeing providers who are out of your plan's network
  • You don't need a referral to see specialists
  • You usually pay a copayment (a fixed amount of money you pay for a covered health care service after you've paid your deductible) for in-network care and a coinsurance for out-of-network care. A coinsurance is the percentage of costs (20%, for example) you pay for a covered health care service after you've paid your deductible

A Medicare Advantage PPO plan may charge a higher monthly premium than an HMO plan. PPOs offer you more flexibility when it comes to choosing providers, and generally it costs less to go to doctors and hospitals that are in network with your PPO plan than going out of network.

You can't sign up for a stand-alone prescription drug plan (Part D) if you enroll in either an HMO or PPO plan, so you'll want to make sure the plan you join includes prescription drug coverage if you need it.

Medicare Advantage HMO and PPO plans are offered by private companies approved by Medicare. These companies' HMO and PPO plans are different from one another, so it's important to research the specific rules and restrictions of the plan you're interested in before enrolling to make sure you're getting the right coverage. If you have questions, call the specific plan for more details.

Rachel Quetti is a health care writer at Aetna with experience in senior wellness, Medicare, commercial health care, and consumer engagement. When Rachel isn't trying out new fitness classes, she is cooking up fun, (mostly) healthy recipes in the kitchen. Rachel lives in Watertown, Massachusetts and has a degree in journalism from the University of Massachusetts, Amherst.

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