Medicare Advantage PPO vs. HMO
Key Takeaways
- Preferred Provider Organizations (PPO) and Health Maintenance Organizations (HMO) are the most common types of Medicare Advantage plans.
- Medicare Advantage PPO plans generally offer more flexibility to see providers outside of your network, while HMO plans are usually more affordable.
- Set priorities and explore the plans available in your area to determine the best choice for your individual needs.
Preferred Provider Organizations (PPO) and Health Maintenance Organizations (HMO) are two common types of health insurance, and Medicare Advantage plans can be either one.
Medicare Advantage plans (also called Medicare Part C) are offered by private insurance carriers to substitute for Original Medicare (also called Medicare Part A and Part B), which is the federally administered public health insurance program for U.S. adults who are over 65 or have certain disabilities.
Every Medicare Advantage plan is legally required to at least match the coverage you would receive from Original Medicare. Unlike Medicare Parts A and B, these plans must set an annual limit on your out-of-pocket spending. Most include Medicare Part D prescription drug coverage and other benefits you don’t get from Original Medicare.
Outside of those key similarities, there can be wide variations in benefits, monthly premiums, deductibles (the amount you must spend on covered care before insurance starts to pay), and coinsurance or copayments (the out-of-pocket costs when you receive covered services or pick up a prescription).
One of the biggest differences between PPOs and HMOs is how they handle medical services with providers outside of the plan’s network:
- PPOs typically pay for covered services, even when you receive them outside of your network, but you’re required to pay more out of pocket for out-of-network services.
- HMOs typically do not pay for out-of-network services, requiring you to pay the full cost for those services.
We’ll cover the pros and cons of each plan type and how to decide which one is right for you.
Ready for a new Medicare Advantage plan?
PPO Medicare Advantage Plans
Preferred Provider Organization (PPO) Medicare Advantage plans are private insurance plans that cover services from both in-network and out-of-network healthcare providers. In recent years, the number of PPO plans has increased; as of 2025, 44% of the available Medicare Advantage plans were PPOs. Unlike HMOs, PPOs do not require you to designate a primary care provider (PCP) or receive referrals to see specialists.
You cannot enroll in both a PPO Medicare Advantage plan and a standalone Part D prescription drug plan. If you don’t have coverage, from another source you should select a PPO plan that includes prescription drug coverage.
Pros of Medicare PPO Plans
- Coverage for out-of-network providers.
- No requirement for referrals to specialists.
- No requirement to designate a primary care provider.
Cons of Medicare PPO Plans
- You may have to pay for out-of-network care up front and file for reimbursement.
- May have higher out-of-pocket costs than an HMO.
- May have higher premiums than an HMO.
HMO Medicare Advantage Plans
Health Maintenance Organization (HMO) Medicare Advantage plans focus on coordinated care within a provider network. In an HMO, you pick a primary care provider who oversees your healthcare and provides referrals to in-network specialists as necessary. HMOs have historically been the most common type of Medicare Advantage plan and still account for 56% of MA plans offered in 2025.
You cannot enroll in both an HMO Medicare Advantage plan and a standalone Part D prescription drug plan, so make sure you choose a plan with the coverage you need.
Pros of Medicare HMO Plans
May have lower premiums.
May have a lower deductible.
Coordinated care via primary care provider.
Cons of Medicare HMO Plans
- May have to change doctors if a preferred provider is out-of-network.
- Limited to in-network providers and facilities.
- Can’t see a specialist without a referral from your PCP.
Which Should You Choose: PPO or HMO?
The choice between PPOs and HMOs depends on your individual needs and financial situation. So how do you know which is the best option for you?
In general, you can think of PPO as the more flexible style of plan.
A PPO might be better for you if:
- You already have doctors you like and don’t want to change providers.
- You want to shop around for doctors.
- You want second or third opinions from multiple specialists.
Compared to the flexibility of a PPO, an HMO is often the more affordable plan, with lower premiums, deductibles, and sometimes even lower copays or coinsurance.
An HMO might be right for you if:
- You don’t already have established relationships with multiple doctors.
- You’re concerned about keeping your coverage affordable.
Reviewing the details of the specific Medicare Advantage plans available in your area can help you decide between an HMO and PPO.
Other Common Types of Medicare Advantage Plans
While PPOs and HMOs are the most common types of Medicare Advantage plans, you may have more specialized options like:
- Health Maintenance Organization-Point of Service (HMO-POS): Certain HMO plans are also “Point of Service” plans. That means you have the option to receive out-of-network services or see a specialist without a referral, but you’ll pay more.These plans typically have higher premium, deductible, and copay/coinsurance costs than regular HMOs and may not set an out-of-pocket maximum for out-of-network services.
- Private Fee-for-Service (PFFS): These plans may or may not have a network and typically pay for covered services at any provider who will accept their terms for payment. Like with other plans, you may pay more for out-of-network care if the plan does have a network.
- Medicare Savings Account (MSA): MSA plans are a combination of a high-deductible plan – you have to pay a certain amount before the plan pays – and a health savings account (HSA). The plan deposits an amount of money in your Medicare savings account at the beginning of the year (or after enrollment) and you can use it to pay for services until you hit your deductible. There’s no provider network in this plan, so you can receive services from anyone who takes Medicare.
- Special Needs Plan (SNP): Special Needs Plans can be PPOs, HMOs, or other types of plans. Medicare has three categories of SNPs: Dual Eligible, Chronic Condition, and Institutional. People who are eligible for the plans receive coverage that’s designed for their specific healthcare needs.
Ready for a new Medicare Advantage plan?
Enrolling In Medicare Advantage
Choosing a Plan
- Find plans in your area – Medicare Advantage plans are unique to your ZIP code. Search for options that are available in your area.
- Set priorities – Make a list of the features that are most important to you, such as affordable monthly premiums, a low deductible, coverage for certain services or drugs, or a provider network that includes your preferred doctors.
- Narrow your plan list – Rule out plans that don’t fit your needs.
- Compare costs and benefits – Once you have a shortlist, dig deeper into the details of each plan.Does one offer lower costs or more robust coverage for benefits you expect to use frequently?
Enrolling in a Plan
Once you’ve picked the Medicare Advantage plan you want, you can enroll directly through an insurance carrier or with a licensed insurance agent who represents multiple carriers. You will probably need information like your email, Medicare number, doctors’ names, and prescriptions.
You can’t join or switch plans at just any time. These are the periods when you can make changes to your coverage:
- Initial Enrollment Period (IEP): The Initial Enrollment Period happens when you first become eligible for Medicare. It usually starts three full months before the month of your 65th birthday and concludes three months afterward.
- Annual Enrollment Period (AEP): The Annual Enrollment Period is every year from October 15 through December 7. This enrollment period is open to all Medicare beneficiaries and allows you to change plans for the coming year.
- Special Enrollment Period (SEP): Special Enrollment Periods happen if your Medicare eligibility has changed or circumstances interfered with your previous enrollment opportunity. For example, getting Medicaid, moving to a new ZIP code, or entering a skilled nursing facility all create SNPs.
Putting It All Together
PPOs and HMOs are the most common types of Medicare Advantage plans. They offer different levels of flexibility and affordability in your healthcare, with PPOs allowing out-of-network care for a higher cost and HMOs focusing on coordinated care within a network. For either type of plan, you should choose one with prescription drug coverage unless you have coverage from another source. A licensed insurance agent can assist you in comparing plans and enrolling in the type that’s best for you.