Key takeaways
- Medicare Advantage (Part C) plans are offered through private insurance companies and combine Medicare Part A and Part B benefits, often including Part D prescription drug coverage.
- HMO plans typically require you to choose a primary care physician and obtain referrals to see specialists within the network, while PPO plans offer more flexibility to see out-of-network providers at a higher cost.
- When deciding between an HMO and PPO plan, consider your healthcare needs, financial situation, and preference for in-network versus out-of-network flexibility to determine the best fit for your individual circumstances.
Medicare Advantage (Part C) is a popular option for beneficiaries who want all their Medicare coverage options under one plan.
There are various types of Medicare Advantage plans, including Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs).
Medicare Advantage PPO plans offer flexibility for people who want to use both in-network and out-of-network healthcare professionals. Under a PPO plan, choosing a primary care physician (PCP) isn’t required, nor is a referral for specialist visits.
However, that flexibility comes at a higher cost.
With a PPO plan, you’ll pay less for services from in-network professionals and more for services from out-of-network professionals.
Coverage
Medicare PPO plans generally cover all the services that Medicare Advantage plans cover, including:
Depending on the plan, you may also be covered for dental, vision, and hearing visits.
If you receive hospital or medical services under a PPO plan, using in-network healthcare professionals can help you avoid paying higher fees. Since each Medicare Advantage PPO plan is different, you’ll need to research the specific plans offered in your area to find out exactly what else is covered in each individual plan.
Costs
Medicare Advantage PPO plans have the following costs:
- Plan-specific premium
- Medicare Part B premium
- In-network deductible
- Drug deductible
- Copayments
- Coinsurance
Unlike Original Medicare (parts A and B), Medicare Advantage PPO plans also have an out-of-pocket maximum. This amount varies by plan, professional, and location.
With a PPO plan, you will owe additional fees for seeing out-of-network professionals. This means that if you choose a PCP, visit a hospital, or seek services from a healthcare professional who isn’t in your PPO network, you may pay more than the average costs listed above.
Medicare Advantage HMO plans don’t offer as much healthcare professional flexibility as a PPO, except for emergencies, out-of-area urgent care, and dialysis. In some cases, you may also be able to use out-of-network professionals, but you’ll pay 100% of the services yourself.
Under an HMO plan, you’re required to choose an in-network PCP and will also be required to have a referral for in-network specialist visits.
Coverage
Like PPO plans, HMO plans cover all the services that Medicare Advantage plans usually cover. Each plan also has a list of included extras, such as gym memberships, hearing aid coverage, and transportation to medical appointments.
Costs
Medicare Advantage HMO plans have the same baseline costs as PPO plans, including the monthly plan and Part B premiums, deductibles, copayments, and coinsurance. As required by law, your HMO plan will also have a yearly out-of-pocket maximum on costs you owe.
Since HMO plans require that you seek in-network services, you generally won’t have to manage additional fees unless you decide to use out-of-network professionals. In emergency situations, you may owe additional costs, but you’ll need to check with your plan to see the fees.
There are a lot of similarities between Medicare Advantage PPO and HMO plans, such as the costs of premiums, deductibles, and other plan fees. Most differences between the two types of plans are primarily based on coverage and costs of in-network and out-of-network services.
Below is a comparison chart outlining the coverage and costs of each plan.
| Will I have in-network professionals? | Can I use out-of-network professionals? | Is a PCP required? | Do I need specialist referrals? | Are there standard plan costs? | Are there additional costs? | |
|---|---|---|---|---|---|---|
| PPO | Yes | Yes, but may cost more | No | No | Yes | For out-of-network services |
| HMO | Yes | no, except for emergencies | Yes | Yes | Yes | For out-of-network services |
No matter what type of Medicare Advantage plan you choose, always pay close attention to the specific coverage options and costs associated with the plan you choose. Because Advantage plans are offered by private insurance companies, they may differ in what they can offer and what they decide to charge.
Choosing the best Medicare Advantage plan depends entirely on your personal medical and financial situation. What works for another person may not work for you, so it’s important to do your research on the plans in your area.
Here are a few things to consider when choosing whether to enroll in a PPO or HMO Advantage plan:
- Professional networks: If you value healthcare professional flexibility, a PPO plan may be your best option. If you’re comfortable using only in-network professionals, an HMO plan may be a suitable option and could be more cost-effective.
- Coverage: Your coverage options vary by plan, but there is usually no significant difference between the coverage options of most PPO and HMO Advantage plans.
- Costs: Medicare Advantage PPO and HMO plans differ in their costs depending on the state you live in and the type of coverage you’re looking for. There may be additional costs associated with your plan, depending on whether you stay in network or not.
- Availability: Medicare Advantage plans are location-based, meaning that you must enroll in the state in which you currently live and receive medical services. Some private companies offer only one type of plan, while others provide multiple options to choose from.
Medicare Advantage PPO and HMO plans are a great insurance option for individuals seeking comprehensive Medicare coverage under a single plan.
While there are similarities between the two types of plans, there are also differences in availability, coverage, and cost.
When choosing the best Medicare Advantage plan structure for you, make sure to consider your healthcare professional preferences, financial situation, and medical needs.