The rise of Medicare Advantage plans offers seniors new choices within the complex framework of Medicare options. From personalized care preferences to expanded benefits, more than half of Medicare beneficiaries, or 30.8 million people, have selected Medicare Advantage plans, according to the Kaiser Family Foundation (KFF).
Medicare Advantage plans, also known as Part C, typically come with HMO or PPO options that are administered by private insurance companies. These plans are mandated by law to provide the same benefits as original Medicare (Part A and Part B), but frequently include additional benefits like vision or dental coverage.
Medicare Advantage HMOs and PPOs have distinct network and cost choices, so it’s essential to understand these differences to determine the most suitable option based on your budget and health care needs.
HMO vs. PPO With Medicare: What’s the Difference?
Choosing a PPO plan versus an HMO plan really comes down to what is available in your area and if you want lower costs or more flexibility. Unlike original Medicare, which is standard across the country, Medicare Advantage plans vary by geographical location and can have different benefits.
What is an HMO?
A health maintenance organization, or HMO, commonly offers lower-cost plan options but with limited choices of doctors and health care facilities within the plan’s network. You choose a primary care physician who then coordinates and approves specialist referrals and prior authorizations.
“HMOs tend to have a restrictive network of providers and will generally not cover nonemergent or nonurgent services provided outside of that network,” says David Lipschutz, an associate director at the Center for Medicare Advocacy in Washington, D.C.
Depending on the plan, if you do not use doctors or facilities in-network, you could be responsible for the expenses. So, check carefully if a doctor is in-network before scheduling a visit.
“Some HMOs, however, have a point-of-service option that allows a beneficiary to see providers outside of the network, but for a higher cost,” says Kelli Jo Greiner, a health care policy analyst with the Minnesota Board on Aging in St. Paul, Minnesota.
These HMO subtype plans encourage using in-network providers to keep your costs low, but out-of-network services may be used at a higher out-of-pocket cost.
What is a PPO?
Preferred provider organizations, or PPOs, tend to have higher costs than an HMO, but in exchange they give you access to a larger selection of doctors and health care facilities. You have the flexibility to use providers both in-network and out-of-network without a referral.
“PPOs tend to have a network of ‘preferred’ providers but allow enrollees to see providers outside of the network, usually with higher cost-sharing attached,” Lipschutz says.
A PPO may be a better choice for you if you already have doctors in place that you’d like to continue with but they do not participate in a plan’s network. Every plan is different no matter if it’s an HMO or PPO, so always check with your health insurance company to confirm what your plan offers.
[READ Medigap vs. Medicare Advantage: Which Should You Buy?]
HMO vs. PPO: Key Similarities and Differences
| HMO | PPO | |
| Monthly premium | Plan dependent, but typically lower premiums | Plan dependent, but typically higher premiums |
| Out-of-pocket costs | Typically lower out-of-pocket expenses | Typically higher expenses in exchange for more flexibility |
| Primary Care Doctor | Yes | No |
| Specialist referral | Yes | No |
| Deductible | Typically, but the amount is plan dependent | Typically, but the amount is plan dependent |
| Out-of-pocket maximum | The threshold is lower, but the amount is plan dependent | The threshold is higher, but the amount is plan dependent |
| Drug coverage | Typically, but medications covered and associated out-of-pocket expenses are plan dependent | Typically, but medications covered and associated out-of-pocket expenses are plan dependent |
| Supplemental benefits | Often, but plan dependent | Often, but plan dependent |
[Read: Medicare Advantage vs. Medicare Cost Plans: What’s the Difference?]
How to Choose Between an HMO and a PPO
In 2023, the average Medicare enrollee had an average of 43 different plans to choose from, according to the KFF. When considering a Medicare Advantage HMO or PPO plan, individuals should evaluate factors including:
— Copayments.
— Deductibles.
— Extent of health care provider network.
— Maximum out-of-pocket costs.
— Monthly premium expenses.
While a plan may check all of your boxes, how do you know that which insurance company to choose from? Each year, the Centers for Medicare & Medicaid Services (CMS) releases the Medicare Advantage star ratings, which evaluate the quality of health care services provided by Medicare Advantage insurance companies. This ratings system enables Medicare beneficiaries to compare the quality of available Medicare Advantage health plans, helping them to make decisions that align with their needs.
The U.S. News Honor Roll of Best Medicare Advantage Plans uses the CMS star ratings to analyze more than 344 insurance companies’ 6,000-plus Medicare Advantage plans nationwide. It breaks down by state and ZIP code which plans have the highest 2024 CMS star ratings to help you make an informed choice.
Here is a snapshot of some of the largest and top-rated companies:
Aetna Medicare Advantage
Aetna offers HMO and PPO Medicare Advantage plans. According to the KFF, Aetna accounts for 11% of the Medicare Advantage market, covering 3.3 million enrollees nationwide. Aetna offers plans in 46 states. In the 2024 CMS star ratings for member experience, Aetna came in at 3.8 out of 5 stars, which is above the average of 3.5 stars for member experience.
Some advantages to Aetna plans include:
— About 55% of its plans come with a zero-dollar premium.
— Around 83% of Aetna plans offer prescription drug coverage for name-brand and generic drugs.
— Some plans offer over-the-counter (OTC) benefits, fitness benefits, a meals-at-home program and basic dental, vision and hearing.
Blue Cross Blue Shield Medicare Advantage
In 2024, Blue Cross Blue Shield (BCBS) offers coverage in 39 states, with HMO and PPO plans available. BCBS accounts for 4.4 million, or 14%, of Medicare Advantage enrollment, according to the KFF.
BCBS Medicare Advantage plans had an average overall rating of 3.7 stars out of 5 from the CMS. This rating falls below the national average of 3.9. Similarly, BCBS received a rating of 3.7 stars from CMS for plans including drug benefits, also below the national average. As for member experience, they achieved a rating of 3.4 stars, slightly lower than the national average of 3.5 stars.
Some advantages to BCBS include:
— For some plans, the annual drug deductible of $40 is the lowest among major carriers.
— It’s the only large carrier offering plans with a zero-dollar maximum for out-of-pocket expenses within your network.
— Some plans feature an allowance for expenses such as medical costs, utility bills or food.
Cigna Medicare Advantage
Cigna offers both HMO and PPO plans. Cigna accounts for 600,000, or 2%, of Medicare Advantage enrollees nationwide, according to the KFF. Its plans are offered in 29 states nationwide.
Cigna’s Medicare Advantage plans ranked below the national average of 3.9 out of 5 stars, coming in at 3.5. According to U.S. News analysis, Cigna’s prescription drug plan and member experience ratings are also the lowest among the top five carriers.
Some advantages to Cigna plans include:
— More than 60% of plans have no premium.
— Plans can include allowances for both preventive and comprehensive dental care, hearing exams with an allowance for hearing aids and vision benefits with an allowance toward eyewear.
— Many plans have no prescription drug deductible.
Humana Medicare Advantage
Humana offers both HMO and PPO options. Humana accounts for 18% of Medicare Advantage enrollment, or some 5.5 million retirees. Plans are offered in 49 states as well as Washington, D.C., and Puerto Rico.
For 2024, U.S. News named Humana the Best Overall Medicare Advantage Plan Company. While the national average is 3.9, Humana’s plans received an overall average of 4.3 out of 5 stars in the CMS star ranking.
Some advantages to Humana plans may include:
— Drug deductibles start as low as $100.
— Some plans have an out-of-pocket maximum as low as $500.
— Nearly all plans come with vision, hearing, dental and fitness benefits.
— Offers the highest percentage of plans with benefits for OTC medications.
Kaiser Medicare Advantage
Depending on the state, Kaiser Permanente offers HMO and HMO-POS (point of service) plans. Although Kaiser is only available in nine states (California, Colorado, Georgia, Hawaii, Maryland, Oregon, Virginia, Washington and Washington, D.C.), it accounts for 6%, or 1.8 million, of Medicare Advantage enrollees, according to the KFF.
Some advantages to Kaiser plans include:
— Many plans come with drug benefits.
— Some plans come with dental care, hearing aids and eyewear coverage for an additional fee, but routine hearing, vision and dental exams tend to be free with all plans.
— Below-average drug deductibles.
United Healthcare Medicare Advantage
United Healthcare offers both Advantage HMO and PPO plan options. Operating in 48 states and Washington D.C., it is the single largest Medicare Advantage provider in the country, according to the KFF, accounting for 29% of all Medicare Advantage enrollment in 2023.
In the CMS star rankings, United Healthcare earned 4 out of 5 stars, making it the second-highest-rated insurance company after Humana. U.S. News also rated United Healthcare as the 2024 Best Medicare Advantage Company for Drug Plans.
Some advantages to United Healthcare plans include:
— Nearly half (48%) of plans are premium-free in 2024, and these plans come with drug benefits.
— About 70% of plans with drug benefits have a zero-dollar deductible for medications.
— No copays for primary care visits, virtual visits and lab tests.
[READ: Medicare Mistakes to Avoid.]
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Medicare Advantage HMOs vs. PPOs: Which Is Right for You? originally appeared on usnews.com
