Health insurance is important for your physical and financial health. However, choosing the right plan can quickly become complicated. The two basic types of health insurance available today are Health Maintenance Organizations, or HMOs, and Preferred Provider Organizations, or PPOs. Let’s take a look at these two types of insurance, and which might be right for you or your employees.

What is an HMO?

An HMO, or Health Maintenance Organization, has a network of approved providers. The organization has agreements with these providers. The HMO will pay a specific price for each service offered by the healthcare provider. Healthcare organizations agree to discounted rates to become a part of the network.

If you use a provider who isn’t in the network, the care won’t be covered by the HMO plan, unless it’s an emergency. You’ll pay a monthly fee and a copay for any healthcare services you receive. You’ll typically need a referral from your primary care provider to see a specialist.

What is a PPO?

A PPO, or a Preferred Provider Organization, offers more flexibility. They also have a network of providers, and have agreements with these providers.

However, there’s a key difference. The PPO has a set amount they will pay for each service. The in-network providers have agreed to these prices. If you go out of network, the PPO will cover a set amount for services. If the provider you see charges more, you’ll need to pay the difference, along with your copay. Some services offered by out-of-network providers may not be covered in your PPO plan. PPOs typically don’t require a referral to see a specialist.

Similarities Between HMOs and PPOs

There are some similarities between HMOs and PPOs you should be aware of.

In-Network Providers

Both HMOs and PPOs have in-network providers. When you see an in-network provider, you’ll have lower out-of-pocket expenses.

Co-pays and Monthly Premiums

Both plans require you to pay a monthly premium and a copay for visits and services. Some plans will also require you to pay a deductible before the plan begins to pay for your healthcare.

Key Differences Between HMOs and PPOs

HMOs and PPOs have many similarities, but there are a few key differences to keep in mind.


The first difference is flexibility. HMOs don’t offer very little flexibility. You can choose your primary doctor, as long as they are in-network. However, you won’t have coverage if you see an out-of-network provider, unless it’s an emergency. If you need to see a specialist, you will need a referral.


The other major difference between the two is affordability. HMOs typically have lower deductibles, copay, and monthly premiums. However, it’s important to keep in mind that the costs will vary based on your plan.

PPOs typically have higher out-of-pocket costs, particularly copay and monthly premiums. They may have a higher deductible as well.

Primary Care Providers

An HMO plan requires you to choose a primary care provider or PPO. You’ll see this doctor for your basic healthcare needs. This does limit your flexibility. However, it also means you have a doctor overseeing your medical care.

A PPO plan doesn’t require you to have a primary healthcare provider. However, it is recommended. A primary care doctor gets to know you and your health, which allows them to help you make the best healthcare decisions.

Health Insurance with Margolis and Associates

Are you looking for affordable health insurance plans in NYC? Contact us at Margolis and Associates. We offer health insurance coverage for individuals and businesses in New York City. Our insurance brokers can help you choose the best NYC employee health benefits for your company.