When you’re deciding whether Medicare Advantage is the right fit for your health and financial goals, you may benefit from learning about the different types of plans that are offered. There are a few different types, including HMO, PPO, PFFS, and SNP. We’ll also offer a comparison of HMO vs. PPO, the two most common plan types.
Health Maintenance Organization (HMO)
A Medicare HMO is a type of Medicare Advantage plan that offers coverage through a network of providers, as well as an out-of-pocket maximum. This is a popular plan type because of the convenience of having all of your providers in a single network, as well as a cap on how much money you will pay out-of-pocket. Because you must stay within your network to stay covered, many HMO plans will have you select a primary care physician. Most HMO plans offer prescription drug coverage and require you to get a referral to see a specialist. You will always be covered in an emergency, even if you are outside of your network.
Preferred Provider Organizations (PPO)
A Medicare PPO is a Medicare Advantage plan that offers coverage for healthcare providers and services both in- and out-of-network. Because you don’t need to visit a doctor or provider within your network, you do not need to choose a primary care physician or have a referral to see a specialist. It’s typically more cost effective to see a preferred in-network provider, but you can still visit an out-of-network provider for a higher cost, as long as the provider accepts Medicare. Most PPO plans include prescription drug coverage, and you are always covered in case of an emergency.
Private Fee-for-Service (PFFS)
Medicare PFFS is a Medicare Advantage plan. These plans determine how much you pay for each service. Providers can choose whether they will accept your PFFS plan’s terms on a visit-to-visit basis so when you visit a hospital, physician, or specialist, it’s important to confirm they will accept your plan’s terms prior to each visit. Because you can go to any Medicare-approved provider, you don’t need to select a primary physician or get a referral to see a specialist. You will always be covered in case of an emergency.
Special Needs Plan (SNP)
Medicare Advantage SNPs are only available if you have a special circumstance, disability, or disease. For example, being dual eligible or having End-Stage Renal Disease may qualify you. All Special Needs Plans offer prescription drug coverage. Due to the nature of the plan, most SNPs have a network of specialists that target the specific type of need. In most cases, you will need to select a primary care physician and get a referral to see a specialist.
How do you choose?
There are many factors that go into deciding which Medicare Advantage plan type is for you. Important things to consider include:
- Primary care physician
- Prescription drug coverage
- Referrals for specialists
HMO vs. PPO
Medicare Advantage HMO and PPO plans are the most common plan types. Let’s compare HMO vs. PPO using the metrics for consideration above, including network, primary care physician, prescription drug coverage, referrals for specialists, and cost:
Most HMO Plans…
- Require you to visit doctors and receive services within a set network of providers
- Require you to select a primary care physician.
- Typically provide prescription drug coverage.
- Require a referral from your primary care physician to see a specialist.
- Are generally less expensive with lower deductibles but come with tighter restrictions.
Most PPO Plans…
- Offer flexibility to choose providers in-network or out-of-network.
- Do not require you to select a primary care physician.
- Typically provide prescription drug coverage.
- Do not require referrals from your primary care physician to see a specialist.
- Are generally more expensive but choosing providers in-network keeps costs down.
As for all plans, some HMO or PPO plans may vary slightly in what’s offered or covered, so it’s best to check with the specific plan you are considering before committing.
There are other plan types, but they are significantly less common. Alternative Medicare Advantage plans include:
- Medicare Medical Savings Account (MSA): A high-deductible plan that offers money deposited in a medical savings account. You can use this account to pay for your health services. The amount deposited is often less than the deductible amount, which means you will be paying out-of-pocket until you’ve met your deductible.
- Health Maintenance Organization Point-of-Service (HMO POS): These plans may let you obtain coverage out-of-network for a higher out-of-pocket cost.
Annual Enrollment Period (AEP)
Medicare Annual Enrollment Period runs each year from October 15 to December 7. What is the Annual Enrollment Period vs. Open Enrollment Period?
Initial Enrollment Period (IEP)
Your Initial Enrollment Period generally surrounds your 65th birthday but may occur if you otherwise become eligible for Medicare for the first time.
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Last Updated: October 13, 2023