What are HMOs and PPOs?


There are a number of different health insurance plans out there to choose from. You may have noticed that most of them fall into one of two kinds: “HMO” and “PPO”.

Here’s what they stand for: 

  • HMO – health maintenance organization
  • PPO – preferred provider organization

HMOs and PPOs are both forms of managed care plans, as opposed to “fee-for-service” plans. Managed care plans have rules about what doctors their members can see and what medical services are covered by insurance.

What’s the difference between HMOs and PPOs?

Generally speaking, HMOs tend to have lower costs for members, while PPOs tend to have fewer restrictions on seeing doctors:

HMOs will likely have lower premiums, out-of-pocket costs and deductibles, along with a smaller network of doctors and more rules about seeing specialists (such as getting a referral from your Primary Care Physician (PCP).

PPOs will typically have higher premiums, out-of-pocket costs and deductibles, along with a larger network of doctors and fewer rules about seeing specialists.

Virginia Premier, for example, has prioritized lowering costs for members, and so offers HMO health insurance plans instead of PPOs.

Again, these are generalizations, they may not hold true of every particular HMO and PPO health insurance plan. But, for the most part, HMOs offer lower costs, and PPOs offer a larger choice of providers.

Learn more

If you’re a member of Virginia Premier, you can always contact Member Services if you have a question about your health insurance.

And if you’d like to know more about how health insurance helps you with your medical costs (and to stay healthy), see What is Health Insurance and Why is it Important?


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