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When you are searching for health coverage through Covered California, your employer or directly from a health insurance company, you want to make sure there’s a plan available that meets your health needs, allows you to see your preferred doctors or specialists, and works with your budget. The most common choice you’ll have is between a health maintenance organization (HMO) plan and a preferred provider organization (PPO) plan.
HMO (Health Maintenance Organization)
If you have an HMO, your insurance coverage is usually limited to care from a group of medical insurance providers that limit coverage to medical care provided through doctors and other providers who are under contract with the HMO.
If you receive care in the network, you’re covered.
If you go to someone outside the network, you have to pay out-of-pocket.
Also, if you want to see a specialist, you are required to get a referral from your primary care doctor. This may mean having to pay an additional copay for a primary care doctor with the copay you’ll need to pay to see a specialist. Prior authorization and network requirements don’t normally apply to emergency care, such as having a stroke.
An HMO is right for you if you're fine requiring a primary care doctor to coordinate your care. Sometimes this has the advantage of a lower premium.
PPO (Preferred Provider Organization)
With PPO plans, you’re typically paying more, but offers you the freedom to receive care from any provider—in or out of your network. PPO plans require higher cost-sharing (like copays) when you see doctors outside their network of preferred doctors, but you generally pay less if you use providers that are in the network because they have negotiated lower rates with your insurance company. No referrals are required for any doctor, specialist or hospital.
A PPO is right for you if… You’re willing to pay higher out-of-pocket costs for more health care choices.
| HMO | PPO |
Cost | Lower monthly premiums, lower out-of-pocket costs, which may or may not include a deductible | Higher monthly premiums, higher out-of-pocket costs, including deductibles |
Network Coverage | In-network only (except for medical emergencies or if care isn’t available in the network) | Flexibility to see providers both in- and out-of-network |
Referrals | To see a specialist, a referral from a primary care doctor may be required | None — specialist referrals aren’t required, and you don’t need a primary care doctor |
Is an HMO or a PPO plan better?
If you prefer to have your care coordinated through your primary care doctor, an HMO plan might be right for you. And if you want greater flexibility and the ability to see specialists without a referral, a PPO plan might be what you’re looking for.
What to consider when choosing a health insurance plan
As you’re changing jobs and deciding between HMO and PPO health plans, your first step is to ask questions. Based on your health care needs and the information above, come up with a list of questions for your insurance agent. You should consider things like deductibles and out-of-pocket costs and whether you want to continue seeing your current doctor or team of specialists. An EnrollCA agent can help provide a chart that compares the details of the specific plans they offer and give you advice on provider networks.
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