HMO VS PPO

There seems to be a lot of confusion out there regarding the different types of medicare plans available.  The majority of the plans are going to be either PPO or HMO. 


An HMO is a Health Maintenance Organization, and differs quite a bit from the PPO.  When you are comparing plans this year in 2011 make sure that you are comparing apples to apples.  HMO's are always going to be cheaper than PPO's, and there is a good reason for this.  HMO's are more restrictive than PPO's and are more difficult to use. 

Here are the primary two differences. 

HMO - Requires a referral from the PCP or Primary Care Physician
PPO - Does not require a referral from the PCP

HMO - You must pay 100% of the cost out of network
PPO - You have coverage out of network, but usually pay a higher amount when you are out of network

So, if you don't mind the referral hassle, you can save some money by going the HMO route.  If network is the most important thing to you, than you are probably better off on a PPO unless there is an HMO with an extensive network!  Be sure to check out my post Medicare Advantage Do's and Don'ts for more information on choosing a plan http://www.medicareupdate.info/2010/10/medicare-advantage-dos-and-donts.html