What Is the Difference Between an HMO Plan and a Medicare Supplement Plan? (2024)

First, let’s start with Original Medicare

Medicare is basic health insurance provided by the Federal governmentfor people 65 and older, and people under 65 who meet certain criteria. When you sign up for Medicare, you are signing up for Part A and Part B. This is the first step to completing your Medicare coverage.

Medicare consists of 4 separate parts:

Part A(Part of Original Medicare offered by the Federal government)
Part B(Part of Original Medicare offered by the Federal government)
Part C(Medicare Advantage plansoffered by private insurance companies)
Part D(Drug coverage offered by private insurance companies)

Why do you need additional coverage?

Many people discover that relying on Original Medicare (Part A and Part B) doesn’t provide enough coverage. With Original Medicare, there are gaps in your coverage. For example, Original Medicare only covers 80% of Part B expenses after the annual Part B deductible is met. The remaining 20% is your responsibility and could add up to thousands of dollars each year. Plus, Original Medicare doesn’t include Part D prescription drug coverage, routine vision and hearing exams, and certain other services.

How does an HMO plan work?

An HMO plan is a Medicare Advantage plan (Part C) that offers everything Medicare covers plus additional benefits such as prescription drug coverage (Part D), vision and hearing exams, preventive dental coverage, and discounts on fitness programs. In addition, Medicare Advantage HMO plans can help save you money with monthly premiums as low as $0 and an out-of-pocket maximum that limits what you pay for medical services in a year.

With a Medicare Advantage HMO plan, you choose a primary care physician, or PCP, to be your main doctor. Your PCP keeps track of all the care you receive and refers you to specialists if needed. Your PCP makes sure you get the care that is right for you. Your PCP can also help you avoid unnecessary expenses such as duplicate tests. This is one of the advantages of an HMO plan, having a team behind you to make sure you are getting the right care.

How does a Medicare Supplement plan work?

A Medicare Supplement plan helps cover the gaps in Original Medicare coverage. With a Medicare Supplement plan, you get coverage for extra benefits not covered with Original Medicare. Plus, you can see any doctor who accepts Medicare. Medicare Supplement plans generally have a higher premium than Medicare Advantage HMO plans, but fewer services require a copayment.

Comparing the two

There is a difference in how you see a doctor.

With a Medicare Advantage HMO plan, you choose a PCP to oversee your care. Your PCP provides referrals to see a specialist when necessary. With a Medicare Supplement plan, you don’t have to choose a PCP. You can see any doctor that accepts Original Medicare, and you don’t need a referral to see a specialist.

The monthly premium amounts are different.

Monthly premiums for Medicare Advantage HMO plans are generally less than Medicare Supplement plans. But Medicare Supplement plans have fewer copays for services. One way to think about it is with a Medicare Supplement plan, you pay upfront, and with an HMO plan, you pay as you go.

Which is right for you?

When determining which plan is right for you, it helps to weigh several factors including your health, your budget, and how you see your doctor.

If you are in good health and want a low monthly premium with prescription drug coverage included, you may want to consider an HMO plan with a $0 or low monthly premium.
If you want to see any doctor and don’t mind paying a higher monthly premium, you may want to choose a Medicare Supplement plan.

At Tufts Health Plan, we have a team of Medicare Experts available to answer all your Medicare questions and help you find the plan that’s right for you. Tufts Health Plan offers both HMO plans and Medicare Supplement plans. Just call 1-800-890-6600(TTY: 711).

You can also compare plans on our website.

Medicare Advantage plans (Part C) offer additional coverage not included with Original Medicare such as prescription drug coverage, vision and hearing exams, preventive dental coverage, and discounts on fitness programs. Plus, many Medicare Advantage plans include Part D prescription drug coverage.

In addition, Medicare Advantage plans can help save you money with monthly premiums as low as $0 and an out-of-pocket maximum that limits what you pay for medical services in a year.

With Original Medicare, there are gaps in your coverage. For example, Original Medicare has deductibles and does not have a limit on out-of-pocket spending. Original Medicare doesn’t cover Part D prescription drugs, routine vision and hearing exams, and certain other services. In order to have enough coverage, many people choose to enroll in an HMO plan or a Medicare Supplement plan.

What are the advantages of an HMO plan?

Many people choose an HMO plan because it covers everything Original Medicare covers plus additional benefits. HMO plans generally have lower monthly premiums than Medicare Supplement plans and are available with prescription drug coverage, so you can have medical and drug coverage in one plan. With an HMO plan, you have a primary care physician, or PCP, who keeps track of all your care and refers you to specialists.With an HMO plan, you have a team behind you to make sure you get the right care.

What about a Medicare Supplement plan?

A Medicare Supplement plan will help covergaps in Original Medicare. Generally, Medicare Supplement plans have higher monthly premiums than HMO plans, but you can see any doctor who accepts Medicare. However, with a Medicare Supplement plan, you would need to purchase a separate prescription drug plan if you want prescription drug coverage.

How do I know which plan option is the right fit?

When deciding whether to choose an HMO plan or a Medicare Supplement plan, it’s helpful to consider several factors:

Your health – How many times a year do you visit a doctor, specialist, or hospital? If you are in good health, you may want to consider a plan with a $0 or low monthly premium. If you see your doctor more frequently, you may want a plan with a higher monthly premium in exchange for lower doctor visit copays.
Your budget – Do you want to pay less each month or pay less when you visit a doctor? You’ll want a plan that provides you with the right amount of coverage and still meets your budget. Generally, you’ll pay lower monthly premiums with HMO plans than with Medicare Supplement plans, but with Medicare Supplement plans, fewer services require a copayment. Alsoworth considering is that HMO plans provide what’s known as an out-of-pocket maximum that protects you by limiting the amount you would have to spend on medical costs in a year. With Original Medicare and Medicare Supplement plans, there is no limit to how much you may have to pay out of pocket in a year.
Your doctor – Choosing an HMO plan means you have a PCP who works together with a team of specialists to help you stay healthy and get the care that is right for you.With a Medicare Supplement plan, you don’t have a PCP, but you can see any doctor that accepts Original Medicare.
Drug coverage – With an HMO plan, you can have Part D prescription drug coverage and medical coverage all in one plan. With a Medicare Supplement plan, if you want prescription drug coverage, you would need to enroll in a separate prescription drug plan.

But, no matter which plan you choose, it’s important to sign up for prescription drug coverage when you are first eligible to avoid paying a penalty assigned by Medicare.

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FAQs

What Is the Difference Between an HMO Plan and a Medicare Supplement Plan? ›

With a Medicare Advantage HMO plan, you choose a PCP to oversee your care. Your PCP provides referrals to see a specialist when necessary. With a Medicare Supplement plan, you don't have to choose a PCP. You can see any doctor that accepts Original Medicare, and you don't need a referral to see a specialist.

Read On ›

Is it better to have an HMO or PPO for a medicare advantage plan? ›

Generally speaking, an HMO might make sense if lower costs are most important and if you don't mind using a PCP to manage your care. A PPO may be better if you already have a doctor or medical team that you want to keep but doesn't belong to your plan network.

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Is HMO a supplemental plan? ›

What's an HMO? A type of Medicare-approved health plan from a private company that you can choose to cover most of your Part A and Part B benefits instead of Original Medicare. It usually also includes drug coverage (Part D).

What are three disadvantages of HMO? ›

Disadvantages

If you need specialized care, you will need a referral from your primary care physician to an in-network provider.
Must see in-network providers for care-less flexibility than a PPO plan.

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Why do doctors prefer PPO over HMO? ›

Doctors often prefer PPOs because they offer greater reimbursem*nt rates compared to HMOs and have less administrative paperwork. Is a PPO a good thing? For many, a PPO's flexibility and coverage make it a favorable choice, but it comes with higher premiums.

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Why are people leaving Medicare Advantage plans? ›

Network restrictions are another common reason why beneficiaries leave their Medicare Advantage plans. With Medicare Advantage plans, staying within your policy's network is key to paying the lowest possible costs for health services. Going out of your network could mean high fees or no coverage.

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Why do people say not to get a Medicare Advantage plan? ›

In some cases, you'll have a higher share of costs when you see an out-of-network doctor. In other cases, you're not covered at all if you go out of network. This is particularly important if you travel a lot because Medicare Advantage plans generally don't provide out-of-state coverage.

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Why do doctors not like HMO? ›

HMO plans might involve more bureaucracy and can limit doctors' ability to practice medicine as they see fit due to stricter guidelines on treatment protocols. So just as with patients, providers who prefer a greater degree of flexibility tend to prefer PPO plans.

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What is the primary problem with an HMO? ›

Cons Explained

No specialist visits without a referral: You'll need referrals for any specialists if you want your HMO to pay for those visits. If you need to visit a rheumatologist or a dermatologist, for example, your PCP must make a referral before you can see one for the plan to pay for your visit.

Should I avoid HMO? ›

HMO plans tend to be more affordable with lower monthly premiums and lower out-of-pocket costs — unless you see an out-of-network provider. You will also likely not have to file a claim, since you are seeing physicians in your network and your insurance provider will work with your healthcare providers directly.

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Is Blue Shield PPO better than HMO? ›

Is an HMO or PPO better? An HMO is better if you're looking for cheaper health insurance costs, but a PPO is superior if you want the option of out-of-network care and don't want to get primary care physician referrals to see a specialist.

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Should I switch from PPO to HMO? ›

HMO plans are generally less expensive than PPO plans, with lower monthly payments, making them ideal if your favorite doctors are already in the network, or if you receive most of your care close to home.

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Are HMOs good or bad? ›

HMOs are more budget-friendly than PPOs. HMOs usually have lower monthly premiums. Both may require you to meet a deductible before services are covered, but it's less common with an HMO. With a PPO, your monthly premiums may be higher, but you will have some coverage if you go out-of-network.

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What is the main advantage of choosing a PPO plan over an HMO plan? ›

Compared to PPOs, HMOs cost less. However, PPOs generally offer greater flexibility in seeing specialists, have larger networks than HMOs, and offer some out-of-network coverage.

What is the most highly rated Medicare Advantage plan? ›

Best Medicare Advantage Plans

Best Overall: AARP/UnitedHealthcare.
Lowest Cost: Cigna.
Great for Nationwide Coverage: Humana.
Best for Additional Drug Coverage in the Gap: Aetna.
Best for Quality and Customer Satisfaction: Kaiser Permanente.

What does the PPO mean on Medicare Advantage? ›

A Preferred Provider Organization (PPO) Plan is a Medicare Advantage Plan that has a network of doctors, specialists, hospitals, and other health care providers you can use.

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What are the pitfalls of a Medicare Advantage plan? ›

Potential risk in the long run: With MA, you can end up paying more — especially if you spend a lot of time in the hospital. Also, costs can escalate as you get older. Some MA plans also have an additional premium beyond what you pay for Medicare Part B.