Medicare Advantage HMO vs PPO in 2027: We Counted What Each One Actually Costs

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Everyone explains the difference between an HMO and a PPO the same way, and the explanation is correct as far as it goes: an HMO keeps you inside its network and usually wants a referral; a PPO lets you go outside it and pay more. Our own guide to how the two plan types work walks through the mechanics properly.

What nobody does is put a number on it. “Pay more” how much more? Twenty dollars a year? Two thousand?

So we counted. Every Medicare Advantage plan on sale for 2027, from the CMS plan file, sorted by plan type. The freedom to go out of network turns out to have a fairly precise price, and it’s charged to you twice — once every month, and once in the year you get sick.

The Short Version

• The average PPO charges $31.89 a month. The average HMO charges $20.74. That’s $134 a year.
• The median PPO caps your in-network spending at $7,150. The median HMO caps it at $5,700. That’s $1,450 of extra exposure in a bad year.
• 15.8% of PPOs sit at the $9,850 legal maximum, against 7.2% of HMOs. More than twice as likely.
• On quality it is the other way around for 2027. On the new star ratings, 74.6% of PPOs reach four stars or more, against 60.7% of HMOs — a reversal from 2026.
• And yet PPOs are sold in almost exactly as much of the country as HMOs are.

None of that makes the PPO a bad choice. It makes it an expensive one, and the cost is worth knowing before you decide whether you need what it buys.

First, Why We Took the Special Needs Plans Out

This one matters, because leaving them in would have quietly flattered the PPOs and we’d never have noticed.

More than a third of Medicare Advantage plans are special needs plans, which you can only join if you qualify. They’re overwhelmingly HMOs, and most of them sit right at the legal out-of-pocket ceiling — for reasons that are perfectly sensible, since their members usually have Medicaid covering the cost-sharing.

Count them in and the HMO figures get dragged toward the ceiling: the median HMO out-of-pocket limit goes from $5,700 to $6,700, and the share of HMOs at the legal maximum jumps from 7.2% to 29.1%. That’s not a fact about HMOs. It’s a fact about special needs plans wearing HMO clothes.

So every figure below is worked out over the 3,541 ordinary plans — the ones anyone with Medicare in that county can join. That’s 2,115 HMOs and 1,426 PPOs, apples to apples.

The Two Plan Types, Side by Side

Ordinary plans on sale for 2027	HMO	PPO
Plans	2,115	1,426
Mean monthly premium	$20.74	$31.89
Plans with no monthly premium	72.5%	56.3%
Median out-of-pocket limit	$5,700	$7,150
Same limit in 2026	$4,900	$6,700
Plans at the $9,850 legal ceiling	7.2%	15.8%
Mean star rating, 2027	3.86	3.92
Rated plans at four stars or better, 2027	60.7%	74.6%
Same share for 2026	68.5%	51.3%

On money, every row goes the same way: the PPO is behind on price and behind on protection at once, which is unusual — normally a market makes you trade one thing for another. The star rows are the exception, and they changed sides this year. On the 2026 ratings HMOs were clearly ahead; on the 2027 ratings, which CMS published on October 8, 2026, ordinary PPOs are.

The $1,450 You Don’t See

The premium gap is the one people notice, and it’s the smaller of the two. Eleven dollars and fifteen cents a month is a couple of coffees. Over a year it’s $134.

The out-of-pocket gap is the one that decides what happens to you in a bad year, and it’s $1,450 — almost eleven times the annual premium difference. If you have a year with a hospital stay and a run of specialists, the median HMO stops taking your money at $5,700 and the median PPO keeps going to $7,150. Both figures are worse than they were a year ago: the HMO limit rose $800 and the PPO limit $450, so the gap narrowed from $1,800 because HMOs lost ground faster, not because PPOs improved.

And look at the ceiling row again, because it’s the sharpest number here. Only one HMO in fourteen leaves you exposed all the way to the $9,850 legal maximum. One PPO in six does. If you pick a PPO at random you’re more than twice as likely to end up in a plan that offers the least protection the law permits.

That’s the number to check on the plan in front of you, and it’s printed on every summary of benefits. We’ve written separately on why the out-of-pocket maximum tells you more than the premium does — this is another case of the same thing.

So What Does the Extra Money Buy?

One thing, and it’s a real thing: the right to see a doctor who isn’t in the plan’s network, and usually the right to see a specialist without a referral first.

Whether that’s worth $134 a year plus $1,450 of extra exposure depends entirely on facts about your own life that no national average can tell you. It’s worth it if you split the year between two states, or travel a lot, or have a specialist you refuse to give up who isn’t in any local network, or live somewhere with one hospital system that keeps falling in and out of contracts.

It’s not worth it if you see the same three doctors, they’re all in the HMO’s network, and you were going to stay in network anyway. A lot of people buy the PPO as insurance against a possibility they’ll never use — and the out-of-network coverage itself usually comes with its own, higher out-of-pocket limit on top of the in-network one, which is a detail worth reading on the specific plan.

The honest summary is that the PPO is a product for people with a specific problem, sold to a great many people who don’t have it.

The Ratings Changed Sides

When we first counted this, the ratings leaned the same way as the money. On the 2026 ratings, 68.5% of ordinary HMOs reached four stars or better against 51.3% of PPOs, and we offered a tentative explanation: that the things CMS measures — preventive screening, medication adherence, follow-up after discharge — are easier to get right inside a tightly managed network.

The 2027 ratings do not support it. 74.6% of ordinary PPOs now reach four stars, against 60.7% of HMOs, and the mean has flipped too, 3.92 against 3.86. Part of that is one insurer: Humana, which sells more PPOs than anyone, saw its ratings jump for 2027 and carried the PPO average with it — though even leaving Humana out, 69.1% of the remaining PPOs reach four stars, still ahead of HMOs. Which is the useful lesson here. CMS rates contracts, not plan types, so a type-level average moves whenever a few large insurers’ contracts move — and it tells you little about the specific plan in front of you.

So do not choose an HMO or a PPO for its rating. Choose the type on network and money, as the rest of this article sets out, and then read the 2027 rating of the specific plan.

Where Each One Is Actually Sold

Here’s the part that surprised us most. Given everything above, you’d expect HMOs to be the default everywhere and PPOs the specialist option. Geographically the two are almost level.

• HMOs are sold in 3,038 of the 3,131 counties — 97.0%.
• PPOs are sold in 3,026 — 96.6%.
• 84 counties have only PPOs. In those, the choice doesn’t exist.
• 96 counties have only HMOs.

An HMO needs a network built on the ground: contracted doctors, contracted hospitals, somebody managing it. A PPO can be sold into a thin market by simply agreeing to pay out-of-network rates. That’s why some of the thinner corners of the country end up PPO-only, and it’s the same pattern our state-by-state analysis shows from a different angle. It is also shifting: a year ago PPO-only counties outnumbered HMO-only ones, and for 2027 it is the other way around, because there are 165 fewer ordinary PPOs on sale than in 2026 and only 24 fewer HMOs.

So if you live in one of those 84 counties, this whole article is background reading rather than a decision. Compare PPOs against each other and put your attention on the out-of-pocket column, because that’s where the spread is.

The Third Plan Type Nobody Mentions

There’s a third kind still technically on sale, the Private Fee-for-Service plan, and the file says everything you need to know about it in four numbers.

There are 11 PFFS plans in the whole country for 2027, half as many as a year ago. Their mean premium is $60.00 a month — the most expensive plan type by a wide margin. Only 14.3% of them charge nothing. On the 2026 ratings not one of them reached four stars; on the 2027 ratings seven of the eleven do, which says more about how much a handful of contracts can move than about the plan type.

Eleven plans out of 5,522 isn’t a market segment, it’s a remnant. If one comes up in your county, the burden of proof is on it.

How to Actually Decide

Start with your doctors, not with the plan type. Write down the two or three you’d be unhappy to lose and call their offices. If they’re all in one HMO’s network, the case for paying PPO money largely evaporates. If one of them isn’t in any network you can find, you’ve just discovered you need a PPO, and the $134 is worth it.

Then compare out-of-pocket maximums within the type you’ve landed on. The spread between plans of the same type in the same county is far wider than the gap between the two types nationally. The averages on this page tell you where to look; they don’t tell you which plan to buy.

Don’t pay for out-of-network coverage you can’t use. If you do buy a PPO, look up what it actually pays outside the network and what the combined out-of-network limit is. A PPO whose out-of-network terms are bad is the worst of both: HMO-style constraints at PPO prices.

Remember you’re not locked in for life. If the network turns out not to fit once you start using it, the Medicare Advantage Open Enrollment Period between January and March exists precisely for that, and our guide to switching plans sets out the windows and the traps.

Frequently Asked Questions

Is a PPO always more expensive than an HMO? On average, yes, on both counts — $11.15 a month more and $1,450 more on the median out-of-pocket ceiling. But these are averages across thousands of plans. There are cheap PPOs and expensive HMOs, and the only figures that matter are the ones on the plans sold at your address.

Do I need a referral with an HMO? Usually, though it varies and the HMO-POS variant is more flexible. It’s one of the real costs of an HMO and it doesn’t show up in any of the numbers here, which is worth saying plainly: not everything an HMO takes from you is money.

Which plan type is rated better? It depends on the year. On the 2026 ratings 68.5% of ordinary HMOs reached four stars against 51.3% of PPOs; on the 2027 ratings it is 74.6% of PPOs against 60.7% of HMOs, partly because Humana — the biggest seller of PPOs — saw its ratings jump. A swing like that is a reason to read the rating of the specific plan, not to choose a plan type for its rating.

My county only has PPOs. What do I do? Compare them against each other on the out-of-pocket maximum first, then on the drug formulary, then on the star rating. 84 counties are in your position, and the variation between PPOs in one county is bigger than the national gap between the two plan types.

Does any of this apply to special needs plans? No, and that’s deliberate. They’re excluded from every figure here because they’re mostly HMOs sitting at the legal out-of-pocket ceiling for reasons that have nothing to do with being an HMO. Mixing them in would have made PPOs look better than they are.

Bottom Line

The out-of-network freedom a PPO sells you has a price, and now it has a figure: about $134 a year in premiums, plus $1,450 more of exposure in the year you actually get sick, plus more than double the chance of being left uncapped all the way to the legal maximum. Star ratings no longer settle anything either way: they favored HMOs for 2026 and favor PPOs for 2027.

Which is fine if you need what the PPO does. The question isn’t which plan type is better — it’s whether the freedom you’re buying is freedom you’re going to use. For a lot of people it isn’t, and the money goes out the door every month regardless.

Check what’s sold at your own address through the official Medicare Plan Finder, or call 1-800-MEDICARE or your local State Health Insurance Assistance Program (SHIP) for free help comparing them.

How We Counted This

Every 2027 figure here is our own count from the CY2027 Landscape file that CMS released on September 22, 2026, and revised on September 30, reduced to one entry per distinct plan rather than one per county. That gives 5,522 plans across 3,131 counties. The 2026 comparisons come from the CY2026 file, in its September 2026 version, processed by the same code. The 2027 star ratings come from the 2027 Star Ratings data tables CMS published on October 8, 2026, matched to each plan through its contract.

Plan types are grouped as the file labels them: everything carrying HMO counts as an HMO, including HMO-POS; everything carrying PPO counts as a PPO, including Regional PPO. Special needs plans are excluded from every HMO-versus-PPO figure, leaving 3,541 ordinary plans, for the reason set out near the top. County coverage is counted on all plans of each type, special needs plans included, because availability is availability.

Premiums are the combined Part C and Part D figure; the Part B premium is payable on top of all of them. It was $202.90 a month in 2026, and CMS announces the 2027 figure in November. Plans the file gives no premium figure for are excluded from the premium figures rather than counted as zero, and the star rows cover only plans that carry a published rating for the year shown. Percentages are shares of plans, not of enrollment. The full method is on our editorial methodology page.

Sources

• CY2027 Medicare Advantage and Part D Landscape file — Centers for Medicare & Medicaid Services, released September 22, 2026, and revised September 30, 2026. Source for every 2027 figure in this article: the plan counts by type, the premiums, the out-of-pocket limits, the county coverage and the PFFS figures. All calculations are our own, by the method above.
• CY2026 Medicare Advantage and Part D Landscape file — Centers for Medicare & Medicaid Services, September 2026 version. Source for the 2026 limits and star ratings shown for comparison, counted by the same method.
• 2027 Star Ratings Data Tables — Centers for Medicare & Medicaid Services, published October 8, 2026. Source for every 2027 star figure, matched contract by contract, and for ratings being assigned to contracts rather than plan types.
• CY2027 Rate Announcement — Centers for Medicare & Medicaid Services. Source for the $9,850 statutory maximum in-network out-of-pocket limit for 2027.
• 2026 Medicare Parts A & B Premiums and Deductibles — Centers for Medicare & Medicaid Services. Source for the $202.90 standard Part B premium in 2026.

All plan figures on this page were counted from the two CMS files on October 4, 2026, and the 2027 star ratings on October 12, 2026. Plan availability changes; confirm what is sold at your own address on Medicare.gov before enrolling.

Disclaimer: Plan figures and star ratings reflect 2027 data, with 2026 comparisons, from the Centers for Medicare & Medicaid Services (CMS) and vary by state, county and plan. Always confirm current details directly with Medicare.gov, 1-800-MEDICARE, or a licensed agent before making a decision.