The viscous flow of two immiscible fluids in a porous medium on the Darcy scale is governed by a system of nonlinear parabolic equations. If infinite mobility of one phase can be assumed (e.g., in soil layers in contact with the atmosphere) the system can be substituted by the scalar Richards model. Thus, the porous medium domain may be partitioned into disjoint subdomains where either the full two-phase or the simplified Richards model dynamics are valid. Extending the previously considered one-model situations we suggest coupling conditions for this hybrid model approach. Based on an Euler implicit discretization, a linear iterative (L-type) domain decomposition scheme is proposed, and proved to be convergent. The theoretical findings are verified by a comparative numerical study that in particular confirms the efficiency of the hybrid ansatz as compared to full two-phase model computations.