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Making Sense of Plan Types

There’s a lot to learn about health insurance. And all the acronyms and terms you hear when looking at different plans, like HMO and PPO, may be confusing. But don’t worry – we’ll make it easy by breaking down what each of these plan types are and how they are different. 

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Four Common Types of Health Insurance

If you’re looking for health insurance, especially in the Marketplace, you may find these four common plan types: HMOs, PPOs, EPOs, and POS plans. There are so many different plan types to help ensure that different needs can be met. Many of the differences between these plans can be found in their networks and associated costs. Here’s a look into what defines these four main types of individually purchased non-Medicare health insurance plans.

HMO: Health Maintenance Organization

Health maintenance organization plans, or HMO plans, offer a wide range of health care services through a specific, local network of participating health care providers, hospitals and facilities. Generally speaking, you must have an in-network primary care physician, or a PCP, with an HMO plan. Not only is your PCP your main point of contact for your health care needs, but they also need to provide you with referrals should you need to see an in-network specialist. 

Main features of HMO plans:

  • Lower costs (copays and coinsurance) than other types of health plans if your care is all in-network
  • A dedicated primary care doctor who can coordinated all your care needs
  • Referrals required to see specialists
  • More defined network of doctors, hospitals and facilities
  • No out-of-network coverage for non-emergency care with few exceptions

PPO: Preferred Provider Organization

Preferred provider organization plans, or PPO plans, offer you more options for health care providers. Their networks tend to be larger, so you have more doctors and hospitals to choose from. While you’re able to see out-of-network providers with a PPO plan, you may pay higher out-of-pocket costs than you would with in-network providers. With a PPO plan, you’re not required to have a primary care doctor and can see specialists without a referral.

Main features of PPO plans:

  • A larger network of providers and hospitals
  • Lower costs when you use in-network providers
  • The option to use out-of-network providers and hospitals for an additional cost
  • Generally higher out-of-pocket and premium costs than HMOs
  • The ability to see a specialist without a referral from a PCP

EPO: Exclusive Provider Organization

Exclusive provider organization plans, or EPO plans, are like HMO plans in that they have a specific network of providers that members must use, except in the case of an emergency. Outside of emergencies, there is no coverage for out-of-network providers with few exceptions. However, like with PPO plans, most EPO plans don’t require you to have a PCP and you do not need a referral from a PCP to see a specialist. 

Main features of EPO plans: 

  • Generally lower premiums than PPOs
  • No out-of-network coverage for non-emergency care
  • More defined network of doctors, hospitals and facilities
  • The ability to see in-network specialists without a referral from a PCP

POS: Point of Service

Point of Service plans, or POS plans, are like a combination of HMO plans and PPO plans. Like with an HMO, you may be required to have an in-network primary care doctor. This PCP should refer you to any specialists needed, but like with a PPO plan, you are able to see out-of-network specialists for a higher out-of-pocket cost. 

Main features of POS plans:

  • Lower cost when you use in-network providers and hospitals
  • The option to use out-of-network providers and hospitals for an additional cost
  • A dedicated primary care doctor who can coordinate your health care needs
  • Referrals required to see specialists

Frequently Asked Questions

While PPO plans can be more expensive than HMO plans, they offer out-of-network coverage that HMO plans do not offer. This gives you a choice of more doctors and specialists. 

Short-term health insurance plans, also called short term limited duration plans, offer health coverage for people who may be in-between jobs, need coverage outside of the annual Open Enrollment Period and don’t qualify for a special enrollment period or are waiting to be eligible for Medicare. Typically, these temporary health insurance plans can cover you for as little as 30 days to a maximum of 364 days.

High-deductible health plans, or HDHP plans, can be any of the types of health insurance plans listed above (HMO, PPO, EPO or POS). However, these plans are specifically designed to be used in conjunction with a health savings account, or an HSA. An HSA is a bank account that allows you to save pre-tax money to be used exclusively for qualified medical expenses. Unused funds in an HSA account roll over every year, but you can’t use the funds outside of qualified medical expenses without paying a penalty. Because they are often used side-by-side with an HSA, HDHP plans have higher out-of-pocket costs but offer a lower premium.

Main features of HDHP plans:

  • Higher deductible and out-of-pocket costs
  • Lower premium payment
  • A health savings account (HSA) to help pay for your care with tax-free money that rolls over each year

The best type of health plan for you will depend entirely on your specific financial and health care needs. For instance, if you currently use or expect to have more intensive care needs than just preventive services, the best type of plan for you might have lower out-of-pocket costs (especially a lower deductible and coinsurance) so you know what to expect to pay. 

If you’re healthy and don’t expect to need much medical care outside of preventive visits, a plan with a higher deductible and a lower monthly premium could help you save money while still giving you the coverage you need to stay healthy. 

Learn More About Health Insurance

  • How to Choose a Plan >

    Ready to take the next step? Explore our guide on how to choose the right plan for you when shopping for health insurance.

Policies have limitations and exclusions. The amount of benefits provided depends on the plan selected and the premium may vary with the amount of benefits selected.

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