Health insurance is anything but simple. Whether you have employer-sponsored coverage or an ACA plan, you may not realize the different types of insurance. If you’re confused,
don’t worry: you’re not alone!
The most common types of healthcare plans are Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Exclusive Provider Organizations
(EPOs). That’s a lot of acronyms, so let’s explain how each type works.
Understanding the difference can help you choose the right coverage type for your health needs. Let’s dive in.
What is an HMO?
As the name suggests, a Health Maintenance Organization plan focuses on preventive care. You are typically assigned a primary care physician (PCP), and they refer you to specialists or outpatient services as needed.
Your plan also includes a “network” of covered providers. If you seek care outside this network, you’ll have to pay out-of-pocket. This could be quite costly.
What is a PPO?
A Preferred Provider Organization plan lets you choose your own providers and will pay a portion of out-of-network services (if approved). Only in-network providers are fully covered by your plan.
For example, you can still keep seeing your physician even if they’re not in-network. As long as you’re booking covered services (e.g. basic checkups), the PPO will cover at least some of your costs.
Also, as you don’t typically have a primary care physician in a PPO, you don’t need a referral to see a specialist.
What is an EPO?
An Exclusive Provider Organization plan is a hybrid of the HMO and PPO. Like an HMO, you have a primary care physician and a network of providers. However, you don’t need a referral to see a specialist.
An EPO does not pay any costs for out-of-network providers. So while you can get many services covered and choose your own specialists, you’ll be fully responsible for paying providers not included in the plan.
Pros and Cons of HMOs, PPOs, and EPOs
Each type of healthcare coverage has tradeoffs. Different plans work better for different people. Here’s a breakdown of each plan type’s pros and cons:
- Dedicated primary care physician
- Preventative services are often fully covered
- Lower premiums
- Limited network of providers
- Required referral to access specialist care
- Higher deductible
- Freedom to choose providers
- No referrals required
- A wider range of specialist care, even outside your state or network
- Higher premiums
- Higher premiums
- Higher deductibles before doctor’s visits are covered
- Potentially fewer services or providers eligible for full insurer payout
- More in-network providers than an HMO
- Consistency of the PCP without the need for specialist referral
- No insurer payout for out-of-network providers
Which Should You Choose: HMO, PPO, or EPO?
Each health insurance type suits a different set of healthcare needs. When choosing a plan, ask yourself these questions:
- Which of my health conditions require ongoing specialist care, frequent doctor’s visits, or both?
- Do I anticipate potentially needing emergency room care or hospitalization?
- How many prescriptions do I need to be covered?
- Do I have any major medical events coming up (e.g. pregnancy, surgery)?
- Do I want to keep certain providers even if they’re not in-network?
- Would I rather pay more each month in premiums or pay a higher deductible to get healthcare costs covered?
In general, here’s who each plan type best suits:
HMOs are best for individuals who mostly need preventative care, see only their main doctor, and/or would rather save on monthly healthcare costs.
PPOs are best for those who travel frequently, have chronic health conditions requiring specialists, and/or would choose their own providers.
EPOs are best for those with chronic medical problems who need a broad provider
network and/or would rather ensure expensive services get covered.
Weigh your options to see which plan type would be most affordable for you. The ACA marketplace also offers subsidies to lower your monthly premiums.
Your Health Needs Determine Your Best Coverage Option
Ultimately, your choice of health insurance plan type comes down to your unique situation in terms of both health and finances.
The convenience of PPOs comes at higher per-visit costs, while the rigid HMO plan could mean you’re left on the hook for expensive
Weigh your unique medical risks and goals before choosing your plan. A bit of homework pays off in the long run!
For expert assistance, reach out to the health insurance experts at Coverage2Care. We’re happy to guide you in your decision.