Comparing health insurance plans: HMO vs. PPO vs. EPO vs. POS
| Plan type | Do you have to stay in network to get coverage? | Do procedures & specialists require a referral? | Snapshot: |
|---|---|---|---|
| HMO: Health Maintenance Organization | Yes, except for emergencies. | Yes, typically | Lower out-of-pocket costs and a primary doctor who coordinates your care for you, but less freedom to choose providers. |
| PPO: Preferred Provider Organization | No, but in-network care is less expensive. | No | More provider options and no required referrals, but higher out-of-pocket costs. |
| EPO: Exclusive Provider Organization | Yes, except for emergencies. | No | Lower out-of-pocket costs and no required referrals, but less freedom to choose providers. |
| POS: Point of Service Plan | No, but in-network care is less expensive. | Yes | More provider options and a primary doctor who coordinates your care for you, with referrals required. |
When comparing different plans, put your family’s medical needs under the microscope. Look at the amount and type of treatment you’ve received in the past. Though it’s impossible to predict every medical expense, being aware of trends can help you make an informed decision.
If you choose an HMO or POS plan, which require referrals, you typically must see a primary care physician before scheduling a procedure or visiting a specialist. Because of this requirement, many people prefer other plans. Due to the restrictions, however, HMOs tend to be the cheapest type of health plan, overall.
POS and HMO plans may be better if you don’t mind your primary doctor choosing specialists for you. One benefit is that there’s less work on your end, since your doctor’s staff coordinates visits and handles medical records. If you do choose a POS plan and go out of network, make sure to get the referral from your doctor ahead of time to reduce out-of-pocket costs.
If you would rather choose your specialists, you might be happier with a PPO or an EPO. An EPO may help keep costs low as long as you find providers in network; this is more likely to be the case in a larger metro area. A PPO might be better if you live in a remote or rural area with limited access to doctors and care, as you may be forced to go out of the network.
What about an HDHP with a health savings account?
A high-deductible health plan can be any one of the types above — HMO, PPO, EPO or POS — but follows certain rules in order to be “HSA-eligible.” These HDHPs typically have lower premiums, but you pay higher out-of-pocket costs, especially at first. They are the only plans that qualify you to open an HSA, which is a tax-advantaged account you can use to pay health care costs. If you’re interested in this arrangement, be sure to learn the ins and outs of HSAs and HDHPs first.
Step 3: Compare health plan networks
Costs are lower when you go to an in-network doctor because insurance companies contract lower rates with in-network providers. When you go out of network, those doctors don’t have agreed-upon rates, and you’re typically on the hook for a higher portion of the cost.
If you have preferred doctors and want to keep seeing them, make sure they’re in the provider directories for the plan you’re considering. You can also directly ask your doctors if they take a particular health plan.