When it comes to complicated things, they have their own unique language associated with them. Insurance is no different. Understanding the fundamentals goes a long way to simplifying your decision and giving you the information to choose the best plan possible. Think of this article as a crash course into all things health insurance. This article will cover the four main types of insurance plans: HMO, EPO, POS, and PPOs.
The Four Main Insurance Plans
Let’s start with the four main types of health insurance plans that you will see when shopping for insurance plans. It’s important to know that if you are selecting a plan during open enrollment with your employer, the number of plans available will vary dramatically based on your employer’s benefits package. These packages can also change from year to the next, so make sure to look over your plans carefully each year.
HMO – Health Managed Organization
An HMO provides all health services through a network of providers and facilities. You are covered as long as you choose doctors and healthcare providers inside your network, but you could be on the hook for the entire bill if you venture outside the HMO network. Emergency care at out-of-network facilities can be covered, but it depends on the specific HMO.
Key Facts:
- The HMO gives you limited options on health care providers
- Little paperwork compared to other plans
- Referrals are required to see specialists, but only in-network providers are covered.
- Typically low cost if you don’t have any significant medical issues.
- They have lower deductibles along with low premium plans.
EPO – Exclusive Provider Organization
Similar to An HMO, an EPO provides all health services through a network of providers and facilities but gives more flexibility and more choices of health care providers. One of the main differences here is you don’t need to have a referral to see a specialist, which gives you greater ability to choose your provider. You are covered as long as you choose doctors and healthcare providers inside your EPO network. Suppose you venture outside of the EPO network. In that case, you will be on the hook for the entire bill, and emergency care at out-of-network facilities is typically not covered either but can vary based on the specific EPO.
Key Facts:
- The EPO gives you more freedom to choose your healthcare providers than other plans, namely an HMO.
- NO coverage for out-of-network providers, which means if you see someone out-of-network, you are on the hook for the entire cost yourself.
- No referrals are needed to see specialists.
- Typically lower cost if you don’t have any significant medical issues and stay in-network.
- Lower premiums compared to other plans such as a PPO.
PPO – Preferred Provider Organization
A PPO typically comes with the highest premiums and deductibles, but you also receive the most extensive network and coverage of all the plans because of this cost. If you have the means and want the most flexibility of all the plans, a PPO could be right for you as long as you are ok with a higher monthly premium.
Key Facts:
- Most options for in-network and out-of-network.
- Higher premium and deductible, especially when using an out-of-network doctor.
- More paperwork compared to other plans.
- No referrals are required to see specialists.
POS – Point-Of-Service Plan
A POS is a hybrid between an HMO and a PPO plan. The POS plan usually requires referrals to see specialists similar to an HMO, but unlike an HMO, you can get access to out-of-network care.
Key Facts:
- The POS works through a primary care doctor who coordinates all of your medical needs.
- You can get coverage for out-of-network providers, which means if you see someone out-of-network, you will have to pay more than if it was an in-network provider.
- Referrals are needed to see specialists.
- Typically lower cost if you don’t have any significant medical issues and stay in-network.
- Middle-Tier premiums. Typically more than HMOs and EPOs but less than a PPO.
Conclusion
Each plan has different pros and cons and it can take time to know which plan is right for you. When selecting the plan, you need to factor in your current health, medical history, dependents, and of course the cost of the plan. At the end of the day, pick the health insurance plan that you feel the most comfortable with. Peace of mind goes a long way. You can easily get lost in the weeds of premiums, deductibles, copays, treatments, surgeries, and so on.
There are literally 100s of plans to choose from and now that you understand the basics, you can feel more confident in your choice of plan. As always, if you have any questions don’t hesitate to reach out to us! We would love to help. This journey is not meant to be done alone. Talking with a financial advisor, coach, or insurance specialist can help you find the best plan for your unique situation.
