Types Of Health Insurance

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When shopping for health insurance, it is easy to get lost in an alphabet soup of plan types: PPO, HMO, EPO—what does it all mean?

These are all acronyms for types of health plan benefit designs. A plan’s benefit design dictates how you get care and influences health insurance costs. Understanding the differences between these plans is crucial to finding the best health insurance plan for you at an affordable price.

What’s a PPO?

A preferred provider organization (PPO) health care plan offers the flexibility to get health care outside of your provider network and see a specialist without a referral from a primary care provider.

Getting care outside your provider network gives you more choices than other health plans, but that freedom comes at a price. Out-of-network care typically costs more than if you get care in-network.

PPOs also typically have higher health insurance premiums than other insurance plans.

What’s an HMO?

Members with health maintenance organization (HMO) coverage are limited to seeing in-network providers who either work directly for or contract with the HMO. Typically, your primary care physician coordinates most of the care you receive when you have an HMO. For example, you likely will need a referral to see a specialist.

An HMO won’t cover your care if you go outside the plan’s network, except if you need emergency care.

HMO plans generally have lower health insurance premiums than other types of health insurance, but those savings come with a strict provider network.

What’s an EPO?

In an exclusive provider organization (EPO) plan, you’re only covered if you use physicians, specialists or hospitals within the plan’s network, although you will be covered for emergency care regardless of the service provider’s network affiliation.

Unlike an HMO, you likely won’t need a referral to see a specialist. Also, unlike an HMO, doctors don’t work for or contract with the EPO. Instead, the EPO negotiates lower rates with providers that are passed on to policyholders when you need health care services.

With an EPO plan, you typically pay less in premiums than in a PPO plan but more than you would in an HMO.

What’s a POS?

A point-of-service (POS) plan has aspects like a PPO but others similar to an HMO. POS members pay less for their care when they visit a medical provider inside the plan’s network.

However, they also can seek care outside the network. You will need a referral to receive care outside the plan’s network and pay an extra cost for using this type of provider.

You also need a referral to see a specialist.

What’s an HDHP?

A high-deductible health plan (HDHP) has an annual health insurance deductible of at least $1,400 for an individual or $2,800 for a family in 2022. A plan considered high deductible will increase to $1,500 for an individual and $3,000 for a family in 2023.

Your total annual out-of-pocket costs for in-network services for a high-deductible plan can’t be more than $7,050 for an individual or $14,100 for a family in 2022. In 2023, out-of-pocket maximums will jump to $7,500 for an individual and $15,000 for family coverage.

HDHP premiums are typically low, but the high deductible means your out-of-pocket costs can be high if you need regular medical care in a given year.

One of the big advantages of an HDHP is that you can pair it with a health savings account (HSA), which allows you to save for and pay for medical services tax-free.

Unlike the other types of plans, a high-deductible health plan isn’t a benefit design. It strictly means you have a high deductible. HDHPs can actually be any type of benefit design—PPO, HMO, EPO or POS.

What’s the Best Type of Health Insurance?

There is no single best type of health insurance. Each plan has its pros and cons, and the right plan depends on what you need out of health insurance coverage.

Comparing and contrasting the various types of plans can give you a better sense of which type of benefit design makes the most sense for you.

Comparing a PPO vs. HMO

  • PPOs usually have higher premiums than HMOs.
  • PPOs offer more flexibility to see doctors and hospitals than HMOs.
  • HMOs require you to get a referral to see a specialist, while PPOs do not.
  • HMOs exclude most out-of-network care from coverage, while PPOs will cover some portion of out-of-network costs.

Comparing a PPO vs. EPO

  • EPO plans usually have lower premiums than PPOs.
  • EPO plans don’t generally pay for out-of-network care, while PPOs pay a portion of those costs.
  • PPO plans allow you to see more doctors and hospitals than EPO plans.

Comparing a PPO vs. POS

  • Both PPO and POS plans allow you to go outside your network for care, though you will likely pay more for that care than if you stay in the network.
  • A PPO plan does not require a referral to see a specialist, but a POS plan likely will have this requirement.
  • A POS plan will likely have lower premiums than a PPO plan.

Comparing an HMO vs. EPO

  • HMOs often have lower premiums than EPOs.
  • Neither HMOs nor EPOs cover most types of out-of-network care.
  • HMOs require you to get a referral to see a specialist, while EPOs do not.
  • EPOs negotiate lower rates with in-network providers, while HMOs have providers that either work for the HMO or contract with it.

Comparing an HMO vs. POS

  • Members of a POS plan can seek care out of network, while those in an HMO are generally not covered for out-of-network care.
  • Both POS plans and HMOs require you to get a referral to see a specialist.
  • Both HMOs and POS plans tend to have lower premiums compared to PPOs.

Comparing an EPO vs. POS

  • An EPO doesn’t usually allow you to seek care outside the network, while a POS may offer that coverage.
  • EPOs are unlikely to require a referral to see a specialist, while POS plans will have this requirement.
  • Both EPOs and POS plans tend to have lower premiums compared to PPOs.

How Much Does Health Insurance Cost?

The cost of health insurance on the Affordable Care Act (ACA) marketplace varies by health plan type, age and how many people covered. Here are the average premiums for PPOs, HMOs and EPOs on the ACA marketplace.

Average health insurance costs by health plan type

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