What Differentiates Health Insurance Plans & Network Types?

We’ve all heard of HMOs (health maintenance organizations) and many of us have heard of PPOs (preferred provider organizations). Most of us, however, have never heard of EPO (exclusive provider organization) or POS (point of service) plans. More importantly, most people are not quite sure what separates these various plans from one another. When it comes time to select a health plan, knowing what separates the various plan types is an important first step in narrowing down your choices. Here is a look at the differences between the four major types of health insurance plan.

HMO (Health Maintenance Organization Plan)

An HMO or health maintenance organization plan is the most restrictive type of health plan. HMOs require that you get all of your care from an “in-network” provider. In-network providers and facilities are simply those that are pre-approved by the HMO’s managers. Emergency situations are the only time when using an out-of-network service will be paid for by your insurance. In other words, if you go to a facility or provider that is not in your network, you will have to pay 100% of the cost of your care unless it is an emergency situation.

HMOs also require referrals any time you want to see a specialist. These are traditional health plans in which a primary care provider coordinates all of your care and determines if and when you get to see a specialist. Because HMOs are so restrictive, they are able to keep costs contained and thus usually are the least expensive health care plans. HMOs often have the lowest out-of-pocket costs and may require you to live or work in the HMO service area to be eligible for coverage (https://www.healthcare.gov/choose-a-plan/plan-types/).

PPO (Preferred Provider Plans)

PPOs (preferred provider plans) came into being because people wanted more control over their own health care. These plans do not require referrals for you to see a specialist and make it easier for you to pursue out-of-network care. If you choose to see a specialist without a referral, you will probably pay a larger copay, but most of the costs are covered if you see an in-network specialist. The same is true if you pursue out-of-network care. In most cases, out-of-network care is reimbursed at a lower rate than in-network care. If your insurance covers 80% of the cost of in-network care, it may only cover 50% of the cost of out-of-network care. In most cases, PPOs are more expensive than HMOs. You are essentially paying more to have greater freedom of choice (https://www.nerdwallet.com/blog/health/health-insurance-guide/).

EPO (Exclusive Provider Organization)

An EPO or exclusive provider organization is much like an HMO, but allows you to see specialists without a referral. You are required to stay in your network though. If you choose an EPO, make sure that the primary providers and specialists you want to see are a part of the plan or you may not be able to see them without paying 100% of the costs. In most cases, the price of an EPO is somewhere between that of an HMO and PPO (https://marketplace.cms.gov/outreach-and-education/what-you-should-know-provider-networks.pdf).

POS (Point of Service)

A point of service (POS) plan requires you to have a primary care provider who makes all of your care and referral decisions. What sets a POS plan apart from an HMO is that you can receive care (as long as you are referred) from outside of your network and still have insurance coverage for most of the costs. Out-of-network care is usually more expensive than in-network care, but at least you have the options of going out of your network without having to cover 100% of the costs. You will never cover 100% of the cost of any provider’s care, even if they are outside of your network, with a POS plan.

A Rough Bottom Line

HMOs and POS plans may be better for you if you want to keep costs under control and don’t mind getting referrals any time you want to see a specialist. POS plans will allow you to go out of network with a referral, though costs will be higher. HMOs do not cover any costs (other than emergency situations) if you go out of your network.

EPO and PPO plans are best for people who want more control over their health care. PPOs give you the greatest freedom, but at the highest cost. They tend to be best for people in rural areas with limited access to care who may have trouble staying within a network. PPO plans are also best for people with complex medical issues who may require care from a limited number of subspecialists and out-of-network providers.

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