Types of Health Plans
When shopping for a health plan, you may see a plan described as an HMO, PPO, POS or EPO. Those abbreviations are important because the coverage, rules and typical costs differ for each type of plan.
In a Health Maintenance Organization (HMO), you get all of your care from providers in your plan’s network. That’s the group of doctors, hospitals, labs and others that have agreed to accept the insurer’s contracted rates as full payment for their services. When you join, you choose a primary care physician (PCP) who refers you to specialists in the network if needed. In most HMOs, when you visit your doctor, you usually have to pay only a fixed cost, a copay. But if you visit a provider outside the network, you have to pay the full cost of the visit. The plan doesn’t cover the visit unless it’s an emergency.
In a Preferred Provider Organization (PPO), you’re not required to have a PCP. You don’t need a referral to see a specialist. The costs may include a copay, coinsurance (a percentage of the cost of covered healthcare expenses) and a deductible (an amount you have to pay before the insurer starts covering costs). (See The Facts about Cost Sharing in this issue.) The plan covers your care whether you see doctors who are in network or out of network. But if the doctor is out of network, your costs are higher than if you stay in network.
A Point of Service plan (POS) is like an HMO in that you have to choose a PCP. The PCP refers you to specialists in the network if needed. Unlike in an HMO, the specialists can be either in network or out of network. If you visit a provider out of network, your costs are typically higher than if you stay in network.
An Exclusive Provider Organization (EPO) is like a PPO in that you don’t have to choose a PCP. You can see in-network specialists without a referral. But if you visit a doctor outside your plan’s network, you have to pay the full cost.
Choosing among Types of Plans
When choosing among types of health plans, think about what you want from a plan. For example, if you want the freedom to see specialists without a referral from a PCP, you might prefer a PPO or an EPO. If you think some of the specialists you might see will be out of network, remember that an EPO won’t cover those costs. A PPO does have out-of-network coverage, though with higher costs to you than if you saw in-network doctors.
Suppose you’re used to seeing a PCP, and like having a PCP guide you about whether you need a specialist. Then an HMO or a POS may be right for you. Do you still want the freedom to see an out-of-network doctor? Then you might prefer a POS to an HMO. A POS has out-of-network coverage; an HMO doesn’t.
The type of plan is only one thing to think about when choosing a plan. Other questions to consider include:
- How high is the premium? That’s the cost (usually monthly) that you have to pay to maintain coverage.
- How high are the deductibles, copays and coinsurance?
- Does the network include your current doctors and the hospitals with which they’re affiliated?
- How many network providers are close to where you live and work?
- Does the plan cover the prescription drugs you take?
To find the answers, read the plan description, which is often available on the insurer’s website. Or ask a representative of the insurer