Types of health insurance – Forbes Advisor

Editorial Note: We earn a commission on partner links on Forbes Advisor. Commissions do not affect the opinions or ratings of our editors.

When shopping for health insurance, it’s easy to get lost in an alphabetical 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 is a PPO?

A Preferred Provider Organization (PPO) healthcare plan offers the flexibility to get healthcare outside of your provider network and see a specialist without a referral from a primary care provider.

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

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

What is an HMO?

Members covered by a health maintenance organization (HMO) are limited to seeing network providers who work directly or under contract with the HMO. Typically, your primary care doctor coordinates most of the care you receive when you have an HMO. For example, you will probably need a referral to see a specialist.

An HMO will not cover your care if you go out of the plan’s network, unless you need emergency care.

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

What is an EPO?

In an Exclusive Provider Organization (EPO) plan, you are only covered if you use doctors, specialists or hospitals within the plan’s network, although you are covered for emergency care, regardless of regardless of service provider network affiliation.

Unlike an HMO, you probably won’t need a referral to see a specialist. Also, unlike an HMO, the doctors do not work for the EPO or are under contract with the EPO. Instead, the EPO negotiates lower rates with providers that are passed on to insureds when you need healthcare 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 is a point of sale?

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

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

You also need a referral to see a specialist.

What is 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 disbursements for in-network services for a high-deductible plan cannot exceed $7,050 for an individual or $14,100 for a family in 2022. In 2023, the maximum disbursements will increase to $7,500 for an individual and $15,000 for family coverage.

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

One of the great benefits of an HDHP is that you can link it to a Health Savings Account (HSA), which allows you to save money and pay for medical services tax-free.

Unlike other types of plans, a high deductible health plan is not a benefit design. This strictly means that you have a high deductible. HDHPs can actually be any type of benefit design: PPO, HMO, EPO, or POS.

What is the best type of health insurance?

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

Comparing and contrasting different types of plans can give you a better idea of ​​which type of benefit design is best for you.

Compare a PPO to an HMO

  • PPOs generally 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 out-of-network costs.

Compare a PPO to an EPO

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

Compare a PPO to a POS

  • Both PPO and POS plans let you step out of your network for care, although you’ll likely pay more for that care than if you stayed in the network.
  • A PPO plan does not require a referral to see a specialist, but a POS plan will likely have this requirement.
  • A POS plan will likely have lower premiums than a PPO plan.

Compare an HMO to an 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 network providers, while HMOs have providers who work for or contract with the HMO.

Compare an HMO to a POS

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

Compare an EPO to a POS

  • An EPO generally does not allow you to seek out-of-network care, while an outlet may provide this coverage.
  • EPOs are unlikely to need a referral to see a specialist, while POS plans will have this requirement.
  • EPO and POS plans tend to have lower premiums than PPOs.

How much does health insurance cost?

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

Average health insurance costs by type of health insurance plan