Which health insurance plan is best for you?
The answer to that question really depends on a number of factors that pertain to your specific situation. When comparing health plan options, take these factors into account:
- Your health
- Your family’s health
- Your health care providers and whether they accept the insurance
- Your financial situation
- Whether you want to pay more upfront via premiums
- If you want flexibility and not having to ask for referrals to see a specialist
Once you review those factors, choosing a health plan is much easier.
The five most common types of health insurance plans are:
- Preferred provider organizations (PPOs)
- Health maintenance organizations (HMOs)
- High deductible health plans (HDHPs)
- Point of service plans (POS)
- Exclusive provider organization plans (EPO)
The two most common health plans have been generally HMOs and PPOs, but HDHPs have become a lower-cost health insurance option for employers over the past decade. POS and EPO plans are options provided by some employers and health insurers, but they’re not nearly as common as HMOs, PPOs and HDHPs.
In this guide, we provide information about each of these plans to help you make the right decision for your circumstances. We will go through each of the five plan types and highlight the differences:
- What is a PPO?
- What is an HMO?
- What is an HDHP?
- What is a POS?
- What is an EPO?
- What is the difference between HMO, PPO, HDHP, POS and EPO?
PPO stands for preferred-provider organization. Premiums and deductibles are usually much higher for a PPO compared to an HMO, but that comes with greater flexibility.
The main benefit of a PPO is flexibility, but it does come at the cost of higher premiums and a deductible that you will have to pay before your insurer starts paying for care.
When a PPO might be right for you:
- You want the flexibility to go out of network and not need to get referrals.
- Flexibility is more important to you than paying higher premiums.
- You would rather pay higher premiums, but likely pay less for the health care services.
What kind of person should opt for a PPO: Someone who utilizes health care regularly and sees specialists or wants to have the option to see a specialist without getting a referral.
HMO stands for health maintenance organization and makes up about 15 percent of health plans. It is known for its lower premiums and restricted network of doctors and hospitals, which means you sacrifice flexibility for lower upfront costs.
You’ll likely pay less in premiums for an HMO compared to a PPO – sometimes significantly less.
When an HMO might be right for you:
- You have a primary care physician and other providers who are in the HMO network.
- You don’t see many specialists and don’t need referrals often.
- You don’t mind the limitations of only seeing providers in your network.
- Cost is more important to you than flexibility.
What kind of person should opt for a HMO: Someone who wants to pay as little as possible in premiums though not have to face high deductibles. An HMO could be a good option if you have a PCP and your other health care providers are already in the HMO.
HDHP stands for high-deductible health plan, which is also sometimes called a CDHP (consumer driven health plan). HDHPs have grown in popularity as more employers have begun offering the plans as a way to contain health care costs.
Nearly one-third of workers have a HDHP.
Unlike the other plans, an HDHP can vary depending on the specific plan. For instance, one HDHP could be very similar to an HMO, while another could look more like a PPO. The critical piece of a HDHP is the size of the deductible and Health Savings Account that is attached to it.
HDHPs typically feature a Health Savings Account, which allows you to save money pre-tax to pay for qualified medical expenses. Some employers seed money in employee HSA accounts to help pay for care, so you’ll want to see if your employer provides money to employee HSAs when making a health plan decision.
Much like a PPO, your insurer will begin to pay its share of the coinsurance once you’ve reached your deductible. Your insurer will cover all costs once you’ve hit your out-of-pocket maximum.
HDHP usually have lower premiums, so they can be a less costly plan option — as long as you don’t need a lot of medical care. HDHPs might be a good idea if you are young and healthy, but could be costly to older adults or young families.
When a HDHP might be right for you:
- You don’t have many health care costs, and you don’t expect to have many costs over the next year.
- You’d rather pay less upfront costs in premiums with the understanding that the higher deductible means you’ll pay more out-of-pocket if you need care.
- You don’t have children and/or a spouse on your plan who may use a lot of health care services.
What kind of person should opt for a HDHP: Someone who is healthy and doesn’t expect to use many health care services within the next year. You want the cheapest premiums and don’t mind having to pay a high deductible if you need a lot of care.
POS stands for point of service plan and makes up about 10 percent of health plans. POS plans are not nearly as common as PPOs, HDHPs and HMOs. POS plans are a hybrid of PPO and HMOs.
When a POS might be right for you:
- You have a PCP in the POS plan.
- You want the flexibility of going out of network like a PPO — and don’t mind paying the higher out-of-pocket fees when you need to go out of network.
- You’re good at keeping health care receipts. You don’t mind filling out forms and sending in bills for payment if you get care out of network.
What kind of person should opt for a POS: Someone who likes being able to go out of network for care, but also wants a PCP coordinating your care.
EPO stands for exclusive provider organization and is a managed care plan that requires you to go to doctors and hospitals in the plan’s network.
You don’t need to choose a PCP or need a referral, so in that sense, it’s similar to a PPO, but you will only receive coverage for providers in your network. Other parts of an EPO plan are similar to an HMO, such as having a limited network of doctors and hospitals. You can’t get care outside the network unless it’s an emergency.
Much like a PPO, you need to get approval from your health plan in order to get what’s deemed as an expensive service.
When an EPO might be right for you:
- You want the flexibility of a PPO and don’t need a referral as long as you stay in network.
- You’re OK having a limited network of doctors and facilities like an HMO.
- You want a network like an HMO, but don’t want to choose a PCP.
What kind of person should opt for an EPO: Someone who doesn’t mind have a limited number of doctors and facilities and would rather not have to get a referral to see a specialist.
It’s open enrollment season at your job and your employer offers you a choice between the three biggest plan types: HMO, PPO and HDHP. Which is best? It really depends on your financial and medical situation – and preferences.
Choosing the right health insurance plan is a personal decision and depends on your situation and preferences. Whether you ultimately choose a PPO, HMO, HDHP, POS or EPO, take costs, flexibility, coverage and convenience into account when making that decision.
|Type of plan||Average deductible*||Require PCP?||Need referrals?||Out of network care|
|POS||$1,301||No||No||Yes, but costlier|
*Kaiser Family Foundation, 2017 Employer Health Benefits Survey. Note: The survey did not include the average deductible amount for an EPO.