Types of Health Insurance – Forbes Advisor

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When shopping for health insurance, it’s 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 models. The design of a plan’s benefits dictates how you get care and affects health insurance costs. Understanding the differences between these plans is essential to finding the best health insurance plan for you at an affordable price.

What is a PPO?

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

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

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

What is an HMO?

Members with health maintenance organization (HMO) coverage are limited to seeing in-network providers who either work directly with or 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 likely need a referral to see a specialist.

An HMO will not cover your care if you go outside the plan’s network, unless 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 is an EPO?

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

Unlike an HMO, you likely won’t need a referral to see a specialist. Also, unlike an HMO, physicians do not work for or contract with EPOs. Instead, the EPO negotiates lower fees with providers that are passed on to policies when you need health care services.

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

What is 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 within the plan’s network.

However, they may also seek out-of-network care. You will need a referral to get care outside 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 a 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 a individual and $3,000 for a family in 2023.

Total annual out-of-pocket costs for in-network services for a high-deductible plan cannot be more than $7,050 for an individual or $14,100 for a family in 2022. In 2023, out-of-pocket maximums will go to $7,500 dollars for an individual and $15,000 for family coverage.

HDHP premiums are usually 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 great advantages of an HDHP is that you can pair it with a health savings account (HSA), which allows you to save 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 single best type of health insurance. Each plan has its pros and cons, and the right plan depends on what you need from health insurance coverage.

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

Comparing a PPO vs. HMO

  • PPOs typically 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 a portion of out-of-network costs.

Comparing a PPO vs. EPO

  • EPO plans typically have lower premiums than PPOs.
  • EPO plans generally do not pay for out-of-network care, while PPOs pay a portion of these 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, although you’ll likely pay more for that care than if you stayed in network.
  • A PPO plan does not require a referral to see a specialist, but a POS plan likely does.
  • A POS plan is likely to 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 network providers, while HMOs have providers who either work for or contract with the HMO.

Comparing an HMO vs POS

  • Members of a POS plan can seek out-of-network care, 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 HMO and POS plans tend to have lower premiums compared to PPOs.

Comparison of an EPO vs POS

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

How much does health insurance cost?

The cost of health insurance in the Affordable Care Act (ACA) marketplace 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 marketplace.

Average health insurance costs by health plan type

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