Good to Know: HMO, PPO, and EPO Plans

When choosing your health insurance and reviewing your options, it is important to understand the difference between the health insurance plan types: HMO, PPO, and EPO.

Health Maintenance Organization (H.M.O.)

Bright ideas: Choosing the Best Insurance Plan

Image: Pexels

With HMO's, your policy will cover the doctor, provider, or hospital that has an agreement with your health insurance carrier aka "in network".  They are generally less expensive for a limited selection of providers.  If you find quality providers you like and are "in network"... and you're saving money on your health insurance premium, then it may be the best choice for you.

An HMO plan requires you to first select a Primary Care Physician (PCP) who will coordinate your care and refer you to a Specialist as needed. The PCP is, in essence, a gatekeeper and in order to see a Specialist your PCP needs to make the referral to the insurance company on your behalf.

These PCPs belong to an HMO network that has negotiated rates and coverage provided by your insurance provider and this Primary Care Physician is your first stop for care.  An insurance company has a negotiated fee structure to keep the costs down, providing a substantial patient savings.

If you're unhappy with your doctor, you do always have the option to change your Primary Care Physician by first contacting your carrier and finding a new provider in network.

Preferred Provider Organization (P.P.O.)

With PPO's, you have more choices of medical providers, but your insurance plan still has a network.  You do have the ability to go outside the network for care and do not need to see a PCP for a referral to a specialist.

However, medical providers receive a higher reimbursement rate from the insurance companies if they are "in network" so you (the patient) will pay less for your share.  If you choose to see a provider outside the network, you will have a higher out-of-pocket cost because there is no negotiated fee reduction or cost control for out-of-network services.

Due to the typically broader networks and the flexibility of seeing a provider outside of the network, these plans usually have a higher monthly premium.

If you had a PPO in the past, please be advised that due to health care reform, the PPO networks are not always as extensive as they once were.  Your PPO may cover 90% of the costs when you receive care from an in-network provider.  But if you see an out-of-network care provider, your PPO might only reimburse you for 70% of your costs.

Exclusive Provider Organization (E.P.O.)

With an EPO, you have a network similar to the HMO networks and you must use providers within the network, but unlike the HMO plan, you don’t need a Primary Care Physician to coordinate your care.

You are free to see any healthcare provider in the network.  As a member of an EPO, you can use the doctors and hospitals within the EPO network, but cannot go outside the network for care. There are no out-of-network benefits.

Selecting the best option for your needs and budget will really vary depending on your anticipated medical costs and personal finances.