Finding the right Health Insurance Plan can seem quite complicated, and understanding the differences between the various plan types is essential.
There are many factors to consider when deciding which one is the best insurance plan for your family’s medical needs. The most important factors to focus on are the average frequency of health care needs, your age, and any preferred physicians that you would want to have access to.
With that in mind, it's important to understand each of the different types of health insurance plans and what they include in order to find the right one for you.
Main Types of Health Insurance
The most common types of plans are HMO (Health Maintenance Organization), PPO (Preferred Provider Organization), EPO (Exclusive Provider Organization), and POS (Point of Service). The coverage of the plans differs by whether they require referrals, have a certain network, and monthly premiums as well as out of pocket costs. Online marketplaces and employers should be able to provide the information of what they include.
Health Maintenance Organization (HMO)
HMO plans have access to a specific network of doctors and hospitals. A network is a group of providers that have agreed to accept lower rates for plan members and meet certain quality standards.
The distinguishing feature of this plan is the primary care physician (PCP), who will act as a sort of gatekeeper. In order to have a visit to a specialist covered, your PCP will determine the treatment plan going forward and provide a written referral. The referral is needed in order to be covered by health insurance for the costs of specialists or other procedures.
Premiums are generally lower for these plans, along with a low deductible or none at all. While these plans don’t allow you to go outside of your network, if you do, you pay for the care with the exception of an emergency.
Preferred Provider Organization (PPO)
PPO plans, or Preferred Provider Organization, have more flexibility when picking a doctor or hospital so you don’t need to stay within a certain network. While the plan does feature a network of providers and looking within the network could be the most cost effective with better benefits, there are fewer restrictions on seeing non-network providers.
There is also no need to visit a primary care physician before going to a specialist. The premiums tend to be higher and it’s common for there to be a deductible. Therefore, the out-of-pockets costs are usually higher.
Exclusive Provider Organization (EPO)
Exclusive Provider Organization plans tend to be less expensive than their HMO and PPO counterparts because they limit access to specific health care providers. This makes it more affordable than a PPO while offering a little more flexibility than an HMO.
Unlike the PPO plan, you do not need to get a referral from a primary care doctor to see a specialist or for other procedures.
If you’re looking for lower monthly premiums and are willing to pay a higher deductible for healthcare you need, then EPO health insurance is one to consider.
Point of Service (POS)
Point of Service health insurance is mainly within a network of providers which should provide a better level of coverage than out-of-network providers. You can still go outside of the network for care but will need to file a claim for reimbursement if you do. The plan also requires referrals from a primary physician to continue with specialized treatments that can be covered by the insurance plan. If you are okay with having your primary doctor choosing the specialists for you and coordinating your visits then this plan can work well.
Premiums fall on the lower side but also have a higher deductible when you go outside of the network.
High Deductible Health Plan (HDHP)
The High Deductible Health Plan has grown to be more popular as more employers have pushed to offer plans that reduce health care costs for their employees. These plans have lower premiums that make them a less costly plan but have a higher deductible, and they can include any of the previously mentioned plans. A higher deductible means you'll have to pay a larger share of your medical bills before the insurance will cover anything.
There is also a Health Savings Account attached to the plan, that allows you to save money pre-tax to pay for qualified medical expenses, and can be contributed to by the employer as well. If you choose this plan, you’ll want to keep in mind setting aside money for the deductible into the account.
| Health Insurance Plans | Overview | PCP Referrals | Stay in Network |
|---|---|---|---|
| HMO: Health Maintenance Organization | Lower monthly premiums and low to none deductibles | Yes | Yes |
| PPO: Preferred Provider Organization | Premiums are higher and common to have deductible | No | No, but less expensive |
| EPO: Exclusive Provider Organization | Lower monthly premiums and higher deductibles | No | Yes |
| POS: Point of Service | Lower monthly premiums and higher deductibles | Yes | No, but less expensive |
How to Enroll
Typically, people enroll in an insurance plan through their employer. However, if you don't work for a company that offers a health plan, or if you still want to shop around, there are several options to explore.
To shop the marketplace for your own plans, search HealthCare.gov to find coverage. Start by searching on your state’s public marketplace. Not all states have one, so redirect to the federal marketplace next if yours doesn’t.
There is also an option to purchase health insurance through a private exchange or directly from an insurer.
Choosing the Best Plan for You
There are a lot of factors that come into play when choosing a health insurance plan. Here are some things you should consider.
If you already have a preferred doctor, then look through and compare the network providers to see if the doctor falls under one of the plans you are considering. If not, then look for the plan that has more quality choices and a larger network of providers to choose from. Decide whether you are able to stay within the network to keep costs to a minimum or whether you will still most likely need to see other providers.
Another important point to consider are the monthly premiums and deductibles. Be aware of how much you will need to pay out of pocket with each plan and be prepared. While a lower monthly premium can be a deciding point, generally, the lower the premium, the higher the deductible and out-of-pocket expenses.
The frequency of visits to a physician and need of medical care play a big role in this decision. For someone who visits the doctor less frequently the higher out-of-pocket costs might be better with a lower premium, than for someone who visits more often in which case the out-of-pocket costs can quickly add up.