All of those acronyms and who knows what they mean!
When trying to determine which choice is the best for you, you need to take the following factors into account:
- How healthy are you and your family?
- Does your health care provider accept only certain insurance providers?
- What’s your current financial situation?
- Do you want to pay more upfront in premiums or later in coinsurance?
- Do you want flexibility in choosing your specialists?
The answer to these questions will make choosing an insurance option a little easier.
- 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.
Here are the Pros and Cons about each of the five plans that will help you make the right decision for your circumstances.
What is an HMO?
HMO stands for health maintenance organization and makes up 16 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.
HMO PROS: Lower premiums & Lower Cost Than a PPO
HMO CONS: Need to stay in network & Need referral to see a specialist
You’ll likely pay less in premiums for an HMO compared to a PPO – sometimes significantly less.
Not all providers accept HMOs, so before choosing an HMO, make sure your provider or providers accept the plan.
What kind of person should choose an HMO: Someone who wants to pay as little as possible in premiums and 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.
What is a PPO?
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.
PPO Pros: Larger Network, Can go out of network, Don’t need a referral for specialists
PPO Cons: Higher premiums & Has a deductible
You usually don’t have to select a primary care provider (PCP) in a PPO plan, and you can choose from more healthcare providers than an HMO because PPO networks are usually larger. PPOs allow you to get both in-network and out-of-network care — though out-of-network providers will cost you more. You can also see a specialist without a referral.
In addition to higher premiums, PPOs usually have a deductible that you have to meet before the health plan pays for care.
What kind of person should chose a PPO plan: Someone who utilizes health care regularly and sees specialists or wants to have the option to see a specialist without getting a referral.
What is an HDHP?
HDHP stands for high-deductible health plan. HDHP’s have grown in popularity as more employers have started to offer the plans as a way to contain health care costs.
HDHP Pros: Lower Premiums, Employer-contributed HSAs
HDHP Cons: Need to stay in network, Need a referral to see a specialist.
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.
The deductible is usually higher in an HDHP compared to other plans. You’ll want to keep that in mind if you choose this plan, and you should set aside money for the deductible in case you need it.
HDHPs typically feature a Health Savings Account, which allows you to save money pre-tax to pay for qualified medical expenses. Some employers also contribute money into employee HSA accounts to help pay for care.
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.
What is a POS?
POS stands for point of service plan and makes up only 6 percent of health plans. POS plans are a hybrid of PPO and HMOs. In fact, point of service means that the health care consumer gets to choose whether to use HMO or PPO services each time you see a provider.
POS Pros: Don’t need a referral, Can go out of network for care
POS Cons: Need to file claims if you go out of network, higher deductibles than PPO and HMO
POS plans usually have similar rules to HMOs (for instance, you need to choose an in-network physician as your PCP), but you can see an out-of-network physician for a higher fee in a POS plan.
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.
What is an EPO?
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.
EPO Pros: Don’t need a referral
EPO Cons: Need to stay in network for care, limited 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.
What kind of person should opt for an EPO: Someone who doesn’t mind having a limited number of doctors and facilities and would rather not have to get a referral to see a specialist.
Choosing The RIGHT Health Insurance Plan is Unique For Every Situation. The Independent Benefit Advisors, serving Raleigh & The Triangle, Charlotte, and ALL of North Carolina can help determine the plan that is best for YOUR situation.