HMO vs PPO Health Plans

HMO. EPO. POS. PPO. So much healthcare lingo, so little time. When it comes to understanding different health plan options, there is a lot to learn. Kudos to the people who know what kind of health plan they have, and what exactly that means for them. For everyone else, here is a quick guide to knowing (or pretending like you know) what kind of health plan you have. Understanding your benefits empowers you to make the best healthcare decisions for you and your families, and everyone wants that, right?

What is an HMO?

HMO stands for Health Maintenance Organization. With an HMO plan, you are required to designate a Primary Care Physician (PCP) as the first point of contact for all of your care. Your PCP coordinates your healthcare and a PCP referral may be required in order for you to see a specialist. However, some services, like yearly mammograms and other preventive care, may not require prior approval.

With the exception of emergency care, an HMO does not provide coverage for out-of-network care. Although HMOs may offer a more limited choice of physicians than some other plan types, they generally have lower out-of-pocket medical costs and lower monthly premiums.

What is a PPO?

PPO stands for Preferred Provider Organization. It is a type of health plan that allows for more flexibility. You do not need to have a Primary Care Physician (PCP) with a PPO plan, which means you do not need a referral to see a specialist. It also allows you to see go to a doctor, specialist, or hospital that is out-of-network.

Generally there are higher out-of-pocket costs for providers you see outside of your network. The increased flexibility and provider options come at a cost – PPO plans generally have higher monthly premiums.

EPO and POS Plans

HMOs and PPOs aren’t the only types of health plans out there, they just get a lot of the attention. EPO and POS plans are two other common healthcare options.

EPO Plan

An EPO, Exclusive Provider Organization, as the name denotes, has an exclusive network of providers and functions in the same way as an HMO plan. You may, but not always, be required to get referrals for specialists through your PCP. Like HMOs, EPO plans provide no coverage for services by out-of-network providers, with the exception of emergency care.

POS Plan

A POS, Point-of-Service plan, allows you to go out-of-network for covered services, but for a higher cost. Like an HMO, a POS usually requires that you designate a PCP and you may be required to obtain your PCP’s referral in order to see a specialist. A POS is more of a hybrid HMO and PPO plan, so pay attention to how your POS plan works.

To help you see these plan types side-by-side, we made this chart comparing some of their key characteristics.

How do i decide which plan is right for me?

One health plan type isn’t necessarily better than another. Only you can decide what kind of health coverage is best for you and your family. Determining what is best depends on things like what kind of care you want or need, whether you are insuring yourself or also dependents, and how much you are able or willing to spend on care. As you evaluate plans, some things to consider are:

  • Deductible
  • Out-of-pocket maximums
  • Co-insurance (amount paid, as a percentage, after deductible is met)
  • Co-pays
  • Rx Prescription drug coverage
  • Whether you want a Primary Care Physician as a gatekeeper
  • Provider network in your area (whether in or out-of-network)

The key to remember here is this – While these different plan types describe the general types of access to care you have available to you, the conditions of your plan may vary based on the plan type, state of issue or insurer, so keep that in mind as you compare your options.

Making benefits decisions is never easy. Some people have probably never even heard of an EPO or POS plan, and may not fully understand the benefits they currently have. Employers bear much of the responsibility for delivering benefits communication to employees. Providing frequent reminders and helpful enrollment information can save your business time, money, and headaches so employees are able to make informed benefits decisions. See how XcelHR can help you.