PPO, HMO, EPO, and POS are different types of health insurance plans that people can purchase. Each plan is different when it comes to:
- The size of the network: Some plans have a larger number of providers available to its members.
- Accessing various providers: For some plans, you need a referral from your primary care physician to see a specialist, whereas in other plans you can book straight with a specialist of your choice.
- Out-of-network services: Some plans cover out-of-network services whereas others do not.
- Price: Plans differ in premium and out-of-pocket costs.
Most insurers tend to focus one or two plan types. So, to get a selection of all four types of coverage, you’ll probably need to compare across different insurers.
Below is more information on each type of plan:
PPO — Preferred Provider Organization
Of all the available plans, a PPO is generally the most robust. It tends to have the largest network and most flexibility in terms of accessing providers. It also generally comes with a higher price tag. More specifically:
- Larger network: The network of available providers is generally larger than the other types of plans
- No referrals needed: Members usually do not need a referral from a primary care physician (PCP) to see a specialist
- Out-of-network-care is typically covered, but with (separate) higher deductibles and coinsurance
- Higher costs: Out-of-pocket costs and/or premiums are often higher than the other types of coverage, because a PPO provides the most flexibility in terms of allowing members relatively unfettered access to a wide array of providers
HMO — Health Maintenance Organization
HMOs tend to have the most restrictions of the various types of plans, but they also tend to have lower overall costs for premiums and out-of-pocket expenses.
- Smaller network: The network of available providers is typically smaller than a PPO
- Referrals are needed: Members usually must get a referral from their PCP in order to see a specialist
- Out-of-network care is not covered, unless it’s an emergency situation
- Lower costs: Out-of-pocket costs and/or premiums are often lower for HMOs, as these plans tend to be the most restrictive in terms of members’ access to providers
You can think of EPO and POS plans as hybrids of HMO and PPO plans:
EPO — Exclusive Provider Organization
An EPO is similar to an HMO in terms of out-of-network care, but similar to a PPO in terms of being able to visit a specialist without a referral.
- Network size: Tends to be smaller than PPO networks, but it varies from one insurer to another
- Refferalls generally not needed: Members can generally visit a specialist without a referral from their PCP, but some EPOs do require PCP referrals
- Out-of-network care is not covered unless it’s an emergency situation
- Costs: The total premium and out-of-pocket costs tend to be lower than a PPO, but higher than an HMO
POS — Point of Service
A POS is similar to a PPO in terms of out-of-network care, but resembles an HMO in terms of needing a referral from a PCP to see a specialist.
- Network size: Generally smaller than PPO networks, but the inclusion of coverage for out-of-network care means that members have more options
- Referrals are needed: Members typically need a referral from their PCP in order to see a specialist
- Out-of-network care is usually covered, with higher cost-sharing for the member (the cost-sharing may be reduced if the member’s PCP refers them to an out-of-network specialist).
- Costs: The total premium and out-of-pocket costs tend to be lower, unless you seek out-of-network care, which is covered, but has a higher cost.
Here’s a table to help you compare the different plans even more closely:
|Type of plan||Size of network||Out-of-network coverage||PCP referral needed to see a specialist?||Premium and out-of-pocket cost|
|PPO||Generally larger||Yes||No||Generally higher|
|HMO||Generally smaller||No||Yes||Generally lower|
|POS||Generally smaller, but out-of-network care is covered||Yes||Yes||Mid-range|
Now, the above definitions are general trends, and certainly aren’t set in stone. There aren’t any federal definitions or rules that differentiate the various plan types, so you may find plans that don’t fit perfectly into the general categories. So, read the fine print to understand how your specific plan options work.
How do I pick the right plan?
When you’re considering various small group plans for your business, you’ll still need to compare the nitty gritty of each plan. Make sure you understand:
- Do members need a referral to see a specialist? No referrals means it’s generally easier for you to see specialists. Keep in mind, however, that some insurance companies still require pre-authorization, even if it’s not a referral.
- Is non-emergency out-of-network care covered? If out-of-network care is covered, then you’ll have access to a larger number of doctors as part of your plan. Though, the rates can differ for in-network doctors vs. out-of-network doctors.
- If out-of-network care is covered, is there a cap on out-of-pocket costs when members seek out-of-network care? If so, how much is it? You’ll want a cap. If there isn’t one, you could potentially pay an unlimited amount for out-of-network care.
Nonetheless, there is a lot to consider so it’s often best to rely on a broker to help you find the best plan for your business.
What about an HSA-qualified plan?
In all your plan hunting, you may come across another term: HSA. The term HSA stands for health savings account. If a plan is HSA-qualified, its members can contribute pre-tax money to an HSA, and that money can be used to pay for future medical expenses
Any of the plans above (HMO, PPO, EPO, or POS) can be an HSA-qualified plan.
People can only contribute to HSAs if they have coverage under an HSA-qualified high deductible health plan (often referred to as an HDHP), although they can continue to withdraw funds from their HSA to pay for qualified medical expenses even if they no longer have coverage under an HDHP.