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 (like doctors and hospitals) 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 schedule appointments directly with the specialist of your choice.
- Out-of-network services: Some plans cover out-of-network services, while others do not.
- Price: Plans differ in premiums (your monthly costs for the coverage).
Here’s a table to help you compare the different plans at a high-level:
|Plan Type||Network Size||Out-of-network coverage||Referral needed to see a specialist?||Premiums|
If you still want more detail, here’s a breakdown of each type of plan:
PPO—Preferred Provider Organization
PPO plans tend to have the largest networks and most flexibility in terms of accessing providers. They also generally comes with a higher price tag. Here’s a summary of PPO plans:
- Larger network: The network of available providers is generally larger than the other plan types
- No referrals needed: Members do not need a referral to see a specialist
- Out-of-network-care is typically covered, but with higher deductibles and coinsurance
- Higher costs: PPO 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. Here’s the summary for HMO plans:
- Smaller network: The network of available providers is typically much smaller than a PPO
- Referrals are needed: Members usually must get a referral from their primary care physician (PCP) in order to see a specialist
- Out-of-network care is not covered, unless it’s an emergency
- Lower costs: HMO plans often have the lowest monthly cost, as these plans tend to be the most restrictive in terms of members’ access to providers
EPO—Exclusive Provider Organization
An EPO is similar to a PPO except it does not provide out-of-network coverage. Network size: Generally the same as PPO, minus the out-of-network coverage.
- Referrals not needed: Members do not need a referral to see a specialist
- Out-of-network care is not covered unless it’s an emergency
- Costs: Premiums tend to be lower than a PPO, but higher than an HMO
POS—Point of Service
POS plans features vary widely from carrier to carrier. They can sometimes require referrals, they can sometimes exclude out-of-network coverage, and their premiums vary, but are normally more than HMO and less than PPO.
- Network size: Generally smaller than PPO networks
- Referrals may be needed: Referrals requirements vary from plan-to-plan
- Out-of-network care is usually covered, with higher cost-sharing for the member
- Costs: Premiums tend to be lower than PPOs
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, ask yourself these two questions:
- Do members need a referral to see a specialist? No referrals typically means it’s easier for you to see specialists.
- Is 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, costs can differ for in-network doctors vs. out-of-network doctors.
Nonetheless, there is a lot to consider so it’s often best to rely on a broker. There is no cost to use a broker so it’s common to use one to help 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.
Members can only contribute to an HSA if they have coverage under an HSA-qualified, High Deductible Health Plan (HDHP). Once the funds are in the account, they can continue to withdraw funds to pay for qualified medical expenses even if they no longer have coverage under an HDHP medical plan.