What Health Insurance Plan is Right For You?

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Margaret Huntley 28-04-2021

The Differences Between HMO, PPO, POS, HDHP, And EPO Health Plans

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HMO, PPO, POS, HDHP, and EPO are all acronyms for different types of health insurance plans. We know it can be overwhelming to try and decide between various plans and that’s why this article will lay out the differences between the standard types of health insurance plans: to help you decide which plan is best for you and your lifestyle.

Factors to Consider When Looking for Health Plans

It is important to consider the status of your health and of your family’s health when choosing a health insurance plan. If you anticipate needing a lot of healthcare, then you will likely have to opt for a plan that offers a wide range of coverage. If you don’t anticipate needing a lot of healthcare, then you can do without that wide range.

Another crucial factor to consider is your budget. How much is too much for a deductible? How much are you willing to pay in premiums? What about out-of-pocket expenses?
Considering these money-related questions alongside the status of your and/or your family’s health needs will help you select the right health care plan for you.

Health Maintenance Organization (HMO)

This type of plan has a relatively low premium and low deductible. It requires you to name a Primary Care Provider (PCP), who essentially coordinates all of your healthcare needs. Your PCP must provide a referral in order for your HMO insurance provider to cover the cost of seeing a specialist.

You must also seek healthcare only within the network outlined by your HMO insurance provider. The ‘network’ consists of healthcare professionals who either have a contract with or are employed by your healthcare provider. The only exception for seeking healthcare outside of the network is in the case of an emergency.

Preferred Provider Organization (PPO)

This type of plan has a higher cost and higher deductibles than an HMO. The higher price allows for more flexibility in which healthcare services you may seek. For instance, there is no requirement for a PCP and therefore there is no need for a referral to see specialists.

Often, in place of a referral, your provider will require pre-authorization to fund healthcare services. This means that your insurance provider must approve the cost before they pay. So, if you opt for this plan make sure to keep organized receipts to help you with the pre-authorization process.

A PPO plan also permits you to seek care outside of the network. Although you should note that your out-of-pocket cost will increase slightly for healthcare providers outside the network.

Point of Service Plan (POS)

A POS plan is similar to HMOs but offers slightly more flexibility. POS does require you to name a PCP who is within the network, however, you are permitted to see someone outside of the network at a higher cost. This flexibility comes at a bigger price, but it is not as high as a PPO, making POS a good middle-ground choice. 

High Deductible Health Plan (HDHP)

As you can probably guess by the name, this type of plan requires a high deductible. The higher deductibles allow for lower premiums. HDHP also allows for a health savings account where you can put pre-tax money to be used for medical expenses in the future. 

Another thing: HDHP may have an HMO or PPO type plan meaning that your ability to name a PCP or go outside the network will vary.  

Exclusive Provider Organization Plan (EPO)

This plan requires you to stay within the network (unless in the case of an emergency) for your healthcare. However, there is no need to select a PCP. The limited amount of doctors lowers the cost of this plan.  

Final Thoughts on the Differences Between the Standard Types of Health Insurance Plans

We know this is a lot of information to take in, but understanding the differences between the standard types of health insurance plans will help you make the best decision for you. 

Here’s a table that will also help guide your decision. When choosing a health plan,  balance your budget with your healthcare needs and chances are, you’ll arrive at the right choice for you. 

HMOPPOPOSHDHPEPO
PremiumLowHighMiddleLowerMiddle
DeductibleLowHighMiddleHighMiddle
NetworkStay WithinCan Go OutsideCan Go Outside at Higher CostDependsStay Within
PCPRequired (must refer to specialists)Not RequiredRequired (must be within Network) (must refer to specialists)DependsNot Required

Margaret HuntleyMargaret Huntley is a creative writing and philosophy student at Western University. She has been working as a freelance writer for over two years and has written about everything from insurance, to poker, to health and wellness for international businesses.