Healthcare Decision-Making: HMO, PPO, EPO, Or POS – Know Your Options

Health insurance is one of the most important investments you can make in your and your family’s future. But if you’re frustrated by all the jargon, you’re not alone. Health insurance terminology can be confusing. It might be one of the reasons why so many Americans choose to forego medical insurance. 

HMO, PPO, EPO, or POS – do you understand what all these common insurance plan acronyms even mean? Don’t worry; they’re easy to understand with just a bit of expert guidance. Get to know your options in this concise guide to healthcare decision-making. 

Differences Between HMO, PPO, EPO, And POS Plans

Here is a breakdown of each of these four types of health plans, as well as their main pros and cons.

Health Maintenance Organization (HMO)

With a Health Maintenance Organization (HMO) plan, you have access to medical services within a  managed network of preferred healthcare providers. The providers are usually close to where you live or work. 

HMOs have lower premiums and out-of-pocket costs and are popular with people on tight budgets. 

Referrals And Primary Care Physicians (PCPs)

On an HMO plan, you’ll need to select a primary care physician (PCP). This is the person who will decide if you see a specialist or not, and you will usually require a referral from them. Unlike some other plans, you can’t just go ahead and see a specialist and expect it to be covered by your insurance.

In-Network Vs Out-Of-Network Care

When you choose an HMO plan, your choices of healthcare providers are severely limited. You don’t have the option to select out-of-network care over in-network care. Your PCP will automatically refer you to a specialist (if needed) on the network.

Preapprovals For Medical Services

On an HMO plan, preapprovals for medical services are required, as is common with managed care options (we’ll talk more about that later).

Pros

  • Low premiums
  • Low out-of-pocket costs
  • Coordinated healthcare services in your area

Cons 

  • You can only access other medical treatments through a primary care physician
  • You need a referral to see a specialist
  • Out-of-network care is not covered

Preferred Provider Organization (PPO) 

With a Preferred Provider Organization (PPO) plan, you can access a much broader network of healthcare providers than on an HMO plan. However, this freedom of choice comes at a price, as PPOs tend to have higher premiums and deductibles than HMOs.

Referrals And Primary Care Physicians (PCPs)

On a PPO plan, you will not have to choose a primary care physician or be referred by one to see a specialist. While this saves time and gives you greater autonomy in your healthcare decision-making, it means you take more responsibility for your healthcare choices.

In-Network Vs Out-Of-Network Care

When you choose a PPO plan, in-network vs out-of-network care is not as much of an issue as with HMOs. You can also receive care out-of-network on a PPO, albeit at a higher cost. This gives you greater freedom when seeking medical care. 

Preapprovals For Medical Services

On a PPO plan, you may need preapprovals for certain medical services. This requirement can vary from one plan to another.

Pros

  • A broader network of preferred providers than HMOs
  • No primary care physician needed to access other health services
  • You don’t need a referral to see a specialist

Cons 

  • Limited coverage for out-of-network medical services
  • Out-of-network care carrie higher out-of-pocket costs
  • Premiums are typically higher than HMO plan premiums 

Exclusive Provider Organization (EPO)

With an Exclusive Provider Organization (EPO) plan, you access healthcare and medical treatments within a network of preferred providers, much like with PPOs. However, as with an HMO, you must use these healthcare providers exclusively. 

Referrals And Primary Care Physicians (PCPs)

On an EPO plan, referrals and Primary Care Physicians are not an issue as with HMOs. You can choose to see a specialist if you need to, but they must be one of the providers approved by the EPO plan.

In-Network Vs Out-Of-Network Care

When you choose an EPO plan, coverage is typically limited to in-network services at the approved providers. EPOs generally do not cover out-of-network care. The exception is when you have a medical emergency, and the nearest medical treatment is at an out-of-network provider. 

Preapprovals For Medical Services

On an EPO plan, you will almost always require preapprovals for medical services.

Pros

  • Generally cheaper than PPOs, with very affordable premiums
  • You don’t need to go through a primary care physician for medical care.
  • No need for a referral to see a specialist

Cons

  • Limited to an exclusive network of providers
  • No coverage is offered for off-network providers (except in an emergency)
  • One of the most limited types of health insurance

Point-of-Service (POS)

With a Point-of-Service (POS) plan, you will experience a combination of HMO and PPO features.

There’s a preferred provider network, and like with an HMO, you’ll have to choose a primary care physician. You’ll also need referrals for specialist visits within the network, like you would on an HMO. But like a PPO, you’ll have limited out-of-network coverage, although at a higher cost.

Referrals And Primary Care Physicians (PCPs)

On a POS plan, referrals and Primary Care Physicians are required.  

In-Network Vs Out-Of-Network Care

When you choose a POS plan, in-network care is strongly encouraged. Out-of-network care is allowed but the coverage will be limited and carry higher out-of-pocket costs.

If you are referred to an out-of-network service by your primary care physician, your POS plan will pay out more than if you use an out-of-network provider without a referral. 

Preapprovals For Medical Services

On a POS plan, you may need preapprovals for various medical services. 

Pros

  • Combo of HMO and PPO features
  • You can access out-of-network care when you need to
  • It’s affordable if you stick to the preferred providers

Cons

  • You need to have a primary care physician who will make decisions about your ongoing care
  • You need a referral to see a specialist
  • Out-of-network care carries a higher out-of-pocket cost

What Are Managed Care Options? 

Managed care options are part of a healthcare delivery model focused on quality healthcare through coordinated services at a controlled cost. They place a lot of emphasis on preventative care to improve patient outcomes.

This is achieved with a network of healthcare providers and managed care options. Costs are kept low because insurers negotiate rates with these healthcare providers beforehand, and prior authorization for specific procedures and services is required.

A Health Maintenance Organization (HMO) is an example of a managed care option.

What Are Provider Networks?

Provider networks are groups of medical practitioners and facilities that have entered into a contract with insurance companies. They agree to accept a discounted rate for policyholders on specific health plans. 

Depending on your specific health plan, the network may be exclusive (you have to use them) or preferred ( you ought to use them). Failure to do so can result in your medical services not being covered, as they were obtained out-of-network. 

Choosing The Right Plan

HMO, PPO, EPO, and POS plans are all forms of major medical insurance. So, which of these health insurance plans is the right one for you?

  1. Is it a matter of price vs choice? If you are looking for highly managed healthcare and affordable premiums and don’t mind restrictions, an HMO may be suitable for you. Want to have more choices on the network of providers and do away with the need for referrals? You’ll have this freedom on a PPO.
  1. Want the best of two worlds? If you can’t decide between an HMO and a PPO, a POS might be the solution for you. It has features of both HMOs and PPOs so that you can enjoy the best of both types of health plans. 
  1. Perhaps you want a cheaper plan and don’t mind being limited to an exclusive network of healthcare providers. Then, an EPO is your best bet. You will pay lower premiums, but you won’t have coverage outside of the exclusive provider network except in an emergency.

What To Consider When Choosing A Health Insurance Plan

But it’s not always as clear-cut as this. Price is important, sure, but not everything is about the budget. 

Your specific medical needs, the available providers in your area, and your family obligations should also factor into your decision. You need a plan that’s compliant with the Affordable Care Act and suits your unique medical profile.       

This is where it helps to speak to an insurance broker like Enhance Health. We’ve helped people all over the country with their health insurance decision-making. Our qualified consultants can help with choosing the right plan for all your needs.                                                                                                          

Conclusion

Your choice of an HMO, PPO, EPO, or POS health insurance plan depends on how you feel about restrictions. Generally, the more restricted you are to a provider network, the cheaper the plan. However, this is not always the case. 

Affordable health plans of all types are available throughout the US. We can help you choose the best one that meets both your financial situation as well as your healthcare preferences. Contact us today for expert advice on health plans and assistance with medical insurance sign-up. 

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