What are the five kinds of insurance plans and what's the difference between them?
Let’s assume for a second that you're not an expert at health insurance. You probably wouldn't be able to explain the difference between an HMO, an EPO, a POS, a PPO, and an HDHP.
If this doesn't sound familiar, it's because you had better things to do since the last time you worried about insurance. But now you're deciding which insurance plans you want to offer your employees and acronyms are popping up everywhere. This handy reference guide will help make sense of the insurance literature you've been going through.
The Five Types of Health Insurance Plans
HMO - Health Maintenance Organization
With an HMO plan, you must choose a Primary Care Physician (PCP) from a network of local healthcare providers who'll refer you to in-network specialists or hospitals when necessary. All your care is coordinated through that PCP. HMO plans require referrals and have no out of network coverage.
In sum:
Referrals are required
No out-of-network coverage
May or may not have deductibles
PPO - Preferred Provider Organization
A PPO plans give you almost full flexibility. You don’t need a primary care physician. You can go to any health care professional you want without a referral — inside or outside of your network. PPO plans do not require referrals and have out of network coverage.
In sum:
No referrals required
In and out-of-network coverage
May or may not have a deductible
EPO - Exclusive Provider Organization
An EPO plan combines the flexibility of PPO plans with the cost-savings of HMO plans. You won't need to choose a primary care physician, and you don't need referrals to see a specialist. EPO plans do not require referrals and have no out of network coverage.
In sum:
No referrals required
No out-of-network coverage
May or may not have a deductible
POS - Point of Service
A POS plan is a type of managed care health insurance plan that also combines the characteristics of the HMO and the PPO, similar to the EPO. The difference is that POS is based on a managed care foundation, meaning lower medical costs in exchange for more limited choice than a PPO. POS plans do not require referrals and have out-of-network coverage.
In sum:
No referrals required
In and out-of-network coverage (but with a smaller network)
May or may not have a deductible
HDHP - High Deductible Health Plan
An HDHP is a health insurance plan with lower premiums and higher deductibles than a traditional health plan. It's often thought of as the one of the most budget-friendly while still offering greater coverage than a simple HMO. Being covered by an HDHP is also a requirement for having a health savings account. HDHP plans do not require referrals and usually have out of network coverage.
In sum:
No referrals required
In and out-of-network coverage
Always has a deductible
Which plan is best for me?
We get this question often and there is no catch-all answer. It depends on three key questions:
Are your preferred doctors/facilities in the your carrier's network?
Do your doctors/facilities take your desired insurance?
Would you prefer a lower premium for a higher deductible (savings for those in good health) or would you prefer a higher premium for a lower deductible or no deductible (savings for those with less-than-good health)?
Dinsmore/Steele can help walk you through those questions and help you decide which plan is ideal for you and your employees. Just schedule a quick chat with us — you'll never have to remember another insurance acronym.
