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PPO vs. HMO. Employer-sponsored vs. individual. Medicare vs. Medicaid. Health plans come in many different forms. And have a dizzying number of terms to remember. The good news? With so many choices, you’re likely to find a plan that fits your needs. Understanding your choices in health coverage — and what they pay for — is smart planning that can save you money, stress, and possibly even health troubles in the future.
What are the different types of health plans?
Most health plans use acronyms, and it can feel a bit like an alphabet soup. Here are 4 common ones you’ll see while shopping for plans
- HMO
- PPO
- EPO
- POS
Programs like Medicare and Medicaid are also available for certain people.
What’s the difference between HMO, PPO, EPO, and POS?
Each type of health plan works differently to provide you coverage. Some keep costs low by working with a specific network of doctors and hospitals. Others may let you choose from more doctors, but have higher premiums (the monthly fee for your plan) and deductibles (how much you must pay before your plan covers part of your care).
- HMO (Health Maintenance Organization)
HMOs have a defined network of health care providers (doctors, specialists, and hospitals) who offer set rates for all your care.
With an HMO, you have a primary care doctor who helps you manage your care and refers you to specialists as needed. You may be able to see some specialists, such as ob-gyn and optometry, without a referral.
This coordinated approach to care often means your monthly rates and costs for covered services are lower. And you have less paperwork to deal with.
- PPO (Preferred Provider Organization)
PPOs are known for offering more choice in who you see for care. Like HMOs, PPOs have a preferred network of health care providers, but you can get care outside the network too. When you do, it usually costs more. You also need to pay the full cost for out-of-network care up front, then submit a claim with your health plan to get money back later.
With a PPO, you can have a primary care doctor to manage your routine care. But you don’t need to go through them for a referral to see a specialist.
This broader coverage is why PPOs typically have higher monthly rates and out-of-pocket costs.
- EPO (Exclusive Provider Organization)
Like HMOs, EPOs have a set network of providers to handle all your care. So unless it’s a medical emergency, you’ll pay the full cost for any care you get outside of that network.
But like PPOs, with an EPO, you might not need to go through your primary care doctor to get a referral to see a specialist. Some EPOs still require referrals — they’re called gated EPOs. You’ll need to check your plan details to see whether your EPO is gated.
- POS (Point of Service)
POS plans get their name because at every point of service (each time you get care), you choose what provider you want to see — in network or not.
Like PPOs, POS plans have a preferred provider network with lower set costs for care. But like with HMOs, you need a primary care doctor to help manage your care and refer you to specialists in that network.
You can still see out-of-network providers without a referral, but your costs will be higher. You’ll also need to pay the full cost for out-of-network care up front, then file a claim with your POS plan to get your money back later.
HMOs vs. PPOs
HMOs and PPOs are the 2 most common plan types, so it’s helpful to understand how they compare. The key differences between HMOs and PPOs are cost and in-network vs. out-of-network care access, or the variety of doctors you can choose from.
With HMOs, you’ll mostly get care inside the network. They coordinate your care for you, including referrals, so it takes less paperwork and costs you less. With PPOs, you can choose any doctor you’d like, inside or outside the network, and you usually don’t need a referral to get specialty care. But you’ll need to manage your own costs and may have to pay more up front, including higher monthly rates and out-of-pocket costs.
What’s an HDHP?
HDHP stands for high deductible health plan. Your deductible is the amount you’ll need to pay for certain medical services before your health plan starts covering any costs.
With HDHPs, your monthly premium often costs less than plans with lower deductibles. But you’ll need to pay the full cost of your care until you meet your deductible, with a few exceptions for preventive services like checkups and vaccinations.
These plans are meant to be paired with a health savings account (HSA), which can offer tax savings on medical costs. To qualify for an HSA, your deductible has to be at least a certain amount, which the Internal Revenue Service (IRS) decides each year.
Medicare vs. Medicaid
If you can’t afford a health plan or get coverage through your job, there are government programs to help, like Medicare and Medicaid. The main difference between Medicare and Medicaid is who qualifies. But depending on your needs, you can qualify for both.
Medicare is for people 65 or older, or for people under 65 with a disability, end-stage renal disease or ALS (Lou Gehrig’s disease). It’s a federal program, so eligibility is the same no matter what state you live in. There are 4 parts of Medicare. Parts A (Hospital Insurance), B (Medical Insurance) and D (Prescription Drug Coverage) covers certain services and Part C (Medicare Advantage) is an alternative to Original Medicare that bundles Parts A and B and usually Part D. Each part has different enrollment rules.
Medicaid is for people with low income. It’s a federal program run by the states, so whether you qualify, what services you can get, and how much you pay can depend on where you live. Some states even have different names for their Medicaid programs, like QUEST Integration in Hawaii or Medi-Cal in California.
How to find your health plan options
Most working adults get their health coverage through their job. This is what’s known as employer-sponsored health insurance. You can also buy health plans directly from an insurance company or through a health benefit exchange — an online marketplace where you can shop for individual and family plans.
Employer-sponsored health insurance
If you get health coverage through your job, your choice of health plan boils down to what they offer. This could be an HMO, PPO, POS, EPO, or mix of plans to choose from. Because employers cover a group of people, they can usually offer lower costs than if you bought a plan on your own.
Individual plans
If you’re self-employed, unemployed, or simply want more options than your employer offers, you can shop for health plans on a state or federal health benefit exchange. HealthCare.gov is the most common, but some states have their own, like Covered California or Washington Healthplanfinder.
You can also buy a health plan directly from an insurance company. What you’ll pay for your plan can vary widely based on personal facts like your age and where you live. So in most cases, you’ll need to request a quote to get a price.
Usually, you can only choose or change your health plan during a set time each year, called an open enrollment period. You may be able to make changes at other times — called special enrollment periods — if you meet certain conditions. These are called qualifying life events, and can include:
- Getting married
- Moving or buying a new house
- Losing coverage because you lost your job
What’s the best health plan for me?
The best health plan is one that meets both your health and budget needs. Here are some steps that can help decide what’s right for you.
- Find out what plans are available to you, either through your employer or individually
- Know how the different plan types work, like HMOs vs. PPOs
- Consider how much you want to manage your own care vs. having your plan help
- Think about often you’ll need care and how much coverage you’ll need
- Understand your plan costs
Want to shop health plans from Kaiser Permanente? Visit kp.org/shop.