Choosing a health insurance plan can feel overwhelming. As someone who’s worked in healthcare, and in human resources, I’ve talked to lots of people about their benefits and helped them make decisions for themselves and their families. I’ve also had to do this for myself every year, sometimes more than once in a year. I’ve had both HMOs and PPOs at different points in my life, but for some folks, it might make sense to choose an EPO.
HMO stands for “Health Maintenance Organization”. With an HMO, you choose a Primary Care Physician or PCP. This person will coordinate all of your medical care. So, imagine you had a series of upper respiratory infections, you would need to go see your PCP and then, if they couldn’t get your symptoms under control they’d likely refer you out to see an allergist or possibly to an Ear Nose and Throat specialist in their localized provider network.
The main pros of an HMO are that they tend to be a little less expensive and the provider knows your medical history so they can use that knowledge to better coordinate your care with anyone you’re referred out to see. If you ever need to get your medical records together, they’ll all be gathered into one place while you have a PCP.
The main cons of an HMO are that you have to work within a smaller, more localized network (which makes it a good choice if you rarely travel as providers/services out of network aren’t covered), and your PCP has to manage your care. This means that you can’t just call a clinic and get a walk-in appointment with whoever is there. In order to utilize your HMO medical benefits, you’ll have to choose a PCP. As with choosing a lawyer, a therapist, or a hair stylist, finding someone who’s the right fit for your needs, wants, and personality can prove to be a difficult, time-consuming process. Also, if your PCP is out of the office, you may have to wait for them to make a decision or for their staff to send paperwork to someone you’re referred to.
The exceptions to having a PCP manage all of one’s care is that women don’t need a PCP to refer them to an in-network OB/GYN, and, if there’s an emergency and you need to go to the ER, you also don’t need a referral. Just make sure the ER you choose is in network if at all possible because procedures out of network generally aren’t covered.
PPO stands for “Preferred Provider Organization”. PPOs are the most common type of health insurance plan you’ll see these days. With a PPO, you have access to an expanded network and you don’t need to choose a primary care physician.
The main pros of a PPO plan are the ability to make an appointment with anyone in or out network without a referral. If you want to see a dermatologist, you can look up anyone, check to see if they take your insurance, and then, make an appointment with them. Of course, staying in network has its benefits: lower copays and a higher rate of coverage, but you have the choice of going out of network.
The main cons of a PPO are that they tend to be a little more expensive, and since there’s not one person managing your care or compiling your medical history you may have issues coordinating treatment plans between multiple offices.
EPO stands for “Exclusive Provider Organization”. An EPO limits your network to an even smaller and more localized group than an HMO, but, like a PPO, allows you the freedom to see anyone within that network without a referral. I rarely see EPOs as an employer offering.
If you choose an EPO, you need to make sure that whatever hospital or doctors you see are in your network or your services will not be covered and you’ll end up paying all of those costs. In the event of an emergency, your EPO may cover some of your costs if you are out of network, but you’ll need to check the fine print on the plan you choose.
The main pros of an EPO are that they tend to be less expensive, and, so long as you’re seeing a provider in your network, you don’t need a referral.
The main cons of an EPO are that the network tends to be small and if you are traveling outside of your network and get sick, your services will not be covered at all unless it’s an emergency.
How to decide?
If your employer gives you each of these types of plans to choose from, barring all other criteria (e.g. maximum out of pocket, copays, etc.), these are the questions I generally use to help determine which type of plan to go with.
- Do you want one provider managing your care? Yes – HMO, No – PPO or EPO
- Do you have any condition that needs to be managed closely and may require consultation among several practitioners? Yes – HMO, No – PPO, EPO
- Do you tend to see lots of specialists and/or want more choice in who they are (e.g. dermatologists, etc.)? Yes – PPO, No – HMO, EPO
- Do you (or anyone who would be covered by this plan) travel a lot? Yes – PPO, No – HMO or EPO
- Do you want or need less expensive premiums? Yes – HMO, EPO, No – PPO
- Do you see a doctor (that you want to continue to see) who is in network for one or more of these types of plans and not another?