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HMO, PPO, or EPO? How to Pick the Right Health Insurance Plan

Female doctor smiling arms crossed while young patient is in the background with parents to illustrate how to pick the right health insurance plan.

Looking for health insurance? Knowing the difference between HMO, PPO, and EPO plans can help you pick the right health insurance plan. Depending on whether you most value savings on the one hand, or flexibility on the other, knowing the benefits (and disadvantages) of HMOs, PPOs, and EPOs can help you make an informed decision.

HMO stands for Health Maintenance Organization.

On the plus side

  • HMO plans tend to be less expensive than other plans. Especially if you are young, healthy, and don’t see the doctor that often (or aren’t particular about what doctors you can see), you might appreciate the cost-savings associated with HMOs.

On the negative side

  • The main drawback associated with HMOs is the lack of choice. First, you must designate a primary care physician (PCP) or one will be chosen for you.
  • In order to see a specialist, you must first get a “referral” form your PCP.
  • You can only see doctors within your network of providers. All necessary care you may require can only be provided by doctors and hospitals inside that specific HMO’s network, unless you suffer an emergency. Care outside of network is not covered.
  • Your selected primary care physician within the network must provide a referral to see a specialist or have certain tests performed.

Although HMOs tend to be the least expensive, they also have the least flexibility for members.

PPO stands for Preferred Provider Organization.

On the plus side

  • A main advantage of a PPO insurance plan is flexibility. Unlike HMOs, which are more restrictive, PPOs allow their enrolled members the freedom to visit any doctor or medical facility as needed. They are not required to designate a listed primary care physician before seeking other doctors or specialists.
  • Under a PPO insurance plan, members are free to schedule appointments to be treated by a specialist without first having to consult with a PCP to obtain a referral. This can result in earlier diagnosis and faster treatment as well as getting necessary tests that might otherwise be delayed or denied.
  • Another major advantage of a PPO health insurance plan is your ability to be seen by non-network physicians or facilities. These plans will typically cover a portion of the costs incurred for treatments or other services rendered by healthcare providers, whether in or out of network.

On the negative side

  • One of the negatives of PPO insurance plans, compared to other types, is the existence of a deductible to be paid by the member toward the cost of treatment provided by non-network physicians and specialists. The insurance company will not pay for the services rendered until the member receiving the services first contributes a payment toward the full total of the invoice. These out-of-pocket deductibles can range in price, depending on your plan.
  • Another drawback of PPO plans is co-insurance, which means members are still on the hook for a portion of the remaining balance for out-of-network treatment costs, even after meeting the deductible. More specifically, the member’s responsibility for any services they receive outside the PPO network involves cost-sharing expenses such as deductibles, co-payments, and co-insurance. Depending on the PPO plan, co-insurance percentages paid by the insurance carrier can range from 70 to 90 percent, with the remaining 10 to 30 percent to be paid by the member.

Even though PPOs are among the most popular types of group health insurance plans and many of their features appear more attractive on the surface than other managed care policies, some PPO negatives could prove problematic, depending on your budget.

EPO stands for Exclusive Provider Organizations.

On the plus side

  • A main benefit of an EPO health plan is the low cost of health insurance premiums. Generally cheaper than HMOs, EPOs are structurally similar to PPOs.
  • Like PPOs, most EPOs don’t require referrals from a primary care physician for specialist visits.
  • EPOs are good for individuals who are generally in good health and don’t have to regularly be seen by specialists that may be outside of the EPO network.
  • Often better suited for rural areas where larger HMO carriers may not cover.

On the negative side

  • While PPO and HMO plans tend to have wider choice of caregivers, EPOs are more limited. The number of doctors to choose from within the network is typically much smaller than in HMOs and PPOs.
  • Another disadvantage of EPOs is the difficulty of members to see an out-of-network healthcare provider without paying all of the medical fees incurred out-of-pocket.
  • EPOs will generally not cover care you receive outside your network, other than for an emergency.

Choosing your health insurance plan wisely can make a huge difference when it comes to your budget, especially when cost-sharing is involved. But, you don’t have to navigate the health insurance maze alone. The experts at Freeway can answer your questions before you make that all important decision about what type of plan is best for you. Open Enrollment 2016 runs from November 1, 2015 to January 31, 2016.

Use the time you have left to let Freeway help you compare healthcare plans, explore free or low-cost health insurance programs you may be eligible for, and provide you with a health insurance quote at no cost to you. Our health services are 100% FREE – so what have you got to lose?

No matter which health insurance plan you choose, Freeway Insurance will work to get you the best coverage and the most affordable rate. Get a free health insurance quote online or over the phone at (800)777-5620.

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