HMOs, PPOs, EPOs, and POS Plans: Breaking Down the Acronyms

It's hard to keep all the health plan acronyms straight. Use this guide to help choose the plan that's right for you.

It's hard to keep all the health plan acronyms straight. Use this guide to help choose the plan that's right for you.

The most common acronyms thrown around are those regarding the types of plans that provide the structure around your health care. These plans can vary in the size of the plan network, ability to see specialists, and coverage for out-of-network services, so it’s best to familiarize yourself with the differences before committing to an annual plan.

Health Maintenance Organization (HMO)

HMO is a health insurance plan where individuals are encouraged to use a network of selected hospitals and doctor at a discounted cost. Once you become HMO member, you must assign yourself with a Primary Care Physician to refer you to specialists and other medical providers.

Advantages of HMO plans:

  • Few or no claim forms required to get a service. Typically you only need to provide the insurance card.
  • Charges fixed premiums thus are affordable and accessible to plan and forecast for the year.
  • Out-of-pocket fees tend to be very low.

Disadvantages of HMO plans:

  • Restrictive as the coverage requires one to get services from a doctor in the network of providers.
  • Difficult to obtain specialized care quickly because one requires a referral from their Primary Care Physician.  

Preferred Provider Organization (PPO)

PPO is a health insurance plan where individuals are encouraged to use a network of selected hospitals and doctor at a discounted cost. Once you become PPO member, the insurance company provides you with a list of preferred healthcare providers without any obligation to select a primary care physician. However, you can seek services outside the network, at an out-of-pocket cost.

Advantages of PPO plans:

  • Flexibility to choose any medical facility or healthcare provider
  • You want to take part in an out-of-network service and cost could be covered by the insurer.
  • You want to manage your health care without referrals.
  • You wish to pay lower premiums at the expense of restricting yourself to the network.

Disadvantages of PPO plans:

  • More expensive owing to the cost of extra services provided in the form of co-insurance.
  • There can be high out-of-pocket costs

Exclusive Provider Organization (EPO)

An Exclusive Provider Organization (EPO) Plan may be seen as a crossbreed of the affordable HMO to the flexibility of a PPO.  This plan must operate within a preset limited network of health care providers but in doing so allows for lower monthly premium payments.

Advantages of EPO plans:

  • Low monthly premiums
  • Does not require a Primary Care Physician referral to see a specialist

Disadvantages of EPO plans:

  • Limited network of health care providers and don't provide out-of-network coverage.  
  • There can be high out-of-pocket maximums or deductibles
  • There are less than 10% of EPO plans offered on the Obamacare health insurance exchanges

Point of Service (POS) Plans

A Point of Service plan falls in the category of managed health care plans featuring some qualities of both the PPO and HMO; where benefit levels vary according to whether or not the policyholder receives health care in or out of network as provided in their insurance program. Premiums fall between the higher limit of PPO premiums and lower limit of HMO premiums. A Point of Service plan is the most appropriate plan to patients who rarely use the out-of-network.

Advantages of POS plans:

  • Flexibility to choose any medical facility or healthcare provider
  • You can go out-of-network with relative ease
  • National network with is convenient for those that travel often or live in rural areas

Disadvantages of POS plans:

  • There can be high out-of-pocket maximums or deductibles
  • High quantities of paperwork for out-of-network care
  • Doctor visits may have to be paid upfront, in full and participants must file claims
  • Reimbursements could take months

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