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Insurance.com is dedicated to informing, educating, and empowering you to make confident insurance decisions. Our content is carefully reviewed by insurance experts, and we rely on a data-driven approach to create unbiased, accurate insurance recommendations. Insurance.com maintains editorial integrity through strict independence from insurance companies. There’s an alphabet soup of health insurance plans – everything from HMO to PPO to POS plans. Which health insurance plan is best for you? The answer to that question depends on multiple factors that pertain to your specific situation. When comparing health plan options, take these factors into account:
Once you review those factors, choosing a health plan is much easier. KEY TAKEAWAYS
IN THIS ARTICLE
Types of health insuranceThe five most common types of health insurance plans are:
PPOs are the most common type of health plan in the employer-sponsored health insurance market, while HMOs lead the way in the individual insurance market. HDHPs make up about one-third of employer-sponsored plans and are seen as a lower-cost health insurance option for employers over the past decade. POS and EPO plans are options, but they’re not as common as HMOs, PPOs and HDHPs. In this guide, we provide information about each of these plans to help you make the right decision for your circumstances. We will go through each of the five plan types and highlight the differences: What is a PPO?PPO stands for preferred-provider organization. A PPO's premiums are usually much higher than an HMO and HDHP, but that comes with greater flexibility. Forty-six percent of covered employees were in an PPO in 2021, according to a November 2021 report by the Kaiser Family Foundation, 16% were in an HMO and 9% were in a POS.  You usually don’t have to select a primary care provider (PCP) in a PPO plan. A PPO often has larger healthcare provider options than an HMO. PPOs allow you to get both in-network and out-of-network care -- though out-of-network providers cost more. You can also see a specialist without a referral. Though a PPO gives you more independence, this doesn’t mean that you have complete access to the health care system without any oversight. A health plan may still require you and a physician to get approval for a costly service, such as an MRI. That's called a prior authorization, which has become common in health care. Kaiser Family Foundation reports the average annual deductible for a PPO single coverage plan is $1,245. Once you reach your deductible, your insurer begins to pick up its portion of the coinsurance. The plans also include an out-of-pocket maximum for in-network care. If you reach your out-of-pocket maximum, your insurer covers all costs. A plan’s out-of-pocket maximum can vary widely, so you’ll need to check to see the out-of-pocket maximum for your plan. The main benefit of a PPO is flexibility, but it comes at the cost of higher premiums and a deductible that you will have to pay before your insurer starts paying for care. When a PPO might be right for you:
What kind of person should opt for a PPO: Someone who utilizes health care regularly and sees specialists or wants to have the option to see a specialist without getting a referral. What is an HMO?HMO stands for health maintenance organization and makes up 16% of employer health plans, but about half of the marketplace plans. It's known for lower premiums than PPOs and a restricted network of doctors and hospitals. That smaller network means you sacrifice flexibility for lower costs. HMOs require that you name a PCP who “coordinates” care. Your primary doctor must refer you first in order to see a specialist. HMOs may have a deductible, but it's lower than other plans. The average deductible for individual coverage is $1,271. Health plans have been increasing HMO deductibles at a faster rate than other plans in recent years. One drawback to an HMO is that these plans usually don’t allow you to go outside your network. If you do, you pay for the care on your own. An exception is if you need emergency care, which requires the facility (but not necessarily the providers) to bill as in-network. Not all providers accept HMOs. Before choosing an HMO, make sure your provider or providers take the plan. When an HMO might be right for you:
What kind of person should opt for a HMO: Someone who wants to pay as little as possible in premiums though not have to face high deductibles. An HMO could be a good option if you have a PCP and your other health care providers are already in the HMO. What is an HDHP?HDHP stands for high-deductible health plan. HDHPs have grown in popularity as more employers offer the plans as a way to contain health care costs. Twenty-eight percent of workers have a HDHP. HDHP plans in the marketplace are called Bronze or Silver plans. Most people with a marketplace plan has either a Bronze or Silver plan. An HDHP describes only the deductible and out-of-pocket costs. An HDHP can have a PPO or HMO benefit design. What's makes an HDHP a high deductible plan is its hefty deductible. The IRS defines an HDHP as a health plan with a deductible of at least $1,400 for an individual and $2,800 for a family. You need to pay that amount for care before your health insurance chips in. The average HDHP deductible is $2,424, but many plans exceed $3,000, according to the Kaiser Family Foundation. An HDHP's out-of-pocket in-network costs can't exceed more than $7,000 for an individual and $14,000 for a family. You’ll want to keep that in mind if you choose this plan, and you should set aside money for the deductible in case you need it. Once you reach the deductible, your insurer will begin to pay its share and you'll pay your percentage of coinsurance. Your insurer will cover all costs once you’ve hit your out-of-pocket maximum. HDHP usually have lower premiums, so they can be a less costly plan option -- as long as you don’t need a lot of medical care. HDHPs might be a good idea if you are young and healthy, but could be costly to older adults or young families. Another feature that might interest you is that HDHPs typically feature a Health Savings Account. An HSA allows you to save money pre-tax to pay for qualified medical expenses. Some employers seed money in employee HSA accounts to help pay for care, so you’ll want to see if your employer provides money to employee HSAs when making a health plan decision. Before deciding on an HDHP, think about your next year of potential health care costs to see whether the lower premiums will more than offset the potential costs of care. When a HDHP might be right for you:
What kind of person should opt for a HDHP: Someone who is healthy and doesn’t expect to use many health care services within the next year. You want the cheapest premiums and don’t mind having to pay a high deductible if you need care. What is a POS?POS stands for point of service plan and makes up only 9% of health plans. POS plans are a hybrid of PPOs and HMOs. In fact, point of service means that health care consumers get to choose whether to use HMO or PPO services each time they see a provider. POS plans usually have similar rules to HMOs. For instance, you need to choose an in-network physician as your PCP. However, you can see an out-of-network physician for a higher fee in a POS plan. When a POS might be right for you:
What kind of person should opt for a POS: Someone who likes being able to go out of network for care, but also wants a PCP coordinating your care. What is an EPO?EPO stands for exclusive provider organization and is a managed care plan that requires you to go to doctors and hospitals in the plan’s network. Much like a PPO, you need to get approval from your health plan in order to get what’s deemed as an expensive service. When an EPO might be right for you:
What kind of person should opt for an EPO?: Someone who doesn’t mind having a limited number of doctors and facilities and would rather not have to get a referral to see a specialist. What is the difference between HMO, PPO, and, HDHP?It’s open enrollment season at your job and your employer offers you a choice between the three biggest plan types: HMO, PPO and HDHP. Which is best? It really depends on your financial and medical situation – and preferences. For instance, would you rather the flexibility of not having to go to a smaller group of providers in an HMO and don’t mind paying more upfront for your care via premiums? Then, a PPO might be right for you. Do you not care about having a large network of providers, but want to make sure you pay as little as possible for health care? Then, an HMO could be perfect. Do you not use medical services often and you want a plan that protects you, but not cost much in terms of upfront premiums? Then, a HDHP could be the direction to go. Choosing the right health insurance plan is a personal decision and depends on your situation and preferences. Whether you ultimately choose a PPO, HMO, HDHP, POS or EPO, take costs, flexibility, coverage and convenience into account when making that decision. Cost comparison of HMO, PPO, EPO, POS health insurance plansCost, including premiums and out-of-pocket expenses, plays a vital role when choosing a health insurance plan. HMOs and EPOs usually cost less than PPOs and HDHPs are often the cheapest health insurance plans. Here's the average premium and deductible for single coverage for each plan, as well as how the plans differ in terms of referrals and out-of-network care: Here's the average premium and deductible for single coverage for each plan as well as how the plans differ in terms of referrals and out-of-network care:
Kaiser Family Foundation, 2021 Employer Health Benefits Survey. Note: The survey did not include the average premium or deductible amounts for an EPO. How managed health care plans workManaged health insurance plans are a way for health plans to control costs. Fee-for-service and indemnity health insurance plans are other types of plans, but those usually cost more for employers. Managed health insurance plans pool members and create provider networks. Those providers follow contracts with health insurance companies. That includes payment levels and even offering a certain level of quality rather than fee-for-service. With managed care, health insurance companies can better control costs and providers are rewarded for reducing patient health care services by offering high-quality care. How to enroll in medical health plansIf you’re eligible, you can enroll in a health insurance plan through your employer when you first become eligible, during open enrollment or if you qualify for a special enrollment period. Employer-sponsored health insurance is how most pre-retirement people get health insurance. You can also sign up for an individual or family plan through the Affordable Care Act (ACA) marketplace or a similar plan directly from a health insurance company. Other health insurance options are Medicare and Medicaid if you qualify. Eligibility for those plans is connected to your age (Medicare) and household income (Medicaid). Frequently Asked QuestionsWhat is the difference between an HMO and PPO?PPOs and HMOs are the two most common types of health insurance benefit design. Here’s how they differ:
What is the difference between PPO and EPO?PPOs and EPOs both don’t demand a referral to see specialists and don’t require that members choose a primary care provider, but they differ in a few ways:
What is the difference between a PPO and POS?PPOs and POS don’t require referrals to see specialists and both allow out-of-network care. Here’s how they’re different:
What is the difference between a PPO and POS?PPOs and POS don’t require referrals to see specialists and both allow out-of-network care. Here’s how they’re different:
What is the difference between an HMO and POS?Members have to receive in-network care for both POS and HMO plans and both types of plans have restricted networks. They’re different in one key way:
What is the difference between an EPO and POS?POS and EPO plans both don’t require provider referrals to see specialists, but here’s how they’re different:
Why are the premiums for a PPO more expensive than those for an HMO?A PPO gives you much more coverage than an HMO and also comes with the flexibility to visit out-of-network doctors and hospitals – a setup that costs more to deliver, resulting in a higher monthly premium. PPOs also have a much wider network of doctors and hospitals and also allow you to see a specialist directly, whereas, with an HMO, you are often required to see your primary care physician before going to a specialist. Which type of health insurance plan typically has the lowest deductibles?An HMO, one of the cheapest health plans, offers low premiums and deductibles along with fixed copays for doctor appointments, according to Aetna. “HMOs are a good choice if you’re on a tight budget and don’t have medical issues,” the insurer says. Sources
What does POS mean in HMO?HMO stands for health maintenance organization. POS stands for point of service.
What is the difference between a HMO and PSO?HMO plans typically have lower monthly premiums. You can also expect to pay less out of pocket. PPOs tend to have higher monthly premiums in exchange for the flexibility to use providers both in and out of network without a referral. Out-of-pocket medical costs can also run higher with a PPO plan.
Is a POS like an HMO?A point-of-service plan (POS) is a type of managed care plan that is a hybrid of HMO and PPO plans. Like an HMO, participants designate an in-network physician to be their primary care provider. But like a PPO, patients may go outside of the provider network for health care services.
What does POS mean in a Medicare Advantage plan?The Point-of-Service (POS) option is offered in some Health Maintenance Organization (HMO) plans. Most HMOs only cover care from in-network providers, except in case of emergency. The POS option allows you to receive coverage for certain services out of network, but usually at a higher cost.
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What is the difference between hmo and hmo pos
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