The Six Basic Differences between health insurance plans: HMO, PPO, POS and EPO.
What to look for when purchasing a health plan.
You may be thinking this:
Ok, Maybe I do need health insurance. But what kind should I buy? How do I choose between an HMO, PPO, and every other acronym I’ve heard related to different plans?
There is a lot to consider when deciding on a health insurance plan. The most noticeable of which is: which type of plan? We thought it might help to break down the four most popular types of plans (HMO, PPO, EPOs and POS) into what makes them essentially different.
First of all, let’s break down those acronyms:
HMO – Health Maintenance Organization
PPO – Preferred Provider Organization
EPO – Exclusive Provider Organization
POS – Point-of-Service
There. Now you understand, right? Of course not!
These four health insurance types can be broken down into six basic elements:
1. Primary Care Physician (PCP) Requirement
HMO & POS plans require you to choose a PCP. This person is your main doctor who decides everything about your healthcare. They decide what kinds of test you may need, whether or not you see a specialist, and, if you see one, who that specialist is and what they practice.
In short, it is important to trust your PCP because they are the gatekeeper to your services. The convenience of having this service is that the PCP’s approval means your health insurance will cover the service, and there are far fewer logistics for you to take care of in communicating your needs to your insurance company.
2. Referral Requirement
This is related to the HMO & POS Primary Care Physician Requirement. Let’s say you are having an issue with your skin, and you’re sure you want to see a dermatologist. Well, it’s not quite so simple. First you must make an appointment with your PCP, who will refer you to a dermatologist (if they agree that this is what you need). They may offer an interim solution, and refer you to the dermatologist only after seeing whether or not the interim solution works.
3. Pre-Authorization Requirement
EPO’s and PPO’s require what is called the “pre-authorization requirement.” Since these types of plans don’t require a PCP, they use the pre-authorization requirement to ensure that any services you are getting are one’s that you really need to be healthy. If your doctor recommends a surgery, your health insurance company will decide whether it’s necessary for your health, and if it is, they will approve the surgery.
In this case, if you don’t check with your provider before receiving non-emergency healthcare, they can refuse to pay the bill. The upside to this type of plan is that it gives you more freedom to elect which specialists you see. The downside is that getting approval can sometimes take days, or even weeks. With a primary care physician, the referral happens immediately.
4. Out-of-Network Care
Each of the four plan types has a provider network. This is a list of hospitals, doctors, labs, and specialists that the insurance company works with. PPO will pay for out-of-network care, but POS requires a PCP referral. HMO and EPO will not pay. With both PPO and POS, you will pay more out of pocket for non-emergency out-of-network care.
With the other two plans, HMO & EPO, the bill is all yours. So it is important to make sure that the providers of your non-emergency care are part of your network.
Cost-sharing means that you pay a part of the bill for your services. This includes deductibles, copayments, and coinsurance. For HMO, POS, and EPO, your in-network cost-share is low. PPO is usually much higher, and so is EPO when you are receiving out-of-network services.
Even if you pay less monthly for a PPO plan, when you see the doctor you will pay more out-of-pocket. It’s a trade-off.
6. Who’s filing the Insurance Claims?
For out-of-network care, you will fill out the paperwork. Again, this is only available for PPO and EPO plans. For any in-network care the provider is responsible for insurance paperwork.
So, what does it all mean? Which one should you choose?
Like so many things in life, there is no “right” choice in this scenario. In most cases, the more freedom a plan allows (i.e. being able to choose your own providers and specialists), the more you will pay. Chances are at this point you’ve got more questions than clarity. So call us! We’ll be happy to sort it out with you.
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