Going Through Open Enrollment? Here’s What to Know About the Different Types of Health Insurance


Going Through Open Enrollment? Here’s What to Know About the Different Types of Health Insurance

Health Insurance
CD Rodriguez
By CD Rodriguez
Aug 31, 2019
Couple in front of computer looking at papers regarding open enrollment for health insurance

Whether you get your health insurance through your job, Medicare or one of the Affordable Care Act exchanges, wading your way through the mix of plans can be confusing. It’s a veritable alphabet soup of abbreviations—HMO, PPO, POS, EPO, HDHP—and it may seem like you need a Ph.D. to distinguish them all to make a change during open enrollment.

Here’s a look at six commonly offered plans out there, the pros and cons, and advice on which ones may be right for you.

Health Maintenance Organization (HMO)

This plan usually limits coverage to doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency.

Pros: You’re required to have a primary care physician to oversee your care and refer you to specialists as needed. When you have consistent contact with one provider, they get to know you and your medical history, making it more likely you’ll stay up to date on screenings, preventative care and treatments. Costs—including premiums and your deductible—also tend to be lower than other plans such as PPOs (explained below).

Cons: Out of all the plans, the HMO offers you the least amount of freedom when it comes to picking your providers. While HMOs are required to cover emergency services at out-of-network hospitals at in-network rates, the medical providers can bill you for the difference.

An HMO plan is best for: People in good health who see physicians only for basic medical care like immunizations, preventive care and annual wellness visits.

Preferred Provider Organization (PPO)

Sign up for this plan, and you’ll pay less if you use providers in the plan’s network. You can use doctors, hospitals, and providers outside of the network without a referral for an additional cost.

Pros: You can visit any doc without getting a referral, and if you do opt to see a physician who’s out of network, some—although not all—of that cost will be covered.

Cons: You may have to shell out money for an annual deductible before the PPO begins to pay for any claim. If you use an out-of-network provider, you may have to pay the doctor upfront, then file an insurance claim to get the PPO plan to pay you back.

A PPO plan is best for: Someone who sees medical providers a lot—for example, someone with a chronic condition such as arthritis or Type 2 diabetes—who wants to be able to see specialists without waiting for a referral.

Point of Service (POS)

This plan is essentially a combination of an HMO and a PPO. While you can go out of network, you’ll typically pay much less if you use doctors, hospitals and other health care providers who belong to the plan’s network. POS plans require you to get a referral from your primary care doctor in order to see a specialist.

Pros: These plans tend to be cheaper than PPOs, but also allow you to see other specialists who happen to be out of network.

Cons: If you don’t need to see specialists, you probably won’t get as much value out of this plan.

A POS plan is best for: Someone whose primary care physician is already in the plan’s network, but still wants the flexibility of going out of network to see other health care providers and doesn’t mind paying the higher out-of-pocket fees when doing so.

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Exclusive Provider Organization (EPO)

This is a managed-care plan where services are covered only if you use doctors, specialists, or hospitals in the plan’s network.

Pros: Unlike an HMO, you usually don’t need a referral as long as you see an in-network specialist. This means you can get in to see someone faster, and that you don’t need a primary care provider. They’re also less expensive than HMOs or PPOs.

Cons: You have a smaller choice of doctors. EPOs won’t pay for any out-of-network care unless it’s an emergency, which could be problematic if you end up needing a certain specialist for a complicated health issue.

An EPO plan is best for: Someone healthy who doesn’t travel a lot, and who’s comfortable sticking to the in-network doctors.

Catastrophic Plan

If you’re under the age of 30, or qualify for a hardship exemption (for example, you’re homeless, recently filed for bankruptcy or unemployed), then you qualify for these very inexpensive plans.

Pros: Monthly premiums are very low, and cover preventative services such as mammograms, colonoscopies, vaccines and three visits a year with your primary care physician.

Cons: You have to pay all other medical services out of pocket before you meet your deductible, which is very high; for 2019, the deductible for all catastrophic plans is $7,900. After you reach that, however, the plan will cover 100 percent of your medical costs for covered benefits.

A catastrophic plan is best for: Young, healthy adults under age 30 who don’t need much other than basic preventative care.

High-Deductible Health Plan (HDHP)

An HDHP has a higher deductible than other insurance plans besides catastrophic, (at least $1,350 in network for an individual, or $2,700 in network for a family) but a lower monthly premium.

Pros: You can combine an HDHP with a health savings account (HSA), which allows you to pay for certain medical expenses like your deductible and copays with pretax money. As a result, you’ll end up spending less. You also still won’t pay a dime for preventative care (think colonoscopies, mammograms, vaccinations and, of course, your yearly wellness visit)—it’s all free.

Cons: If you do get sick, you’ll spend thousands of dollars out of pocket—up to $6,650 for an individual or $13,300 for a family (and more than that if you go out of network). A Harvard study found that people with chronic medical conditions who were enrolled in HDHPs were three to four times as likely to avoid care than people in more traditional health plans.

An HDHP plan is best for: Someone who’s healthy, rarely sees the doctor and who can afford to spend thousands of dollars for medical care on the off chance that they or a family member do get really sick.

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CD Rodriguez

CD Rodriguez

CD Rodriguez has worked as an HR manager for 28 years. Currently at Avanzar Interior Technologies, he also worked in benefits and recruiting at USAA and Toyota Motor Manufacturing

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