Health insurance plans are known by various acronyms, including as HMO, PPO, EPO and POS. It's important to understand the plan you purchase because some plans don't cover all of your medical needs. If you inadvertently visit a doctor who's not in your network, you can wind up paying a lot of money out-of-pocket. HMO and EPO plans both only cover in-network visits and care.
HMO stands for Health Maintenance Organization, and it's one of the most common types of health insurance available in the United States. If your insurance coverage is an HMO, you must select a primary care physician, or PCP, from your designated network. Networks are generally based on physical location or metro areas. The PCP you choose will serve as your doctor for basic checkups and health needs. If you need to see a specialist for any other reason, your PCP must provide a referral in order for the visit to be covered by insurance. If you elect to visit a doctor who's not in your network, your HMO won't provide coverage.
Exclusive Provider Organizations, or EPO plans, are structured similarly to HMO plans. In an EPO, there's a specific network of doctors you must choose from; however, you are not required to elect a PCP and you don't need a referral to visit a specialist. As long as the specialist is in the network, the cost is covered under your plan -- but EPO networks can be smaller than an HMO network for the same area. Costs for out-of-network care are generally not covered, though some plans might offer reimbursement for emergency situations.
On average, EPO plans cost less than a comparable HMO plan. The insurance company pays out based only on the services rendered for EPO plans, as opposed to a monthly payment schedule for those on an HMO plan. Both types of plans typically have co-payments due at the time of the office visit, as well as yearly deductibles. The costs for co-pays and deductibles, if applicable, will vary by plan and insurance provider.
Choosing which health care option is right for you ultimately depends on your individual or family's health care needs and your budget. An EPO plan is likely to offers cheaper rates, but the trade-off is a smaller network. An HMO plan provides more choices but has the inconvenience of having to see a PCP before you can visit a specialist. The insurance company can provide you with a detailed list of providers within either network so you can weigh the pros and cons of each option before making a decision.