From HMOs to PPOs, the world of health insurance can be confusing, especially in this era of high deductible plans and co-insurance. While many people are focused on plans’ out-of-pocket expenses, experts warn that shouldn’t be the only factor in the decision-making process.
“You really have to think about your personality,” when choosing the type of health insurance to go with, says Jeff Alter, CEO Unitedhealthcare Employer & Individual. “Are you someone who is willing to be flexible around what provider you see or how you access the health-care system or are you someone who wants to find their own path?”
When it comes to health insurance, there are three main types of plans: HMOs, PPOs and EPOs.
While HMOs, which stands for health maintenance organization, were the de-facto standard in years past, PPOs and EPOs are becoming more popular, particularly among those with chronic illnesses. Last year, HMOs accounted for 8.6% of all individual and family plans at online insurance marketplace eHealthInsurance, and this year it’s up to 36%.
“HMOs are making a comeback,” says Carrie Mclean, director of customer care at eHealthInsurance. “The insurance companies, in order to keep cost down created a lot more HMO plans.”
Kevin Luss, owner of financial services firm The Luss Group, explains that patients with a HMO have to use doctors within their plan’s network to have the care covered. In addition to seeing only in-network doctors, HMO plans require a referral to see a specialist.
“They are cheaper, but HMOs are a little bit more restrictive,” says Luss. “You have to pick your gatekeeper, which is your primary care doctor.” He explains that requiring a referral reduces overall health-care costs because it will prevent people from seeing a specialist on a whim.
“HMOs are appropriate for people who aren’t seeing many specialists and don’t venture far from where they live.”
PPOs, or preferred provider organization plans, are another popular type of insurance plan that allows subscribers to go outside the network to see a doctor. However, that move might mean paying half the bill, according to Mclean. People with PPOs don’t need a referral to see a specialist. “PPOs are good for people who have a lot of pre-existing conditions that require them to see a lot of specialists and they don’t want to get a referral each time,” says Mclean. “PPOs can be more money than HMOs.”
EPOs, or exclusive provider organization plans, have been offered in some states for several years, while other states just starting offering them. “EPOs and PPOs are more open in general,” says Alter. “They offer a larger, broader network.”
That network, however, doesn’t come cheap. According to Alter, the larger the network of doctors, the bigger the price tag of a plan. People with an EPO have to stay in-network, but the network is typically large and national, which means those that summer in New York and head to Florida for the winter still have a large choice of doctors.
“Generally speaking, in a normal marketplace without significant upheaval you’ll pay 15% to 20% more for EPO,” says Luss. “It makes sense for people who travel” since the network is national.
For those choosing a plan based on what doctors are covered, Luss recommends they do their homework before making a purchase.
“Don’t trust anything you see such as Internet lists. The only way to be sure is to call the doctor’s office and speak with them.”