HMO, PPO, EPO, HDHP: What Do All These Letters Mean?
Picking a health plan can feel like reading alphabet soup. HMO. PPO. EPO. HDHP. The good news? Each set of letters answers just two simple questions:
Which doctors can I see?
How do I pay for my care?
Let's break them down.
HMO: Health Maintenance Organization
An HMO has a smaller network of doctors. You pick one main doctor, called a primary care doctor. If you need a specialist, like a skin doctor, your primary care doctor usually has to send you there first. This is called a referral. HMOs usually don't pay for doctors outside the network, except in an emergency. In return, HMOs often have lower premiums each month.
PPO: Preferred Provider Organization
A PPO gives you more choices. You can see any doctor in the network, and you don't need a referral to see a specialist. You can even see doctors outside the network, but you'll pay more. PPOs usually have higher monthly costs because you get more freedom.
EPO: Exclusive Provider Organization
An EPO is like a mix of the two. You need to stay in-network, but have more flexibility within it. Like a PPO, you don't need referrals. Like an HMO, it usually won't pay for doctors outside the network, except in an emergency.
HDHP: High Deductible Health Plan
An HDHP is a different kind of label. HMO and PPO describe which doctors you can see. HDHP describes how you pay. An HDHP has a lower monthly premium but a higher deductible. That means you pay more of your own care costs before insurance starts helping.
Because the two labels answer different questions, a plan can have both. A plan called a “PPO HDHP” has PPO-style doctor choices and HDHP-style costs. An HMO can be an HDHP too.
The big bonus? Some HDHPs let you open a Health Savings Account (HSA). An HSA is a special account where you can save money for care and pay no taxes on it.
Quick comparison
HMO
Need a referral? Usually yes
Out-of-network covered? Usually no
Monthly cost: Lower
Can open an HSA? Only if it's also an HDHP
PPO
Need a referral? No
Out-of-network covered? Yes, but you pay more
Monthly cost: Higher
Can open an HSA? Only if it's also an HDHP
EPO
Need a referral? No
Out-of-network covered? Usually no
Monthly cost: In between
Can open an HSA? Only if it's also an HDHP
HDHP
Need a referral? Depends on the network
Out-of-network covered? Depends on the network
Monthly cost: Lower
Can open an HSA? Usually yes
Which one is right for you?
There's no single best plan. It depends on your health, your budget and the doctors you want to see. In the next few articles, we'll look at each plan more closely. Then we'll help you choose.
Key takeaways
HMO, PPO and EPO plans are mostly about which doctors you can see.
An HDHP is about how you pay: lower monthly cost, higher deductible.
Many HDHPs let you open an HSA to save for care tax-free.
