Understanding Different Types of Health Insurance Plans

*prices are just for presentation purposes and doesn’t reflect price of health plans.

Health insurance plans - they come in more varieties than your local coffee shop's menu. From HMOs to PPOs, EPOs to POS plans, HDHPs to catastrophic plans, it can feel like trying to navigate a health insurance jungle. But don't worry, we've got your back (and your front, and all the other parts too). In this post, we'll break down the different types of health insurance plans so you can choose the one that's right for you, without feeling like you're lost in a labyrinth of medical jargon.

Here are the four main types of plans that you should know about, ordered by smallest to largest network size:

EPO

With an EPO, you have access to a network of providers that have agreed to provide medical services at discounted rates. And unlike an HMO, you don't need a primary care physician (PCP) to refer you to a specialist. This means you have the freedom to see a specialist without the added hassle.

While you don’t need referrals to see a specialist, the network size of an EPO is the most restrictive out all health plans.

POS

POS stands for "Point of Service," and these plans combine features of both HMOs (Health Maintenance Organizations) and PPOs (Preferred Provider Organizations). With a POS plan, you'll typically have a primary care physician (PCP) who is responsible for coordinating your care and referring you to specialists within the plan's network. However, you'll also have the option to see providers outside the network, although you may have to pay more for out-of-network care.

HMO

When you sign up for a Health Maintenance Organization (HMO), you choose a primary care physician (PCP). Your PCP will help you stay healthy by providing preventive care and managing any chronic conditions you may have. They'll also refer you to specialists within the HMO network when you need more specialized care.

HMO network sizes are limited to within the state and does not cover any medical expenses outside the state.

PPO

A Preferred Provider Organization (PPO) is like having a VIP pass to the healthcare world. You get to choose from a wider network of healthcare providers than an HMO and you don't need a referral from a primary care physician to see a specialist.

With a PPO, you have access to healthcare providers nationwide - you have more freedom to choose your healthcare providers and don't need referrals to see a specialist.

The following two plans describe the type of coverage rather than the size of it’s network. A HDHP and catastrophic plan can be on a HMO, PPO, or EPO:

HDHP / HSA

With a High Deductible Health Plan, you get to enjoy the cost savings of lower monthly premiums, but you'll have to pay a higher deductible before your insurance kicks in. This means that you'll need to have a decent chunk of change set aside in case you need medical care. But don't worry, once you hit your deductible, your insurance will start covering a larger portion of the cost.

One of the main benefits of an HDHP is that it allows you to pair it with a Health Savings Account (HSA). An HSA is like a magical piggy bank that you can use to save tax-free money for medical expenses. This can be a great way to build up a safety net for your healthcare expenses.

However, there are some downsides to consider. If you end up needing a lot of medical care, you could end up spending a lot more out of pocket than you would with a traditional health plan. And since HDHPs are often paired with HSAs, you'll need to make sure you're comfortable with managing your own healthcare expenses.

Catastrophic Plans

With a catastrophic plan, you'll have a high deductible - meaning you'll have to pay a lot out of pocket before your insurance kicks in. But once you hit that threshold, your insurance will start covering a larger portion of the costs.

This type of plan is typically aimed at younger, healthier people who don't expect to need a lot of medical care. It's a way to protect yourself from high medical bills in the event of a major illness or injury, while still keeping your monthly premiums low. Think of it like a safety net for your health.

However, there are some downsides to consider. If you end up needing a lot of medical care, you could end up spending a lot more out of pocket than you would with a traditional health plan. And since catastrophic plans are designed to provide coverage only for major emergencies, routine care like doctor's visits or prescriptions may not be covered.