HMO, PPO, EPO or POS: Which plan will save you the most money?

Before taking a closer look at the four major types of health plans, let’s clear one thing up: POS does not stand for the “piece of ####” insurance that many Americans are stuck with. It’s a real insurance option, which we’ll examine shortly.

Here’s what you need to know in order to de-mystify the acronyms that health insurance providers love to use.

Every provider makes financial deals with doctors, hospitals, and other health professionals. The insurance company refers its patients to those doctors, in return for lower treatment costs.

All health professionals that an insurer works with are considered part of that insurer’s “network.”

So if you see a doctor who participates in your insurance company’s network, you’ll pay less than if you visit a doctor who is “out-of-network” and hasn’t worked out a special pricing deal.

How much more will an out-of-network visit cost? That depends on the type of plan you’ve selected.

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HMO: Health Maintenance Organization

In an HMO, you’re restricted to network doctors – at least, if you want your insurance company to pay the cost.

You have a primary care doctor within the network, who you must see for any health problem. If you need specialized care, your primary doctor will write a referral for you to see a specialist who is also in the HMO network. Visiting a doctor who doesn’t participate in the HMO, or seeing any doctor without a referral, means you’re on your own when the bill comes due.

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PPO: Preferred Provider Organization

You have a lot more choice when you sign up for a PPO health plan.

The in-network and out-of-network distinction still exists, but you can visit any health care professional with no restrictions. Your choice does make a big difference, though; your insurance company will at least partially reimburse you for all visits, but they’ll pay more if you see a service provider who is in their PPO network. You don’t need referrals from a primary care physician to see a specialist, either.

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EPO: Exclusive Provider Organization

This is a less-common option which, like a PPO, lets you visit any doctor or hospital you choose without referrals.

An EPO plan is less expensive up front than a PPO, but don’t celebrate too quickly to have discovered this option. You (and the doctor) get zero reimbursement if you go out-of-network.

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POS: Point of Service

A POS plan is also less-common, and it’s a somewhat-complicated mix between an HMO and a PPO.

You start with an HMO network primary care physician, who can refer you to HMO specialists. But if you prefer, you can also go out-of-network for specific health issues. I

If your HMO primary doctor refers you to the non-network doctor, your insurance plan may pick up much of the cost. If you make the choice on your own, you’ll either receive a much lower reimbursement or have to pay the entire bill yourself. And this could be another deal-killer: you’ll also have to do all of the insurance paperwork yourself if you go out-of-network.

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One final and important point: every plan has very different deductible, co-insurance and out-of-pocket rules.

Picking the plan that gives you the desired flexibility to choose your doctor is just one piece of the puzzle – and as your health insurance companion,