3 Common Types of Healthcare Plans

An HMO plan requires you manage care through a primary care provider. This doctor will act as your quartback (the position in American football that directs the plays), and will need to make referrals for specialized services, such as a surgeon. The network for these plans may be limited. If you travel outside your area to receive care, you may have to pay an out-of-pocket cost.

While an HMO plan typically has lower premiums and out-of-pocket costs, the network of available providers is much smaller with an HMO.

Benefits of an HMO plan

• Lower premiums than POS or PPO plans
• If you stay in network, out-of-pocket costs can be more budget friendly than POS or PPO plans

Disadvantages of an HMO plan

• Less flexibility than POS or PPO plans
• All health services go through your primary care provider
• Narrower network than POS or PPO plans
• No out-of-network coverage (except in emergencies)

A POS plan has a larger network than an HMO plan, but you are still encouraged to get care from in-network providers. Referrals may be required for in-network specialists, but you can still see out-of-network providers at a higher cost.

While a POS plan usually provides more flexibility than an HMO plan, it costs more on a monthly basis, and you will still need to rely on your primary care physician for in-network referrals to keep costs lower.

Benefits of a POS plan

• Larger network than HMO plans
• Can receive out-of-network coverage
• Can seek additional care without a referral

Disadvantages of a POS plan

• Higher premiums than HMO plans
• Out-of-network services can be expensive
• Smaller network than PPO plans

A PPO plan has the largest network and likely the highest premiums and out-of-pocket costs. You will have more flexibility when choosing care and don’t need a referral to see a specialist. You can get care from out-of-network providers, but it may be more expensive.

While a PPO plan typically has higher premiums and OOP costs, it usually offers the most options when choosing providers.

Benefits of a PPO plan

• Largest network compared to HMO and POS plans
• Flexibility when choosing care
• Lower copays and co-insurance for in-network providers compared to POS plans
• Can receive out-of-network coverage
• Can seek additional care without a referral

Disadvantages of a PPO plan

• Higher premiums than HMO or POS plans
• Out-of-network services can be expensive

Of the three common types of healthcare plans available, the biggest differences between them are:

• Cost of premiums, co-payments and out-of-pocket expenses
• Size of provider network and out-of-network coverage
• If referrals are needed for specialists