It's no secret that health care can be expensive. The average American's health care will cost a whopping $400,000 throughout a lifetime. With U.S. women having a life expectancy that's about four years higher than that of the average man (81 years versus 77), they face a potentially more significant burden. Fortunately, health insurance covers much of this cost, assuming you have the right plan.
To keep premiums and out-of-pocket expenses as low as possible, women should thoughtfully consider available plan types. Browsing a state or federal health insurance marketplace or evaluating your employer's offerings and knowing the basic set-up of the main four options aids the decision-making process.
Here, we break down HMOs, PPOs, EPOs and POSs to help you choose the right plan for you and your family:
HMO (health maintenance organization)
This managed-care plan offers enrollees and their dependents a set list of doctors and facilities from which they may receive medical services. By contracting with these specific people and places, the insurer forms a health care network.
An individual enrolled in an HMO selects a primary care physician from the list of members. This doctor serves as the main source of medical care. A patient visits this physician for physicals and routine office visits. If the primary care physician believes someone could benefit from the services of a specialist, the doctor refers her to an appropriate person in the network.
Things to consider when choosing an HMO:
Pros: As long as you stay in-network, many medical costs are covered or reduced. Also, HMO policies are often cheaper to purchase than counterparts.
Cons: HMOs limit choice to participating providers. Except in an emergency, they will not pay for services performed outside of the network.
Food for thought: If there is a doctor or medical facility you want to use, find out if it is part of the particular HMOs network before signing up. Also, realize that each HMO has a different extent of coverage, including copay amounts, approved procedures and prescriptions, and maximum out-of-pocket expense. Examine these factors. If, for instance, a medication you rely on monthly is not covered under a given HMO's pharmacy benefits, you might want to avoid that plan rather than switch medications.
PPO (preferred provider organization)
Like HMOs, PPOs contract with specific doctors and medical facilities to form a health care network. People enrolled in the PPO can keep their costs down by sticking to these "preferred providers." Patients who want care outside of the network can do so with some coverage, but they incur a greater share of the financial burden than if they had remained in-network.
While some individuals in PPOs do have a primary care physician, enrollees do not need that doctor for referrals. Patients can see any specialist within the network without first seeking approval.
Things to consider when choosing a PPO:
Pros: People looking for greater flexibility often select PPOs to expand their service options.
Cons: Premiums tend to be higher for PPOs compared to HMOs because of that freedom of choice.
Food for thought: Before signing up for a PPO, evaluate how important the ability to go out-of-network is to you. If you decide to go that route, thoroughly examine each PPO plan. Some may include the professionals and facilities you like within their network, which will help keep costs down. Plans also differ significantly in terms of coverage, deductibles, and the like, so read carefully.
EPO (exclusive provider organization)
The name aptly summarizes this type of managed-care plan. Enrollees can expectd to use only the health care providers and facilities that belong to their policy's network. No out-of-network coverage exists except in an emergency.
However, an EPO differs from an HMO in that the former does not require an individual to first see her primary care physician for a referral before going to a specialist. Patients can freely schedule services with anyone who is part of the network.
Things to consider when choosing an EPO:
Pros: EPOs resemble HMOs by contracting with medical professionals and facilities to keep costs down — with the added advantage of the ability to seek care anywhere in the network without needing consent from one's primary care physician.
Cons: You won't receive financial assistance of any sort if you choose to go out-of-network.
Food for thought: Often described as an HMO/PPO hybrid, the cost of participating in an EPO tends to fall somewhere between the two. As with all plans, premiums are only part of the picture. Take a close look at your health care needs and what ultimate costs may be when factors such as copays are considered.
POS (point-of-service plan)
Like the previous three, a POS relies on a network of contracted professionals and facilities. Participants receive lower medical costs in exchange for limiting choice to network members. However, POS members do have some flexibility to go elsewhere with less coverage. What a person ends up paying depends on where she goes — the point of service.
At the center of a POS is one's primary care physician. As with an HMO, a POS member sees this doctor for preventative measures and basic health care. When a patient needs specialty services, the primary care physician issues a referral. The doctor typically makes this referral to someone (or somewhere) that's part of the network. However, a POS does offer leeway to be referred outside the network.
Things to consider when choosing a POS:
Pros: Enrollees save money by using in-network doctors and services but retain the option of going out-of-network for a higher price.
Cons: Under most plans, you cannot see a specialist either in or out of network without a referral.
Food for thought: A POS resembles an EPO in that it combines elements of both an HMO and a PPO. As such, premiums for this hybrid generally fall somewhere in between. While careful reading of any insurance plan is a smart idea, it's a must for understanding the intricacies of a POS — especially when going out-of-network. Coverage levels can be confusing, and the plan may require individuals to take care of filing paperwork themselves.