Everybody needs health insurance. However, what choice to make for the health plan that best meets your need and fits your budget can be a daunting task. There are a couple of concerns. First of all is to choose what type of health insurance, whether it is HMO (Health Maintenance Organization), PPO (Preferred Provider Organization) or EPO (Exclusive Provider Organization). The out-of-pocket cost can be a major factor.

HMO is the least expensive of the three types because it’s more restrictive. HMO requires you to have a primary care physician (PCP) as a “gatekeeper” for all of your basic healthcare needs. PCP will refer you to a specialist, if you ever need one. Your referral will always be to a provider within your HMO network. Moreover, if you need diagnostic tests (such as blood test, X-ray, etc.), it’s necessary to have an approval from your PCP or specialist. ***Please note that with an HMO, your physician network (also called medial group) is local. Therefore, if you choose to see a doctor outside of the network or without a referral or approval, you will generally have to pay all costs out-of-pocket unless it is a true medical emergency or you have no other options.

PPO is the most expensive of the three types because it’s less restrictive but with higher monthly premiums and in some cases higher cost-sharing. PPO also has a network of providers they prefer that you use, but they’ll still pay for out-of-network care but with higher costs. You don’t need to have a PCP, and can go to a doctor or lab service of your choice. In recent years, PPOs have lost some of their popularity as insurance companies increasingly switch to EPOs and HMOs in an effort to control costs. PPOs are still common among employer-sponsored health plans though.

EPO is somewhat similar to PPO. Basically, you can go to a general practitioner, specialist, or lab service of your choice without a referral as long as the providers are in the network. Unlike PPO, EPO does not cover any out-of-network care. Therefore, it can be less expensive than PPO.

Secondly, doctor of choice is also very important. You probably have a doctor, who you’ve got to have. That means you need to know what medical group he/she belongs to, and whether that medical group has contracted with an insurance company’s HMO, PPO, EPO plans. In many cases, it depends on how much the medical groups charge the insurance companies. Most likely the more the medical groups charge, the less likely they will contract with low cost HMO plans.

Thirdly, it’s the location that needs to be considered. Do you need care when you are out of area that you live? If you are in HMO or EPO, and require for medical care, it will have to be an emergency (life and death situation), otherwise your medical expense will not be covered.

It’s our opinion that in the future healthcare insurance industry will move favorably towards HMOs, which is better managed in terms of risk-control, while PPO will eventually be too expensive to afford its existence.

For any further question, please feel free to contact us.