Insurance carriers and health care providers pool together in advantageous networks. A network is a group of health care providers (including doctors and hospitals) who work for pre-negotiated rates.
Differences between networks include whether you must select a primary care physician, whether you need a referral to see a specialist, and whether you are covered for out-of-network care. Sticking with providers that are in your plan's network (in-network) will significantly reduce your medical costs.
Common Plan Types
- EPO – Exclusive Provider Organization (network only coverage): This network has the most limited group of physicians and hospitals to choose from. However, they combine the flexibility of PPOs with the cost savings of HMOs. Under these plans, you don’t need to choose a primary care physician and don’t need referrals to see specialists. EPOs don’t cover costs outside of the network unless it’s an emergency – if you go to a doctor or hospital out of network, you will pay all costs.
- HMO – Health Maintenance Organization (network only coverage): HMO healthcare plans require the selection of a primary care physician through which all of your health care services filter. This system requires a referral from your primary physician to see a specialist except in an emergency. An exception to this rule is that women are not required to have referrals to visit an OB/GYN for routine services. Advantages of HMOs are less paperwork, lower costs, and more coordination between providers.
- POS – Point-of-Service (in-network and out-of-network coverage): This plan model is a hybrid of the other three. You must select a primary care physician who handles your referrals, but they may refer you to a specialist that is out-of-network unlike in an HMO or EPO. This difference makes it important to understand the out-of-network cost rates (coinsurance, copays, etc.) associated with your plan choice.
- PPO – Preferred Provider Organization (in-network and out-of-network coverage): This network provides the most flexibility and the largest collection of providers and hospitals. You don’t need a primary care physician and can visit any health care professional without a referral, in- or out-of-network. Staying in networks means lower copays and full coverage, but out of network care can still be covered for some services for a certain co-insurance cost.
Did you know...? The "same" plan can vary by employer (and even change from year-to-year with the same employer). This is commonly referred to as an employer's "plan design." Premiums vary. Deductibles vary. Annual out-of-pocket limits vary. Employer subsidies towards premiums and contributions into tax-advantaged accounts vary. So, if your spouse's employer offers healthcare benefits, don't assume the "same" plan is equal.