Health insurance can be confusing. HMO… PPO… EPO… PCP… Q… R… S… T…
If you feel like you’re drowning in a sea of alphabet soup, you aren’t alone! All the acronyms, confusing terms, and long documents can make it feel as if you’ll never understand health insurance. But, if you can better understand some of the terms, it might help you to feel more confident in navigating the world of insurance.
Let’s start with a few basic insurance terms:
- A network is a list of healthcare providers who have established relationships with your insurance plan, and usually it is cheaper to use these providers for care.
- The Primary Care Physician (PCP) is your main doctor—the one you see for check-ups. This doctor will also decide if you need to see another doctor or specialist. Your plan will to provide information about which doctors can be your PCP.
- A referral is when your PCP decides you need to see another doctor. Usually, this occurs when you need to see a specialist for some reason.
Now, back to the alphabet soup of health insurance plan types:
- HMO stands for Health Maintenance Organization. Generally, the first thing you want to do with an HMO is select your PCP. If you need to see another doctor, you will usually need a referral from your PCP. Your PCP will make sure to refer you to doctors who are in your HMO network (which is usually in your local area). In an emergency, there may be care that you can receive out of network.
- A PPO, or Preferred Provider Organization, plan offers less expensive care if you go to doctors who are in your network. You can go out of the network, but it will be more expensive. You will not need a referral to go to someone out of network.
- EPO stands for Exclusive Provider Organization. The exclusive part means that your insurance is only going to cover, or pay for, doctors in the network. But, you may not always need a referral to see a specialist. Sometimes, you can go outside your plan if you are having an emergency.
- POS, or Point of Service, plans typically direct you to providers who are in network. You may need a referral from your PCP to see a specialist. You will pay less if you stay in network, but you can still get some coverage to go out of network. These plans can be very different, so it is important to ask questions and make sure you understand the coverage.
These plans mainly differ on a few basic points:
- how costly or complicated it is to go out of network;
- the cost that you pay each month for the plan; or,
- the amount you have to pay when you go to see the doctor.
Try thinking about what you want in a health insurance plan and then looking for a plan that fits those needs. For example, there is usually a balance between the amount you pay each month and the amount you pay when you go to the doctor. If you pay more each month, you typically pay less when you see the doctor. If you pay a low amount each month, you may have a higher amount to pay when you go to the doctor. You can think about how you want to be able to use your insurance and what you can afford, and then select a plan that allows you to use your plan the way you want.
- Smart Use Health Insurance: Understanding and Estimating Health Care Costs (Sept. 21, 12:00-1:00pm EST)
- Smart Choice Health Insurance: Basics (Oct. 16, 12:00-1:00pm EST)
This post was co-written by Carrie. You can learn more basic information on some of the most important aspects of personal financial management by following the “Money Management Guide” series from our Financial Wellness Team.