Understanding the basics of your health insurance plan can help you make smarter financial decisions. Once you understand how your health insurance plan works and what it covers, you need to know where you can go to get treatment. Not every plan allows you to go wherever you want for a service, and doing so may end up costing you more than expected.
In-network vs. Out-of-network
In-network: Refers to physicians and providers that deliver patient services covered under the insurance plan. Generally the cheapest option because insurance companies have negotiated lower rates with these providers.
Out-of-network: Refers to physicians and providers not covered under your insurance plan. Usually more expensive because providers have not negotiated lower rates with your insurer.
Types of Health Insurance Plans
Most of determining where you can go for service depends on the type of plan you have. Do you have an HMO, EPO, PPO, or POS?
HMO (Health Maintenance Organization)
- Must select a primary care physician (PCP)
- Only allowed to receive covered treatment from physicians and specialists in-network
- Must receive a referral by the PCP before seeing a specialist
- Visiting a provider out-of-network will result in paying all expenses without help from insurance
EPO (Exclusive Provider Organization)
- Similar to an HMO, but do not need to appoint a PCP or get a referral for a specialist
- Only allowed to receive covered treatment from physicians and specialists in-network
- Visiting a provider out-of-network will result in paying all expenses without help from insurance
PPO (Preferred Provider Organization)
- Similar to an EPO with the difference relating to visiting a provider out-of-network
- PPOs cover a portion of out-of-network costs; EPOs do not cover them at all
- In-network costs are still the cheapest option under a PPO
POS (Point of Service Plans)
- A blend of an HMO and PPO
- A PCP must be appointed
- Must receive a referral by the PCP before seeing a specialist
- A PCP can refer you to a provider that is out-of-network. The costs will be higher than in-network, but still covered at a discounted rate similar to a PPO plan.
As you can see, there is a lot of overlap among the four plans but each has its own distinction. Make sure you understand the plan you have to ensure you are paying the least amount possible for your medical services. Also, make sure your emergency fund, HSA/FSA savings and financial budget are all adjusted accordingly in the event you need a medical service.
Stay tuned for part 3 of the blog series on understanding your EOB and medical bill.
Learn more in our health insurance blog series:
Adulting 200: Understanding Your Health Insurance Coverage
This post is part of our Adulting blog series. Contact your employer for questions specific to your health insurance coverage.
