Shopping for health insurance coverage requires you to consider many factors that can make the experience seem confusing at best and daunting at worst. You have to consider the cost of monthly premiums, as well as how much you can afford to pay out-of-pocket for a health event such as an annual physical and the need for remedial surgery. The process for buying heath insurance has gotten complex enough that many insurers offer the use of a digital calculator to help potential policyholders decide which health insurance plan fulfills their coverage requirements, while allowing them to remain within the monthly budget.
Regardless of which type of policy that matches your healthcare needs, as well as budgetary concerns, you can expect to decide on a type of managed care health insurance policy. Whether you shop for health insurance during the open enrollment period established by the Affordable Care Act (ACA) or one of the many plans offered by an employer as part of a benefits package, you should get to know about the four primary types of managed health insurance plans.
The acronyms for the four primary types of managed car options include HMO, PPO, EPO, and POS, which stand for in the same order, Health Maintenance Organization, Preferred Provider Organization, Exclusive Provider Organization, and Point of Service. Knowing the types of services offered by the four primary managed care options helps you decide which health insurance policy works best for your healthcare needs and the ability to afford a certain type of managed care coverage.
What Are Managed Care Health Insurance Options?
Managed care health insurance options have largely replaced the traditional indemnity plans in the private marketplace. Even in the public sector, managed health insurance coverage plays an increasingly significant role in determining the type of healthcare services that are offered under the Medicaid and Medicare programs. More than 60 percent of Americans enrolled in Medicaid during 2019 received health insurance coverage under a managed care option. As of the first quarter of 2022, 45 percent of eligible Americans enrolled in a private managed care health insurance plan.
Managed care health insurance options manage the cost of providing healthcare services. Each of the four primary types of managed care options places some type of limit on the healthcare providers that a policyholder can choose from to receive healthcare services. Managed care health insurance options determine whether a policyholder must visit with a primary care physician listed in a plan. Policyholders of managed care options might not have the opportunity to receive medical care from a provider outside of the designated network of healthcare providers.
A growing number of managed care health insurance options try to enhance the health of policyholders by focusing on preventing diseases and illnesses.
What Do I Need to Know About the Four Primary Managed Care Options?
Each of the four primary managed care health insurance options present policyholders with a network of healthcare providers they can see to receive medical services. The healthcare providers listed in a network agree to charge a price that is negotiated by a health insurance company for the services offered by a provider. Each of the four primary types of managed healthcare insurance options differ on many other components of managed care coverage.
Health Maintenance Organization
For health maintenance organization plans (HMO), policyholders must utilize the medical services offered by a healthcare provider listed in a network. If you enroll in an HMO plan, you cannot receive healthcare coverage from a provider outside of the preferred network. The only exception to the in-network rule is if you required emergency health care.
You have a limited amount of time to select a primary care physician listed in the preferred network of providers. Many types of HMOs require policyholders to receive a referral to receive medical care from a specialist. HMO policyholders typically must receive approval from a plan’s administrator to receive certain medical services.
Preferred Provider Organization
Unlike an HMO, a Preferred Provider Organization (PPO) allows a policyholder to receive medical care from a provider not listed in the preferred network. However, going outside the preferred network of healthcare providers can be cost-prohibitive, as PPO plans usually pay between 70 and 80 percent of an out-of-network provider’s healthcare charges. Policyholders must make up the difference, which for costly medical bills, can be a budget-buster. If you decide to enroll in a PPO plan, you do not have to designate a primary healthcare provider, but you still might have to receive approval from your plan to receive certain types of medical care services.
Exclusive Provider Organization
Similar to an HMO plan, an Exclusive Provider Organization (EPO) plan required enrollees to visit with a provider listed in a network. You cannot receive healthcare coverage from a provider listed outside of an EPO network, even if you agree to pay more for the services provided by an out-of-network healthcare provider. Enrolling in an EPO managed care plan does not require you to choose a primary care doctor and you should not have to receive approval to visit with a specialist.
Point of Service
The fourth and least common type of managed care option is called a Point of Service (POS) plan. This type of managed care option represents a combination of HMO and PPO features. If you choose a POS plan, you can see an out-of-network provider, but expect to pay the full cost of going outside the primary physician network. However, you might receive a subsidy for going outside of the primary physician network if you receive a referral from an approved healthcare provider. You have a limited amount of time to select a primary healthcare provider, as well as to follow the requirement to get approved for certain healthcare services.
Many Managed Care Options—Which is Best for You?
Especially if you haven’t done this before and have relied on employer coverage, this may be the first time you can choose between having an HMO/PPO/EOS/POS. So which one is best? Depends on what you need.
Either way you look at it, you do have options. Whether you are eligible to enroll as a result of lost coverage, need to apply under the emergency Qualifying Life Event, need COBRA, or are seeking short-term health coverage, it pays to have someone in your corner who knows how to help.
Shopping for insurance used to be confusing and time-consuming. But with the help of our national network of licensed brokers, it doesn’t have to be. Insurance Broker Hub has helped over 10,000 consumers find the coverage they need at a price they can afford.
Our free service gives you access to an independent network of national brokers who have the experience and expertise to design a plan around your needs and budget. Ready to get started? Simply request a no obligation health insurance quote here.