What are the differences between a PPO, EPO, HMO, POS, HSA, and FSA?
PPO, EPO, HMO, POS, HSA, FSA, and lions and tigers and bears – oh my! It’s not surprising that we have trouble keeping these abbreviations straight! What’s the difference between a PPO and POS? How does a HSA or FSA work? Does my current medical plan have out-of-network benefits?
PPO, EPO, HMO, POS, and HSA plans all use a network of physicians, hospitals, and other health care professionals and facilities to give you quality care. The difference between these plans is the way you interact with these networks.
We hope that the below descriptions of each plan type, and the difference between them, will help you, your HR team, and your employees make sense of this alphabet soup!
Preferred Provider Organization (PPO)
You do not need to select a primary care physician (PCP), and you can go to any health care professional without requesting a referral from your PCP.
You do have out-of-network benefits, but they are usually paid at a lower percentage than in-network benefits, have higher deductibles, and some services may not be covered. Using in-network physicians, hospitals, labs, and other health care professionals or facilities mean smaller copays and lower out-of-pocket costs. 1
Exclusive Provider Network (EPO)
EPO plans work just like a PPO plan and usually have the same network as a PPO plan. Similar to a PPO, you can go to any health care professional without requesting a referral from your PCP.
The biggest difference between a PPO and an EPO is that an EPO plan does not cover the costs of any out-of-network physicians, hospitals, labs, and other health care professionals or facilities, unless it’s an emergency. If you do go to an out-of-network physician or facility, you will have to pay the full cost yourself. EPO plans are also less expensive than PPO plans. 1
EPO products are not available in these states: Alabama, Arizona, Arkansas, Hawaii, Kansas, Louisiana, Massachusetts, Minnesota, New Mexico, North Carolina or Oklahoma.
Health Maintenance Organization (HMO)
Similar to an EPO plan, HMO plans do not have any out-of-network benefits. If you do go to an out-of-network physician or facility, you will have to pay the full cost yourself. In an emergency, an out-of-network hospital will be covered as if they were in-network, but out-of-network doctors and hospitals may bill you the difference. 2
You must select a PCP, and all of your health care services must go through that one doctor. You must request a referral from your PCP if you want/need to see any other health care professional. There are two exceptions:
- Women do not need a referral to see an in-network OB/GYN for routine services 2
If you’re considering a HMO plan, be sure to check which doctors and hospitals are in- and out-of-network before you switch.
A POS plan is a hybrid of a PPO and HMO plan. Like PPO plans, POS plans do cover out-of-network physicians and facilities, but you will pay more out-of-pocket. 3 Like HMO plans, POS plans may require you to select a PCP (depends on the insurance carrier), and you must request a referral from your PCP before you can see a specialist. 3
Health Savings Account (HSA)
HSA plans combine high deductible health plans (HDHP) and tax-free savings accounts. 4 HSA’s are usually funded through paycheck deductions. The money you contribute to your HSA is not taxed and can be used tax-free for any eligible medical, dental, or vision expense. 2 View a list of eligible (and ineligible) expenses.
HSA plans usually do not have copays for any services, including doctor visits. The HSA money you use for eligible medical expenses goes towards your medical deductible. Once the deductible is met, the insurance company starts paying a percentage of the medical expenses (ranging from 100% to 50% based on the plan). Any money left unused in the HSA can earn interest and does not expire. 4 You can claim tax deductions for any contributions you make to your HSA. 5
Employers can make contributions to your HSA, but they are not required to so.
2019 HSA Contribution Limits
|Maximum Contribution Limits||$3,500||$7,000|
|Catch Up Contribution for Age 55+||$1,000||$1,000|
Flexible Spending Arrangement (FSA)
An FSA is not a medical plan, but it can be used to reimburse medical expenses. Like HSA plans, an FSA account is usually funded through paycheck deductions. 6
Similar to an HSA, the money you contribute to your FSA can be used tax-free for any eligible medical or dental expense. View a list of eligible expenses. Any money left in the FSA expires at the end of the year – it does not rollover into the next year. 4 Unlike HSA plans, you are not required to report FSA information on your income tax return. 6
Employers can make contributions to your HSA, but they are not required to so. You cannot have an FSA and an HSA account at the same time. If you have an HSA, you can only have a limited FSA.