Understanding your health insurance

There are two types of health insurance policies: full coverage and partial coverage. Understanding the difference between these two types of policies will help guide you in choosing one policy over another.

Examples of partial coverage policies are those labeled as Health Maintenance Organization (HMO) or Exclusive Provider Organization (EPO) policies. A full coverage policy is known as a Preferred Provider Organization (PPO). It is important to find out what type of policy you have (HMO, EPO or PPO) as this will determine your coverage. A Point of Service (POS) policy also exists and is very similar to a PPO. One of the distinguishing differences between these two is that a POS requires a referral in order to see a specialist. 

The differences between an HMO/EPO and a PPO are fairly simple. With an HMO policy, you must go to In-Network hospitals and doctors. Any charges and bills for Out-of-Network services will not be covered and will be your responsibility. An EPO will have a slightly larger network and you may not need a referral to see a specialist. Like an HMO, an EPO will not cover any Out-of-Network services. Balance Bills for Out-of-Network services will then be your sole responsibility to pay. An HMO and EPO will typically have stronger low-end benefits such as lower cost copay’s.

A PPO policy provides coverage for both In-Network and Out-of-Network services. This means that a member of a PPO policy can go to any doctor, hospital or facility, even if they are considered Out-of-Network. Although the maximum out of pocket for Out-of-Network services is high, PPO policies ensure that there is an absolute limit for how much you may be responsible for in the event you are billed for Out-of-Network services. 

It is important to note here that an HMO and EPO policy will have an unlimited maximum out of pocket for Out-of-Network services. What this means is that if you have an HMO or EPO policy you are leaving yourself with an open-ended liability.