Forget finding the quietest bathroom in the office or the best coffee shop for a quick midday pick-me-up. When you start a new job, one of your most important tasks is picking a health insurance plan. 

There are numerous options, and it’s hard to keep them straight. (Which doesn’t belong: HMO, PPO, POS, BYOB?). We’re here to guide you through the sea of acronyms, deductibles, referrals, and more.  

What do you consider when choosing a healthcare plan?

Start by assessing your health, lifestyle, budget, and individual and family needs. Some considerations: 

• Do you have a primary care physician (PCP)?
• Do you regularly take medications or need monitoring?
• Do you frequently visit specialists?
• Are you pregnant, or do you plan to start a family soon?
• Do you have any surgeries coming up?
• Do you have a family history of medical conditions or diseases?  
• Does your partner or child need specialized care?

Now, let’s dig into the jumble of letters that represent the types of health insurance plans.  

A breakdown of the different types of health insurance plans

Health maintenance organization (HMO)

• You must see in-network providers unless it’s an emergency.
• Specialist visits require a PCP’s referral.
• HMO members often enjoy lower copays and no deductibles.
• Tip: Be sure to check that your PCP and specialists are in-network, or you may have to switch providers. If you visit an out-of-network physician, you’ll have to pay out-of-pocket.

Preferred provider organization (PPO)

• You can visit both in- and out-of-network doctors without referrals.
• They’re more expensive than HMOs in the form of higher monthly premiums and out-of-pocket expenses.
• Go for a PPO if you’re an individual or part of a family that sees multiple doctors, wants to pick providers, and is willing to submit claims themselves.
• Tip: To keep your costs down, only visit in-network providers.

Exclusive provider organization (EPO)

• Here’s where you can find the balance between flexibility and cost.
• You usually don’t need a primary doc or a referral to see a specialist.
• Also, like an HMO, you’re only covered if you stay in-network (except for emergencies).

Point of Service (POS)

• POS are another type of hybrid plan.
• Like an HMO, specialist visits require referrals from a PCP, which means a copay and a trip to your doc.
• You’re free to see out-of-network specialists, but it’ll cost ya.
• This plan is a bit of a hedge: It works well for someone who has an established relationship with their primary doctor, but if you need specialized care, you’ll have maximum flexibility to pick providers.   

What’s a high-deductible health plan (HDHP)? Should I go for that?

A high-deductible health plan is an alternative to traditional insurance plans. It features lower monthly premiums but higher out-of-pocket costs and annual deductibles. (In-network preventive care is always fully covered because that’s the law babbyyyy.) You pay out-of-pocket expenses until you hit your annual limits, and then the plan pays for 100% of covered services.

TL;DR: An HDHP can be a good choice if you’re in good health, don’t take regular medications, and don’t foresee needing any major medical procedures or treatments.

How do I choose what’s best for me?

After digesting all of this (bonus points if you’ve made it this far), you may wonder why you should choose a health plan at all, let alone what’s better between a PPO and HMO.

Start by making a list. (We love lists.) Write down your family’s doctors, medications, and medical conditions. Also assess your financial ability to pay premiums, copays, and deductibles, and possibly out-of-pocket for care. Your answers should guide your selection.

Here are a few scenarios:

• You’re single, in good health, and do not take regular medications. You want low monthly premiums and easy access to a primary doc. Consider an HMO.
• You have a young child with an existing medical condition requiring specialists, routine monitoring, and prescription medication. A PPO offers flexibility to see any specialist and go out-of-network without a PCP or referrals. 
• You love your primary care doc, but you don’t want to be restricted to a network. A POS lets your PCP coordinate your care, but you can see an out-of-network doctor if you like. 
• You and your partner are healthy and trying to save up for your first home. Still, you want flexibility. Go with an EPO and you have lower monthly costs and in-network docs are covered, but you can easily seek out specialists. 

One more important point: People often ask their HR reps, “Can I change my health insurance plan mid-year?” Typically, you can only make changes mid-year if you experience a major life event, including the birth of a child, getting married, or losing existing coverage. That’s why it is important to enroll before your new hire deadline or during your company’s annual open enrollment season. 

FAQs about health plans

Is it legal to have two health insurance plans?

Yes. If you have access to your partner’s or parents’ health plan, you might consider carrying two plans. If you’re employed, your plan will serve as the primary and the other plan is secondary. If your primary insurance doesn’t cover a certain procedure or only partially covers it, your second could pick up the costs.

How do top-off health plans work?

If you’re concerned about what-if situations, but want a base plan, you may be able to obtain extra coverage, called a top-off plan. If you surpass your plan’s limits, say for a hospital plan, your top-off kicks in to cover the difference.

Time to pick your health plan 

Now that you understand the ins and outs of health coverage, you’re ready to make your selection. Take your time, research your company’s offerings, and check with your current doctors. Then, sign up for the plan that fits your healthcare needs  – and your wallet.