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Open enrollment: EPO, HMO, or PPO? What's the difference?

Posted by Joe Allen-Black  October 2, 2012 03:00 AM

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This month employees across the country are going to start getting big'ol packets of information to narrow down a choice for health care. The decisions can be tough. The wrong checkbox could lead to you paying a lot more money in each paycheck for unnecessary benefits, or worse it could lead to you having to pay a lot during an emergency. The first question you have to ask during open enrollment: What type of plan to get?

Most plans fall into three types -- EPO, HMO, and PPO. The differences between the three is largely based on the need to stay in a network of physicians and the need for a primary physician, among other details. Before you make any decisions talk with your human resources representative to see what fits your unique situation. Here's a breakdown of what each generally means:

An HMO -- short for Health Maintenance Organization -- starts with subscribers generally signing on with a primary care physician, who will act as a gatekeeper to other services and referrals. Services in an HMO are generally provided by a network of participating providers. Mercer Health officials said typically services received from non-participating providers are not covered by the plan.

An EPO -- short for Exclusive Provider Organization -- is similar to an HMO in that it is a health care plan that covers eligible services from providers and facilities inside a network. Generally, an EPO does not pay for any services from out-of-network providers and facilities except in emergency or urgent care situations, which is similar to an HMO. People using an EPO generally are not required to have a primary care physician nor referrals, as HMO members are.

A PPO -- short for Preferred Provider Organization -- is a health care plan that allows people to see doctors or get services that are not part of a network. Those out-of-network services are at a higher rate, though. Plans are structured so that members will pay less money out-of-pocket when they use in-network providers, Mercer Health said. In a PPO, members typically do not need to choose a primary care physician, said Paul Fronstin of the Employee Benefit Research Institute. He said they are also typically required to pay a deductible.

There can be other types of plans, but generally those three are the ones you'll be looking at. To help you make your decisions, we created a guide to some of the jargon you'll encounter in those health care packets. Learn more about flexible spending, preventative care, and co-pays.

What terms have you run into or questioned during your health care enrollment period? Discuss your frustrations and questions in our comments section.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit
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