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Health Insurance Explained: Understanding the Most Common Plan Types

Aug 2
10 min read

In every blog, I talk about how every insurance varies but I have never really gone into the nitty gritty of the differences between plans. So today, that is exactly what we are going to do.


Before getting into this, I definitely recommend reading knowing the difference between your copay, deductible, coinsurance, and out-of-pocket maximum as these all vary based on the plan. 


Firstly, let’s talk about what it means for a provider to be contracted with an insurance (or in other words accept an insurance). Providers have to go through a two step process in order to become in-network: credentialing and contracting.

  • Credentialing usually involves a background check of the provider to ensure the license is valid and that the provider hasn’t been through any malpractice lawsuits or work history gaps in order to ensure that the provider meets quality and safety standards before allowing them to treat patients. This keeps their patients safe and puts less risk on the insurance for providing access to bad care.

  • The next step is contracting. This is when the insurance will do something called network adequacy where they will sometimes review the area of the provider to see if they need more providers to be serving the amount of patients in that area with that insurance (this is why they want you to update your address on your insurance). Then the insurance will give the provider a list of the prices they will pay for each medical service and both parties will then sign a legal agreement outlining the rules, patient care expectations, and billing terms (which we can go over in another blog). So when the provider is in the network, they have an agreement that the insurance will pay the provider if the provider can give certain services to patients. Obviously providers want to be contracted with as many insurances as possible so that they can see as many patients as possible. 


 That said, let’s get started: 


PPO

PPO stands for preferred provider organization. When you get this kind of plan, you don’t need a referral to see a specialist and you generally have a larger pool of providers to choose from because PPOs tend to have larger provider networks (which means more providers for you to choose from). You also most likely have out of network benefits (even though it is still recommended for you to see an in network provider). That said, because this sounds like a very flexible plan, there are usually higher monthly premiums. 


When a provider signs up for a PPO plan, after they get credentialed, they receive a list of services that they can get paid for by the insurance. Providers agree to accept negotiated reimbursement rates in exchange for access to a larger pool of patients. 

I know I touched on the point of seeing a specialist without a referral so I just want to explain a little more. Usually, when you want to see a specialist, meaning like a cardiologist, dermatologist, orthopedic surgeon, etc… then you would need to get a referral from a primary care physician meaning you would need to see a PCP (and pay for this visit) before you can see a specialist. Keep in mind that with referrals, if you don’t like who your PCP referred you to, call the office and let them know because they will work with you to find a specialist that works for you. But luckily, if you have a PPO plan, you generally don’t need to worry about this. You can skip right to scheduling with a specialist. 


HMO


HMO stands for Health Maintenance Organization and is usually cheaper than a PPO plan (lower monthly premiums, deductible, and copays) but you have to choose one PCP in your network and only see them (unless you call and change it), you need referrals to see specialists, and you usually don’t have any coverage if you see an out of network provider, 


I have had so many patients who had HMOs plans and did not make us their PCP. They called frantic about their bill only to realize that had they made us their PCP, the claim would have been covered. The thing with this plan is your primary care can be in network with your plan but if you don’t designate them as your PCP on your actual insurance, the insurance will just deny the claim and send it to you as patient responsibility. So please, if you sign up for any HMO plan, call your insurance right away and designate your PCP. Also keep in mind that for some plans you can actually do this at the family practice office by signing a form but this is not for all plans so in order to stay on top of your health, I would just call prior. 

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Aside:


You might be asking, but how do I even change my PCP? Call the customer service number on the back of the card and ensure that you provide the name of the provider, the 10 digit NPI, the 9 digit Tax ID, and the address of the provider (you don’t always need all of this information but I always recommend using it to ensure that the representative correctly looks up the provider because some providers could be credentialed at multiple locations so you want to make sure you are being as specific as possible: I’ve had patients verify we were in network at one of the provider’s locations but at our location, our provider was out of network). After you successfully change it, make sure you get the name of the person you spoke with and the reference number for the call. Then call your PCP and let them know so that they can document it in case they need to fight with the insurance at all. 

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EPO


EPO stands for Exclusive Provider Organization. You can think of an EPO as a combination of an HMO and a PPO. Like a PPO, most EPO plans do not require referrals to see specialists. However, like an HMO, you generally must receive all of your non-emergency care from providers within the plan's network.


Because EPOs are more restrictive than PPOs, they often have lower monthly premiums. The tradeoff is that they usually have a smaller network of providers to choose from, so it is very important to verify that your primary care provider, specialists, hospitals, imaging centers and laboratories are all in-network before receiving care.


Most EPO plans only cover out-of-network care in emergencies. Some plans may make exceptions if the network does not have the specialist or service you need, but these situations usually require approval from the insurance company before treatment.

One interesting thing that many people don't know is that some insurance companies offer gated and non-gated EPO plans.

  • Gated EPO: Requires a referral from your primary care provider before seeing a specialist.

  • Non-gated EPO: Allows you to schedule appointments with specialists without first obtaining a referral.


Not every insurance company uses these terms, so if you have an EPO plan, check your plan documents or call your insurance company to find out whether referrals are required before scheduling specialist appointments. So yeah…way to make it confusing. 


POS Plans 


POS stands for Point of Service. A POS plan combines features of both an HMO and a PPO. Like an HMO, you choose a primary care provider (PCP) who coordinates your care and provides referrals to specialists. However, like a PPO, a POS plan generally offers some coverage for out-of-network providers, although your out-of-pocket costs will usually be higher.


POS plans often have premiums that fall between those of an HMO and a PPO. While you have more flexibility than with an HMO, staying in-network will almost always save you money as with all the other plans.


If you have a POS plan, remember to choose your PCP, obtain referrals when required, and always verify whether a provider is in-network before scheduling your appointment.


High deductible plans


High-Deductible Health Plans (HDHPs) typically have lower monthly premiums in exchange for higher out-of-pocket costs before your insurance begins sharing the cost of your care. These plans are often paired with a Health Savings Account (HSA), allowing you to use pre-tax dollars to help pay for eligible medical expenses.


HDHPs can be a great option for generally healthy patients who do not require frequent medical care and want lower monthly premiums. However, if you regularly see your provider for chronic conditions, medication refills, or ongoing treatments, you may spend more out of pocket before meeting your deductible.


No matter which plan you choose, always verify that your provider, facility, laboratory, imaging center, and any other professionals involved in your care—such as an anesthesiologist, pathologist, or assistant surgeon—are in-network. Doing so can help you avoid unexpected medical bills.

HSA savings accounts


An HSA account is a type of savings account that allows you to set aside a certain amount of money each paycheck for certain future expenses such as appointments. The beauty to this account however is that the money from your paycheck comes from the PRE-TAXED paycheck. You can, of course, either sign up for this account individually or through an employer but you must have a high deductible health plan in order to sign up. So what does this mean for you? Having an HDHP means you'll usually pay more upfront before insurance starts sharing costs (because you have a higher deductible), so an HSA helps you save money tax-free for those expenses. 


FSA saving accounts


An FSA, or Flexible Spending Arrangement, allows you to set aside pre-tax dollars from your paycheck to pay for eligible medical expenses. Unlike an HSA, an FSA is offered through your employer, so you cannot typically open one on your own.


One major difference between an HSA and an FSA is ownership. An HSA belongs to you and stays with you even if you change jobs. An FSA, however, is tied to your employer, so in most cases, if you leave your job, you lose access to any remaining funds.


Both HSAs and FSAs have annual contribution limits set by the IRS. HSA contribution limits are generally higher than FSA limits, but these limits change from year to year, so be sure to check the current contribution limits on the IRS website before deciding how much to contribute.


Another important difference is the rollover rules. HSA funds generally roll over from year to year, allowing you to continue building your savings. FSAs typically follow a "use it or lose it" rule, although some employers allow a grace period or a limited rollover amount.


Finally, remember that HSAs and FSAs are not just for doctor's appointments. Depending on your plan, you may be able to use these funds for prescriptions, copays, deductibles, dental care, vision care, and many over-the-counter health products. Be sure to review your plan's list of eligible expenses so you can make the most of your tax-free savings.



You can find a list of FSA eligible expenses here: 


You can find a list of HSA eligible expenses here: 


HRAs


An HRA, or Health Reimbursement Arrangement, is money that an employer sets aside to help employees pay for eligible health care expenses. Unlike an HSA or FSA, the employee does not contribute money from each paycheck. The employer funds the account and decides which expenses can be reimbursed.


Depending on the plan, an HRA may help pay for deductibles, copays, coinsurance, prescriptions and sometimes health insurance premiums. You may need to pay the expense first and submit a receipt or Explanation of Benefits before receiving reimbursement.


For patients, the most important thing to remember is that every HRA is different. Your employer decides how much money is available, which expenses qualify, whether unused funds roll over and what happens to the money if you leave your job.


If your employer offers an HRA, ask:

  • What expenses can I use it for?

  • Do I need to submit receipts?

  • Can I use it toward my insurance premium?

  • Do unused funds roll over?

  • Will I lose the funds if I leave my job?


An HRA can help reduce your out-of-pocket medical expenses, but only if you understand how your specific plan works and remember to submit eligible expenses for reimbursement.

Your Insurance Company Is Not the Same as Your Plan

One of the most common things patients say is, “My doctor accepts my insurance.” However, a provider may accept the insurance company without participating in your exact plan.


For example, a doctor may accept one Blue Cross PPO plan but not a Blue Cross HMO, Marketplace or Medicare Advantage plan. The insurance company may be the same, but the provider network may be different.


Instead of asking:

“Do you accept Blue Cross?”

Ask:

“Are you in-network with my exact plan?”

Give the office the full name of your plan and the information on your insurance card. You should also confirm the provider directly with your insurance company by calling the customer-service number on the back of your card.


It is also important to remember that being in-network does not guarantee that every service is covered. An in-network provider may perform a service that still requires prior authorization, a referral or payment toward your deductible.

Before an appointment, test or procedure, confirm:

  • Is the provider in-network with my exact plan?

  • Is the facility also in-network?

  • Is the service covered?

  • Do I need a referral or prior authorization?

  • What should I expect to pay?


Write down the date, representative’s name and call reference number. Taking these steps before receiving care can help prevent denied claims and unexpected medical bills.


Now I know a lot of you may be asking: how do I know which plan works best for me? The truth is that there is no simple way to answer this. You need to really sit down and look at the options you have and see which one you can afford, which one covers your medication, which one is in network with your PCP, etc… But to help you get started on where you might want to begin looking, here is a comprehensive diagram:



Health insurance can feel incredibly complicated, but understanding the basics can make all the difference. Remember, there isn't one insurance plan that is "best" for everyone—there is only the plan that best fits your healthcare needs, budget, and lifestyle. Use the decision tree as a general guide to help point you in the right direction, but don't rely on it as the only factor when choosing a plan. Every insurance policy is different, and benefits, provider networks, referral requirements, prescription coverage, deductibles, and out-of-pocket costs can vary significantly between employers and insurance companies.


Before enrolling, take the time to compare your options carefully. Make sure your primary care provider, specialists, hospitals, laboratories, imaging centers, and medications are covered by the plan you're considering. A little research today can save you from unexpected medical bills and unnecessary stress tomorrow. Most importantly, don't be afraid to ask questions. Your insurance company's customer service department, your employer's benefits coordinator, or your healthcare provider's office can often help you better understand your coverage. The more informed you are, the better equipped you'll be to make confident decisions about your healthcare—because taking charge of your health starts with understanding your insurance.


References

Insperity. (n.d.). HSA vs. health care FSA: What's the difference? https://www.insperity.com/blog/hsa-vs-health-care-fsa/


Medwave. (2026, January). Provider credentialing explained: Timelines, documents, and tips. https://medwave.io/2026/01/provider-credentialing-explained-timelines-docs-tips/


PeopleKeep. (n.d.). HSA vs. FSA: What is the difference? https://www.peoplekeep.com/blog/hsa-vs-fsa-what-is-the-difference



U.S. Centers for Medicare & Medicaid Services. (n.d.). HealthCare.gov glossary. HealthCare.gov. https://www.healthcare.gov/glossary/ 


U.S. Centers for Medicare & Medicaid Services. (n.d.). Getting regular medical care. HealthCare.gov. https://www.healthcare.gov/using-marketplace-coverage/getting-medical-care/


U.S. Centers for Medicare & Medicaid Services. (n.d.). Health insurance plan & network types: HMOs, PPOs, and more. HealthCare.gov. https://www.healthcare.gov/choose-a-plan/plan-types/ 


U.S. Centers for Medicare & Medicaid Services. (n.d.). Health Savings Account (HSA). HealthCare.gov. https://www.healthcare.gov/glossary/health-savings-account-HSA/ 


U.S. Centers for Medicare & Medicaid Services. (n.d.). How to pick a health insurance plan. HealthCare.gov. https://www.healthcare.gov/choose-a-plan/



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Creator/Author: Sarah Davidov 

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