HMO, PPO, EPO, HDHP — the acronyms blur together during open enrollment, but they make a real difference in where you can get care, how much it costs, and whether your medications are covered. Here's how to tell them apart and choose the one that actually fits your situation.
Jump to what matters to you
- The four main plan types differ in network flexibility and cost structure Plan Types →
- Networks determine which doctors and hospitals your plan will pay for Networks →
- HDHPs have high upfront costs but unlock a uniquely powerful savings account HDHPs & HSAs →
- Formularies control which drugs your plan covers — and at what cost Formularies →
- Every plan excludes some services — knowing which ones matters before you enroll Exclusions →
The four main plan types
Most employer and marketplace plans fall into one of four structures. The core tradeoff across all of them is the same: more flexibility costs more money.
Health Maintenance Organization
- Choose a primary care physician (PCP) who coordinates all care
- Referrals required for most specialists
- Strictly in-network except true emergencies
- Lower premiums and copays
- Less paperwork; billing goes through your PCP
Preferred Provider Organization
- No required PCP or referrals
- See any provider, in or out of network
- Higher cost for out-of-network care, but covered
- Higher premiums than HMO or EPO
- Most flexible; best for complex or ongoing conditions
Exclusive Provider Organization
- No referrals required
- Strictly in-network except emergencies (like an HMO)
- Lower premiums than PPO
- More provider choice than HMO without the referral hurdle
- Common on ACA marketplace plans
High-Deductible Health Plan
- High deductible before cost-sharing kicks in ($1,650+ individual in 2025)
- Lower premiums
- Qualifies for a Health Savings Account (HSA)
- Can be HMO or PPO structure underneath
- You pay full cost of most care until deductible is met
Networks: why this matters more than plan type
Every insurance plan contracts with a specific set of doctors, hospitals, labs, and pharmacies — its network. In-network providers have agreed to the insurer's negotiated rates. Out-of-network providers haven't, which means two things: your plan pays less (or nothing), and you can be billed for the difference between what the provider charges and what the insurer allows.
Before enrolling in any plan, confirm that your primary care doctor, any specialists you see regularly, and your preferred hospital are all in-network. Insurers post provider directories online, but they're often outdated. Call the provider's office directly and ask whether they accept the specific plan — not just the insurance company.
If you buy coverage through the ACA marketplace (healthcare.gov), pay particular attention to geographic network limits. Many exchange plans build their networks around a specific region or metro area. If you travel regularly, spend time in multiple states, or have a medical situation arise while away from home, you may find that no in-network providers are available — leaving you with full out-of-pocket costs or an out-of-network bill. PPO plans are generally more travel-friendly than HMO and EPO plans for this reason, though even PPOs vary. If you frequently spend time outside your home state, confirm whether the plan has any national network access.
You can receive care at an in-network hospital and still get an out-of-network bill — if the anesthesiologist, radiologist, or another provider who treated you doesn't participate in your plan. Federal surprise billing protections now limit this in most emergency and some non-emergency situations, but it still happens. Always ask whether every provider involved in a procedure is in-network.
High-deductible plans and the HSA advantage
An HDHP pairs a lower premium with a high deductible — in 2025, at least $1,650 for individual coverage or $3,300 for a family. You pay the full negotiated cost of most care until that deductible is met. That sounds like a bad deal. Whether it actually is depends on your situation.
The reason HDHPs exist as a category — and not just as "cheap plans with high deductibles" — is that they unlock access to a Health Savings Account (HSA). An HSA is a tax-advantaged account you own and control. Contributions go in pre-tax, the money grows tax-free, and withdrawals for qualified medical expenses are tax-free. That's a triple tax benefit that no other account type offers.
Unlike a Flexible Spending Account (FSA), an HSA balance rolls over year to year and stays with you if you change jobs or insurers. If you invest the balance, it can grow substantially over time — some people use it as a de facto retirement account for future healthcare costs, paying current medical bills out of pocket and letting the HSA compound.
I think HDHPs get unfairly dismissed. For a healthy person who doesn't use much care and has the financial cushion to cover the deductible, an HDHP paired with consistent HSA contributions is genuinely one of the best financial tools available. The long-term value of a well-funded HSA — especially invested — is significant.
That said, the critical caveat is liquidity. If you couldn't pay a $3,000 bill in January without going into debt, an HDHP puts you in a difficult position. The other scenario where an HDHP can work well even for high healthcare users: when a plan's out-of-pocket maximum is meaningfully lower than competing plans. If you're pregnant, starting an expensive medication, or planning a surgery, do the math on OOP maximums across your options — not just premiums. Sometimes the HDHP wins even when you'll hit the ceiling.
Formularies: how your plan controls drug costs
A formulary is the list of medications your plan covers and what you'll pay for each one. Every formulary is organized into tiers — the higher the tier, the more you pay out of pocket.
| Tier | Typical drugs | Typical cost |
|---|---|---|
| Tier 1 | Generic drugs | $0–$15 copay |
| Tier 2 | Preferred brand-name drugs | $30–$60 copay |
| Tier 3 | Non-preferred brand-name drugs | $60–$100+ copay |
| Tier 4 | Specialty drugs (biologics, injectables, newer agents) | 20–33% coinsurance — often $500–$1,000+ per fill |
If you take a medication regularly — especially anything brand-name, a biologic, or a specialty drug — look up that specific drug in the plan's formulary before enrolling. Plans post formularies on their websites. If you can't find it, call member services and ask: "What tier is [drug name] on, and what will my cost be?"
Insurers can move drugs between tiers or remove them from the formulary with relatively short notice. This is most dangerous for patients on specialty medications who may have no affordable alternative if their drug loses coverage. If you're on a biologic or another high-cost drug, check the formulary at every renewal — and ask your doctor about a medical necessity exception if coverage changes.
What your plan won't cover
Every plan has a list of excluded services — care it simply will not pay for regardless of medical need. Common exclusions include:
- Dental and vision care on standard medical plans (usually require separate coverage)
- Cosmetic procedures
- Weight loss surgery (varies widely by plan — always verify)
- Weight loss medications (GLP-1 drugs like Ozempic and Zepbound are increasingly prescribed but frequently excluded from coverage when used for weight loss, even when covered for diabetes — check your formulary and the specific indication)
- Fertility treatments and assisted reproduction (increasingly covered, but not universally)
- Some gender-affirming care (depends heavily on insurer and state)
- Long-term care and custodial care
- Experimental or investigational treatments
- Out-of-network care on HMO and EPO plans (except true emergencies)
Exclusions live in your plan's Evidence of Coverage document — not the Summary of Benefits, which only covers what's included. It's not a fun read, but if you're planning a specific procedure or starting a medication, checking the exclusions before you enroll can prevent a five-figure surprise.
Every ACA-compliant plan is required to include a Summary of Benefits and Coverage (SBC) — a standardized document that shows your plan's cost-sharing side by side with other plans using three fixed medical scenarios (having a baby, managing type 2 diabetes, and treating a simple fracture). These examples aren't perfectly tailored to your situation, but they make it much easier to compare apples to apples across plans. Look for the SBC on the insurer's website or ask your HR department — it's a required document and every employer plan must provide it. Using the coverage examples takes the guesswork out of comparing deductibles and coinsurance across very different plan structures.
If traditional insurance isn't the right fit — or you want to understand alternatives like health share ministries or direct primary care — the final post in this series covers how those options work, what they leave out, and how to think about combining them with insurance rather than replacing it.
Sources
- Internal Revenue Service. Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans. 2024 edition. irs.gov
- Centers for Medicare & Medicaid Services. Choosing a Health Plan. HealthCare.gov. healthcare.gov
- Kaiser Family Foundation. 2024 Employer Health Benefits Survey — Plan Enrollment. kff.org
- Centers for Medicare & Medicaid Services. Surprise Medical Bills. No Surprises Act Overview. cms.gov
- IRS Rev. Proc. 2024-25. HSA Contribution Limits for 2025. irs.gov