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Health Insurance

Understanding EPO Plans: Benefits and Drawbacks

What Is EPO Insurance?

An EPO, or an Exclusive Provider Organization, is a health plan similar to an HMO or a PPO. An EPO plan offers patients a local group of hospitals and doctors within their network to choose from when seeking care. As long as the patient stays within the network, these plans are more cost-effective than PPO plans. If the patient goes out of network, however, EPO plans do not provide coverage.

EPO insurance can be a good choice if you want some flexibility in choosing your healthcare providers without needing a referral first, and all of your preferred providers and facilities are within the plan’s network.

Understanding the Exclusive Provider Organization (EPO) Plan

An EPO is a type of health insurance plan and so plays much the same role as a preferred provider organization (PPO), health maintenance organization (HMO), or point-of-service (POS) plan. However, EPO plans occupy the space between HMO and PPO plans.

Key Features of an EPO

  • Flexibility in choosing your preferred healthcare providers
  • No referral needed to see specialists
  • Reduced cost for in-network care
  • No coverage for out-of-network care, except for emergencies

A network for a health insurance plan is a group of doctors, hospitals, and other healthcare facilities that have a contract with an insurance company. This allows the healthcare providers to be guaranteed a patient pool amongst the insurer’s policyholders, and in return, the healthcare providers offer lower costs for policyholders. Overall, this means that patients pay less out of pocket for services they receive with the doctors that agree to be in their plan’s network.

Exclusive provider organization plans in particular keep their costs low by only covering care within their network. If a patient seeks care outside the EPO network, the patient is solely responsible for the bill. The only exception is if a patient seeks out-of-network care in an emergency. In emergencies, the EPO will cover services at the in-network price. 

EPO plans are great if you need a specialist, and especially if you have a primary visit copay. This saves you time visiting the doctor and your copay for the referral visit. If you see a specialist regularly, the price difference between an HMO and an EPO is worth it.

-Michael Rumford, Assurance health insurance agent

EPO Insurance vs. Other Insurance Types

EPOPPOHMOPOS
Average premiumModerateHighLowHigh
Average network sizeLargeLargeModerateVariable
Designated primary care physicianNot requiredNot requiredRequiredRequired
Referrals to seek specialist careNot requiredNot requiredRequiredRequired
Out-of-network care coverageMedical emergencies onlyYes, partially coveredNot coveredYes, with limitations

In addition to EPO health insurance plans, other common types of health insurance are preferred provider organizations (PPOs), health maintenance organizations (HMOs), and point-of-service (POS) plans. The advantages and disadvantages of each type differ. Your healthcare history, current health status, and overall budget all help determine which plan is a better fit.

EPO Insurance vs. PPO Insurance

EPOPPO
Average premiumModerateHigh
Average network sizeLargeLarge
Designated primary care physicianNot requiredNot required
Referrals to seek specialist careNot requiredNot required
Out-of-network care coverageMedical emergencies onlyYes, partially covered

PPO plans and EPO medical plans both enjoy large network sizes, giving patients access to a variety of healthcare providers. However, unlike EPOs, PPOs provide some coverage for those who seek out-of-network care, though at higher costs.

PPO plans also tend to have lower deductibles and coinsurance rates, allowing patients quicker access to cost sharing. However, that quicker access as well as out-of-network care coverage means that PPO plans tend to be much more expensive than an exclusive provider organization plan. 

Which Should You Pick: EPO or PPO?

Opting for a PPO plan may be beneficial for those prioritizing the flexibility of getting care both in and out of network. On the other hand, those who do not require out-of-network care and wish to save on premiums may find an EPO coverage option more suitable.

EPO Insurance vs. HMO Insurance

EPOHMO
Average premiumModerateLow
Average network sizeLargeModerate
Designated primary care physicianNot requiredRequired
Referrals to seek specialist careNot requiredRequired
Out-of-network care coverageMedical emergencies onlyNot covered

HMOs feature lower deductibles and premiums than EPO medical plans. However, HMOs have smaller networks than EPO plans, as well as no coverage for out-of-network care. Also differing from an EPO, those enrolled in an HMO plan must have an appointed primary care physician, and specialized care must be coordinated through that primary care physician. For example, if you would like to see a dermatologist and are on an HMO plan, you need a referral from your primary care physician.

Those on an exclusive provider organization insurance plans, on the other hand, do not need referrals to seek specialist care. They are, however, required to obtain permission from the insurance company before any major medical services. 

Which Should You Pick: EPO or HMO?

If you do not have significant health issues that need frequent attention, then an HMO plan can be a more cost-effective plan type to consider. But if your health needs are more complex or require specialized care, then you may want to consider an EPO coverage option. With an exclusive provider organization plan, you’ll have access to a bigger network of in-network doctors that can help you with your specific medical needs.

EPO Insurance vs. POS Insurance

EPOPOS
Average premiumModerateHigh
Average network sizeLargeVariable
Designated primary care physicianNot requiredRequired
Referrals to seek specialist careNot requiredRequired
Out-of-network care coverageMedical emergencies onlyYes, with limitations

Patients with POS plans are required to have a designated primary care physician who helps coordinate all specialist care too. Many POS plans also do not have deductibles, allowing policyholders immediate access to cost sharing. Unlike EPOs, POS plans also have more out-of-network coverages instead of only covering emergencies.

However, POS plans also tend to cost more than EPO insurance plans because of the extended benefits. In addition, exclusive provider organization plans may still have a larger provider network overall, even without offering as much out-of-network benefits.

Which Should You Pick: EPO or POS?

If you live in an area where many healthcare providers are out of network, or if you have recurring health issues, then a POS plan might be a better option for you. Without a deductible, POS plans also allow faster access to cost sharing.

However, if you want to keep your healthcare costs low and your preferred doctors are within the network, then choosing an exclusive provider organization plan may be more favorable.

EPO Insurance vs. HDHP Insurance

EPOHDHP
Average premiumModerateLow
DeductibleModerateHigh
HSA ComponentNoYes
Average network sizeLargeVariable
Designated primary care physicianNot requiredVariable
Referrals to seek specialist careNot requiredVariable

A high deductible health plan, or HDHP, is offered by employers as an alternative to standard group health insurance options. HDHPs have low premiums, but as the name suggests, high deductibles. This means policyholders must pay much more out of pocket before their insurance kicks in to share costs. However, for those who are relatively healthy and have few health needs, the savings with low monthly premiums are worth the risk of having to pay more in the unlikely event they need health care.

These plans are often paired with a Health Savings Account, or HSA. An HSA is an account into which employees can deposit pre-tax money over time, which can then be used to cover deductibles and other medical expenses. Funds roll over each year if there’s money left over in the account. The savings account also follows the policyholder if they switch jobs. HSAs must be paired with HDHPs.

Which Should You Pick: EPO or HDHP?

If you have a low risk of needing health services, an HDHP could be more cost effective by keeping your premiums low. It would also allow you to take advantage of the associated HSA.

However, if you have recurring health needs or planned procedures, a traditional health insurance plan like an exclusive provider organization medical plan may be a better choice, as deductibles are kept lower to allow you quicker access to your insurance plan’s cost sharing.

EPOs are very helpful when you have specialists that you need to see. Many HMOs organize all your care through a primary care provider. This can have some downside if appointments get held up. EPOs, on the other hand, give many of the benefits of a PPO, like freedom of choice, at a lower comparable cost.

-Joshua Travers, Assurance health insurance agent

Your Care Network With EPO Insurance

Health insurance plans can help you access medical care at a much lower cost than what you would pay if you were not insured. However, this only applies if you use providers that are part of your plan’s network.

EPO insurance policies generally have large networks, providing policyholders with access to a wide range of physicians, specialists, pharmacies, and hospitals. As long as you go to healthcare providers within this network, you’ll only have to pay your copays and coinsurance rates for each visit and covered procedure.

Why Is In-network Care Cheaper?

Health insurance plans rely on provider networks. These networks may include primary care physicians, specialists, and outpatient care providers. Insurance companies establish these networks by negotiating agreements with providers, which allows policyholders to access care services at a lower cost.

The tradeoff for lower costs is if you go out of network for care with an EPO insurance policy, you can expect to pay the entire bill for services. This is true even if the service sought is usually covered. For example, if you went to an out-of-network doctor instead of your usual in-network doctor to address a persistent cough, your exclusive provider organization health insurance plan would not cover that appointment.

When Do EPO Plans Cover Out-of-network Care?

An EPO will only pay for a patient’s out-of-network services if they need emergency or urgent care. For example, if you become severely injured and the closest hospital is not within your EPO’s network, your plan will cover the services rendered at the out-of-network hospital because it was needed to save your life. However, keep in mind that insurers will only pay for services that they deem an emergency, and this definition can vary.

How to Find In-network Care

To find an in-network healthcare provider for your exclusive provider organization insurance policy, such as a primary care physician, specialist, hospital, or pharmacy, look into these options:

  • Look up your insurance company’s provider directory. You can usually find this directory on your insurance company’s website. It lists all the doctors, hospitals, and other healthcare providers that are part of your insurance plan’s network, as well as their contact information and locations. To access the directory, you may need to create an account and enter your insurance information, like your member ID.
  • Contact your insurance company. If you’re having a hard time finding an in-network doctor that meets your needs, you can call your insurance company’s customer care phone number for help. A representative can help you find someone in your area that accepts your insurance.
  • Ask your current in-network doctor for recommendations. If you already have an in-network physician, they may be able to provide you with recommendations for other in-network providers and facilities that offer the services you need.

The Costs of an EPO Plan

There are 5 general costs of an EPO: premiums, deductibles, copayments, coinsurance, and your out-of-pocket maximum.

  • Premium: The monthly premium for an EPO medical plan is typically somewhere between the costs of an HMO and a PPO. The average price for one 30-year-old person on an EPO plan is between $400 and $450 per month. The actual cost, however, depends on where the patient lives and their specific plan. 
  • Deductible: This cost is less common in POS health plans compared to PPOs and HMOs, and usually only applies to when you seek out-of-network care. A deductible is the amount you pay before your insurance plan begins covering healthcare costs. For example, if you have a $2,000 deductible for out-of-network care, you’re responsible for covering the first $2,000 worth of services each year whenever you see someone outside of your POS network. Once your deductible is paid, your insurer would begin paying for your covered benefits.
  • Copayments: Copayments refer to upfront flat fees for service. For example, you might have a copayment of $10 for a primary care physician office visit, which you would pay every time you went to see them for an appointment.
  • Coinsurance: Coinsurance refers to the percentage amounts covered by you and your insurer for healthcare. For example, if your coinsurance rate is 20%, then you would pay for 20% of the cost of a covered service, and your insurer would cover the remaining 80%.
  • Out-of-pocket maximum: Many health insurance plans have an annual out-of-pocket maximum for covered services, which is a limit to how much you would be expected to pay each policy term. For example, if your out-of-pocket maximum is $5,000, your insurer would cover all costs completely after you have paid that amount.

See It in Action

Here is an example of these costs in action if your plan had the following costs:

  • Premium: $500 per month
  • Deductible: $1,500 for in-network care
  • Copay: $20 per appointment
  • Coinsurance: 20% for outpatient surgery; 40% for out-of-network outpatient surgery
  • Out-of-pocket Maximum: $5,000

This means that you pay $500 per month whether you use your plan or not.

When you do go to the doctor or receive any kind of in-network medical treatment, you pay a $20 copayment. You would also pay for 20% of the procedure’s cost while your insurer would pay for the remaining 80% of the cost.

If you go to an out-of-network specialist at some point for non-emergency care, you must cover 100% of the costs.

When your medical procedures exceed $5,000 — not including your premiums, copays, or out-of-network deductible — you would only pay up to that amount and all remaining covered expenses would be covered by your health insurance.

Advantages and Drawbacks of EPO Insurance

To evaluate whether an EPO insurance plan is a match for your healthcare needs, consider the benefits and drawbacks of this type of insurance.

Pros
  • No need for a designated primary care physician
  • No need for referrals
  • Lower costs compared to PPO plans
  • Wide network coverage
  • Reduced cost for in-network care
Cons
  • No out-of-network coverage
  • Potential for higher out-of-pocket costs
  • Higher premium than HMO plans

Advantages of EPO Insurance

  • No need for a designated primary care physician: EPO health insurance plans do not require their patients to see primary care physicians, which allows for greater flexibility in scheduling because you do not have to adhere to one provider’s availability.
  • No need for referrals: As EPO policies do not require a designated primary care physician, referrals from a primary care physician are also not needed to seek specialist care. Skipping the referral step can save the patient both time and money.
  • Lower costs compared to PPO plans: EPO plans typically have lower premiums and out-of-pocket costs compared to Preferred Provider Organization (PPO) plans, making them a more cost-effective option for those who do not require frequent out-of-network care.
  • Wide network coverage: EPO networks are fairly large, and some EPOs have nationwide networks. This means patients may be able to see an in-network physician even while they travel.
  • Reduced cost for in-network care: EPO plans have discounted rates for medical care received from in-network providers.

Drawbacks of EPO Insurance

  • No out-of-network coverage: EPO policies do not provide out-of-network coverage for non-emergency care, so if your preferred provider is outside of your plan’s network or leaves your plan’s network, your health insurance would not cover any the costs to see them.
  • Potential for higher out-of-pocket costs: While EPO coverage options often have lower premiums than PPO plans, they may come with higher deductibles, copayments, or coinsurance. This means that you might end up paying more out-of-pocket for certain services, especially if you require a significant amount of healthcare services throughout the year.
  • Higher premium than HMO plans: While EPO plan premiums tend to be lower than PPO premiums, they are still higher than those of HMO plans.

How to Choose the Right EPO Insurance Plan

When considering an EPO health insurance plan, evaluate your current provider network, the overall costs, and how it compares to other insurance plan types. 

What to Consider When Evaluating an EPO Plan

  • Does the EPO network include your preferred doctors, clinics, and pharmacies? When choosing an EPO plan, it’s crucial to ensure that the network is extensive enough to provide the coverage you need, and that your preferred physicians are in network.
  • What are the overall costs of this plan? Review the EPO plan’s costs to determine if it is affordable and appropriate for your healthcare needs, factoring in your out-of-network needs.
  • What is the coverage for your specific healthcare needs? EPO plans may have limitations or exclusions for certain treatments or services. Check the plan’s coverage to determine if it meets your needs. Additionally, verify if the plan covers any medications you take.
  • What are the specific plan features? Carefully evaluate different aspects of the EPO plan, such as restrictions or limitations on coverage and whether there are benefits for staying healthy.
  • What is the overall reputation of the insurance company? Research how the insurance company providing the EPO plan is perceived by the public. Check their financial stability, customer satisfaction, and overall service quality.
  • When can you enroll? Be aware of the enrollment period for the EPO plan you’re considering. If you’re comparing employer-offered plans to individual Marketplace EPO plans, note that you can sign up for your employer’s plan right away, but you may have to wait until the next Open Enrollment Period to enroll in an individual Marketplace plan.

How to Compare Your POS Options

  1. Make a comparison chart or table of your options. To make it easier to compare and contrast the different EPO plans, make a table or spreadsheet that includes the factors discussed earlier. This will give you a clear overview of your options.
  2. Prioritize what matters to you the most. Identify the factors that are most important to you and focus on those when comparing the plans. For example, if having access to your preferred doctors, the insurance company’s reputation, and overall cost of care matter most to you, prioritize those factors.
  3. Consider your current and anticipated care needs. Take into account your present and future healthcare needs when evaluating the plans. If you have upcoming medical appointments or procedures, look for plans that offer coverage for those services. If you need specialized care, such as seeing a dermatologist for skin concerns, make sure to select a plan that covers that specialty.
  4. Narrow your options. Once you’ve considered your needs and priorities, eliminate the EPO insurance plans that do not meet those criteria. This will help you narrow down your choices to the best options for you.
  5. If you are still stuck, ask for advice. If you’re still unsure about which plan to choose, do not hesitate to seek advice from a trusted healthcare provider or an insurance agent. They can help you select an EPO health insurance plan that fits your unique healthcare needs.

Putting It All Together

EPO health insurance plans can be a good option for those who want who want to save on healthcare costs and feel comfortable staying within a specific network of providers — especially if that network is large enough to offer a wide selection of physicians, pharmacies, and facilities.

However, exclusive provider organization coverage options do not offer out-of-network coverage for non-emergency services, so it’s crucial to prioritize what matters most to you, whether it’s access to certain doctors or coverage for a particular medical service. For those with upcoming medical needs or procedures, selecting a plan with adequate coverage is essential. Carefully review and compare plans to ensure you choose the one that meets your unique healthcare needs and financial situation.