The seven main types of health insurance plans are HMO, PPO, EPO, POS, high-deductible health plans (HDHPs), catastrophic plans and indemnity plans. They differ mainly in how much freedom you have to choose doctors, whether you need referrals, whether out-of-network care is covered, and how costs are split between premiums and what you pay when you get care.
Shopping for health insurance for the first time can feel like reading a bowl of alphabet soup. HMO, PPO, EPO, POS: the letters all start to blur together, and nobody explains what they actually mean for your wallet or your doctor visits.
Here’s the simple version. Every plan type is a trade-off between flexibility and cost. Plans that let you see almost any doctor tend to cost more. Plans that keep you inside a set network tend to cost less. Once you understand that, the rest falls into place.
Why the types of health insurance plans matter
The plan type shapes your everyday experience: which doctors you can see, whether you need permission to see a specialist, and what happens if you get care outside the network. Two plans from the same insurer with the same monthly premium can feel completely different depending on their type.
Also keep in mind that plan type is separate from metal tier. On the ACA Marketplace, plans are labeled Bronze, Silver, Gold and Platinum based on how costs are shared, and you can find HMOs, PPOs and EPOs at different tiers.
1. HMO (Health Maintenance Organization)
An HMO keeps your care inside a defined network of doctors and hospitals. You usually choose a primary care physician who coordinates your care and gives you referrals to specialists.
- Out-of-network care: generally not covered, except for emergencies.
- Referrals: usually required for specialists.
- Best for: people who want lower premiums and don’t mind staying in network.
Say you live in a city with a large HMO network and you’re happy with a local doctor who’s in it. An HMO can be a budget-friendly fit.
2. PPO (Preferred Provider Organization)
A PPO gives you the most freedom. You can see in-network and out-of-network providers, and you typically don’t need a referral to see a specialist.
- Out-of-network care: covered, but you pay more.
- Referrals: usually not required.
- Best for: people who want flexibility, travel often, or have specialists they want to keep.
The trade-off is cost. PPOs often carry higher premiums than HMOs or EPOs in the same area.
3. EPO (Exclusive Provider Organization)
An EPO is a middle ground. Like an HMO, it generally won’t pay for out-of-network care except emergencies. Like a PPO, it often lets you see specialists without a referral.
EPOs can work well if the network includes the doctors you already use and you like making your own specialist appointments.
4. POS (Point of Service)
A POS plan blends HMO and PPO features. You usually pick a primary care doctor and need referrals, but you may get some coverage for out-of-network care, typically at a higher cost and with more paperwork.
POS plans are less common than they used to be, but you may still see them in employer benefits packages.
5. HDHP (High-Deductible Health Plan)
An HDHP is defined more by its cost structure than its network. It has a higher deductible than traditional plans and usually a lower premium. An HDHP can be built on an HMO, PPO or EPO network.
The big perk: if the plan is HSA-eligible, you can open a Health Savings Account and set aside pre-tax money for medical costs. The money rolls over year to year and stays yours if you change jobs. The IRS sets minimum deductibles and maximum out-of-pocket limits for HSA-eligible plans each year.
Who should consider an HDHP?
- Generally healthy people who rarely need care beyond checkups.
- People who can afford to cover the deductible if something happens.
- Savers who want the tax advantages of an HSA.
6. Catastrophic plans
Catastrophic plans are available on the ACA Marketplace to people under 30, or to people of any age who qualify for a hardship or affordability exemption. They have low premiums and very high deductibles.
They still cover essential health benefits, including certain preventive services at no cost and a limited number of primary care visits before the deductible. But for most other care, you pay until you hit the deductible. Note that you can’t use premium tax credits to lower the cost of a catastrophic plan.
7. Indemnity (fee-for-service) plans
Indemnity plans are the old-school model. There’s no network: you can see any provider, and the plan reimburses a portion of the cost, often after you pay and file a claim.
True traditional indemnity plans are rare today. Be careful with similarly named fixed indemnity products, which pay a set dollar amount per day or per service. Those are supplemental coverage and are not a substitute for comprehensive, ACA-compliant health insurance.
Quick comparison table
| Plan type | Out-of-network coverage | Referrals needed | Typical premium level |
|---|---|---|---|
| HMO | Emergencies only | Usually | Lower |
| PPO | Yes, at higher cost | Usually not | Higher |
| EPO | Emergencies only | Often not | Moderate |
| POS | Some, at higher cost | Usually | Moderate |
| HDHP | Depends on network | Depends on network | Lower |
| Catastrophic | Emergencies only (typically) | Varies | Lowest |
| Indemnity | No network | No | Varies |
How to choose the right plan type
- List your doctors and prescriptions. Check each plan’s provider directory and drug formulary.
- Estimate how much care you use. Frequent visits often favor lower deductibles; rare visits may favor an HDHP.
- Compare total costs, not just premiums. Add a year of premiums to the out-of-pocket maximum to see your worst-case year.
- Think about travel. If you spend time in other states, a narrow network may be limiting.
- Check for savings. Marketplace subsidies or an employer HSA contribution can change the math.
Bottom line
The types of health insurance plans mostly differ in how much freedom you get versus how much you pay. HMOs and EPOs keep costs down with networks, PPOs buy flexibility, HDHPs pair lower premiums with HSAs, and catastrophic plans are a safety net for younger people. Plan designs vary by insurer and state, so read the Summary of Benefits and Coverage for any plan you’re considering, and talk to a licensed agent, your HR team or HealthCare.gov if you’re unsure.
Frequently asked questions
Which type of health insurance plan is cheapest?
Catastrophic plans and HDHPs usually have the lowest premiums, and HMOs are often cheaper than PPOs. But a low premium can mean higher costs when you need care, so compare the deductible and out-of-pocket maximum too.
Is a PPO better than an HMO?
Neither is better for everyone. A PPO offers more freedom to see out-of-network doctors, while an HMO usually costs less if you're comfortable staying in its network and getting referrals.
Can I have an HSA with any plan?
No. You need to be enrolled in an HSA-eligible high-deductible health plan and generally can't have other disqualifying coverage. Your plan documents or insurer will say whether a plan is HSA-eligible.
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This article is for general information only and is not insurance, legal, tax or medical advice. Rules, coverage and prices vary by state, plan and insurer. Check your policy documents and speak with a licensed agent, your HR department or HealthCare.gov before making decisions.
