Comparing HMO, EPO, and PPO Health Plans

April 12, 2023by Alex Strautman

According to multiple employee surveys – including the MetLife U.S. Employee Benefit Trends Study, the Society of Human Resource Management (SHRM) Employee Benefits Survey, and Glassdoor – health insurance is a valued employee benefit. It is considered a “must have” or “nice to have” benefit by most employees.

So, how can you be sure you’re offering your employees the coverage they want – while still controlling costs for your business? Does an HMO (Health Maintenance Organization) offer you the best value or would an EPO (Exclusive Provider Organization) plan be a better choice? What about a PPO (Preferred Provider Organization) plan or an HDHP (High Deductible Health Plan)?

The best choice actually depends on several factors. Let’s look at the advantages of each plan type – and what you and your employees need to know.

HMO Plans

With an HMO, each member must choose a Primary Care Physician (PCP) to manage care. If you need to visit a Specialist, you’re required to get a referral from your PCP. Treatment is usually limited to your HMO network, except in case of an emergency.

Looking at costs, the premium for an HMO is typically lower than for other coverage. Your copays and coinsurance are also frequently lower with an HMO than with an EPO or PPO.



EPO Plans

Many describe an EPO as a hybrid plan offering both HMO and PPO benefits. This tends to be a lesser-known plan option. Like with an HMO, EPO patients get health care through a doctor, specialist, or hospital that is part of the EPO plan’s network. Like members of a PPO, EPO participants can go to a specialist without a referral, if the provider is in-network.

EPO premiums are lower than PPO premiums but may be higher than HMO premiums. There are typically no or low co-pays when visiting an EPO in-network provider. Outside of the EPO network, care may not be covered – except in case of an emergency.


PPO Plans

PPOs offer more flexibility, although at a higher premium than HMO or EPO coverage. A PPO patient can go directly to an in-network doctor, specialist, or hospital without a referral.

Care inside a PPO plan network is offered at pre-negotiated rates through contracted medical providers. PPO members can go outside of the PPO network but they will pay higher out-of-pocket costs. Going out of network can mean a separate deductible and out-of-pocket maximum.

HDHP Options

An HDHP – which can be an HMO, EPO, or PPO – offers employees a lower monthly premium. The potential downside is that an HDHP member must pay more costs upfront before the HDHP begins to pay for covered services.

If you offer a Health Savings Account (HSA) with your employees’ HDHP, that will allow them to pay for qualified medical expenses with funds free of federal taxes. Members can use HSA funds to pay deductibles, copays, and coinsurance amounts. More information about HSAs is available on the federal website.

Offer More with CaliforniaChoice

Since 1996, CaliforniaChoice has offered California small businesses a way to offer more choice to employees, while also controlling costs. In fact, CaliforniaChoice offers groups access to more doctors and hospitals than any other single program in California.

You might choose a PPO from Anthem Blue Cross because you or your spouse will have access to a particular doctor or hospital in the Anthem network. Someone else in your group might prefer a local or regional HMO like Sutter Health Plus, Western Health Advantage, or Sharp Health Plan. A third person might want an HMO plan Health Net, Kaiser Permanente, or UnitedHealthcare. Others might choose an EPO from Cigna + Oscar. Someone might choose an HSA-compatible plan. With CaliforniaChoice, it’s your – and their – choice.

CaliforniaChoice offers:
Eight health plans and 20+ networks in a single health insurance program
– Choice of 130+ options across all four ACA tiers: Bronze, Silver, Gold, and Platinum
– Cost control with Defined Contribution – you choose the amount you want to put toward employees’ insurance and they apply that contribution to the cost of the plan they like best
– Greater access to health care providers – including 80,000+ doctors and nearly 400 hospitals
– Options for Dental, Vision, Acupuncture + Chiropractic, and Life Insurance
– Consolidated billing — just one bill for all of your employees’ coverage 

At renewal, you can adjust your premium contribution, up or down, giving you complete control over what you’re spending on employee benefits for another 12 months. Plus, members can change plans and still stay in the CaliforniaChoice program.

Shop With Help from a Broker

A broker can help you shop for your employees’ benefits and provide valuable insights along the way. Using a broker does not cost you anything. In fact, it may save you money because of their knowledge of networks and plans in your  area.

If you don’t already have a broker, you can search for one here.

Shopping for group health insurance?

This guide compiles a list of common questions you may have before you start offering health insurance coverage.