Patricia Chaney

Is an EPO Insurance Plan Right for Your Employees?

When deciding what types of health plans to offer your employees, you have a lot of choices. Employees may already be familiar with traditional
Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) plans, but what about Exclusive Provider Organization (EPO) plans?

Here’s what makes EPO insurance plans unique — and how to determine whether or not your employees could benefit from having them as an option.

What Are EPO Insurance Plans?

With an EPO plan, the insurer negotiates payment rates with a targeted network of physicians, usually in the local area. This may mean that they develop a network of physicians within a certain regional health system, for example.

As the name implies, those who choose an EPO insurance plan must stay exclusively within their network for physicians, hospitals and specialists to have their care covered.

How Do EPO Plans Compare to Other Plans?

Two of the more common plans, HMOs and PPOs, have their own restrictions concerning out-of-network care. Both plan types contract with a network of providers and offer lower costs to subscribers who see doctors within that network. An HMO may require that you have a primary care physician who coordinates your care — and that you get referrals from that primary care doctor before seeing specialists. The plan doesn’t cover out-of-network care (though it does make occasional exceptions for emergencies). Meanwhile, a PPO doesn’t require patients get a referral to see specialists and often covers out-of-network care, just at a higher rate than in-network care.

You can think of an EPO as a sort of hybrid between these two plan types, with one major difference that sets it apart from both — the size of the network. If you have an EPO vs. HMO or PPO plan, your network of physicians will be much smaller. Just like with an HMO, you won’t receive any coverage from your insurance if you go outside the network for care other than in an emergency. While you’ll also need preapproval for hospital stays and certain services, EPOs don’t require referrals to see specialists.

What Are the Advantages of an EPO?

As you and your employees look at ways to limit health care costs, an EPO can be an affordable alternative to traditional plans. The biggest advantage EPO patients see is financial — EPOs typically have lower monthly premiums that other plan types. The insurer also has more leverage to negotiate lower costs by bringing subscribers to physicians and facilities in the network, which means your employees will likely pay less out of pocket. EPO patients also have the option of choosing a high-deductible plan with even lower premiums.

Some employees might discover that doctors they have established relationships with are outside of their EPO network — in which case they would have to choose a different plan type, see a different doctor or pay the full cost of visits to their preferred out-of-network doctor. However, because an EPO’s network is made up of a closely organized group of physicians, many people who choose an EPO plan may find superior coordination of care as doctors make recommendations based on a deep knowledge of both their patients’ situations and their colleagues’ specialties and skills.

If you offer an EPO to your employees, be sure they fully understand what the plan means. Let them know:

  • Where to find a list of in-network providers
  • That they won’t receive coverage if they go outside the network
  • What the cost differences are across plan types

With a strong understanding of an EPO compared to other plan types, your employees can make an informed decision about which plan offers them the best balance of coverage and cost savings.

Want more information about EPOs, HMOs, PPOs and everything in between? Read “Navigating the Health Plan Maze: The Employer’s Guide to Building the Right Health Insurance Benefits Package” to discover which plans will best fit your employees’ needs.