Learning about health insurance plans can feel a little like diving into alphabet soup: HMO, PPO, POS, HSA. Of course, each plan has its own merits, depending on a person’s needs. Keep reading to learn the names behind the acronyms, differences between these common plans and who might benefit from each one.


HMO stands for health maintenance organization. With this type of plan, you choose a primary care physician (PCP), who helps manage your health care. In order to see a doctor or specialist other than your PCP, the PCP must refer you to that health care professional (emergencies are an exception). For example, if you’re struggling with allergies and want to see an allergist, your PCP will need to write you a referral. If you have this type of plan, your insurance will only pay for providers that are in your provider network—your insurance provider will offer a list to let you know who is in this network—and you’ll pay for out-of-network visits out-of-pocket. Co-pays, co-insurance and monthly premiums are usually lower for an HMO than for a PPO.

An HMO is a good fit for someone who:

  • Is interested in paying less for their health insurance.
  • Has an in-network PCP, or is willing to switch to one.
  • Is comfortable getting referrals from their PCP to see other doctors and specialists.  


PPO stands for participating provider option. With this type of plan, you can choose any healthcare provider or hospital and make an appointment, without relying on a referral from a primary care physician or other doctor.  In this case, if you’re struggling with allergies and want to see an allergist, you can simply call and make an appointment. Another advantage to a PPO is you can choose a provider outside of your provider network, and, while out-of-pocket costs will be higher than they would be for an in-network provider, your plan will still cover some of the costs. PPOs generally cost more, because you’re paying for that flexibility.  

A PPO is a good fit for someone who:

  • Does not want to rely on a primary care doctor for a referral to other health care providers, including specialists.
  • Wants the option of seeing an out-of-network provider.
  • Doesn’t mind paying more for added flexibility in choosing their health care providers.


POS stands for point of service. This type of plan operates similarly to an HMO, with one exception: in some cases, you’re able to see health care providers outside of your network provider list, although you’ll pay more. Let’s return to the allergist example. Here, you have two choices. You can ask your PCP for a referral to an in-network allergist, and the visit will be covered by your plan. Or, you can opt for an out-of-network allergist and pay additional costs associated with going off-plan. In terms of flexibility, a POS plan falls between an HMO and a PPO, and the same goes for cost.

A POS is good for someone who:

  • Has an in-network PCP, or is willing to switch to one.
  • Is comfortable using in-network providers, but wants the flexibility of using out-of-network providers, as well.
  • Wishes to pay less than it would cost for a PPO, but doesn’t mind paying more than what they would for an HMO.


HSA stands for health savings account. This is an account that you contribute to on a pre-tax basis, and you can withdraw the funds, tax-free, to pay for quailed medical expenses not covered by your health insurance plan, such as co-insurance, co-payments and deductibles, as well as services such as dental, vision and more (you must be enrolled in a high-deductible plan to qualify). The maximum you can contribute to an HSA is set by the Internal Revenue Service each year. In 2021, an individual can contribute up to $3,600, while the family limit is $7,200. The funds earn interest, tax-free, and unused funds will roll over to the next year.

And HSA is good for someone who:

  • Wants a savings account aimed at their health expenses that is triple-tax-free (what you put in is tax free, what you take out is tax free and the interest is tax free).  
  • Is comfortable with paying for a high deductible and lower premium.
  • Doesn’t expect to need extensive medical care in the near future.  

Deciding on which type of plan to pick can seem confusing, but it’s always a smart idea to start with the basics. Sometimes understanding the acronyms is half the battle.