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Quick Guide to Health Insurance Networks

Let’s talk networks. Put your cell phone down, we’re not talking those kinds of networks. We’re talking about health insurance plan networks.

Simply put, a health insurance network is a group of doctors, hospitals and other health care providers and facilities that have agreed to offer negotiated lower rates on their services to members of a certain health plan.

Actually, maybe it would help to think about your cell phone for minute. You know how you’re given a coverage map by your cell phone carrier when you sign up. Usually this is a picture of the United States with some color covering the map where their network is the strongest, that is, where they have the most coverage. Your health insurance network is a bit like that coverage map, only instead of better download speeds or less chance of dropped calls, coverage refers to which doctors and facilities you can use to get the most out of your health insurance coverage.

Here’s how the networks compare in some key areas...

  HMOs EPOs PPOs POSs
In-network vs.
out-of-network care:
Health Maintenance Organizations (HMOs) are usually one of the most restrictive kinds of networks in that you are generally confined to seeking care in-network, that is, from doctors and facilities that are a part of the HMO network. HMOs authorize out-of-network care only in cases of emergency. Exclusive Provider Organizations (EPOs) are similar to HMOs in that they restrict you to care in-network. Out-of-network care is covered only in cases of emergency. Preferred Provider Organizations (PPOs) have a network of doctors and providers you can stay in-network with for your care. By doing so, you get the most coverage from your insurance provider and benefit from the lower rates for services they have negotiated for you. However, in contrast to HMOs and EPOs, with a PPO you can choose to go to an out-of-network doctor or facility for care and still get some coverage from your health plan. Point of Service (POS) health insurance plans are a hybrid of HMOs and PPOs. Generally speaking, you are required to stay in-network for your care. However, out-of-network services may be authorized and covered in some cases. As with a PPO, the amount covered by your carrier when you go out-of-network is likely to be less than if you stay in-network.
How doctors/providers are compensated Doctors or providers either work for the HMO or contract for a set rate with the HMO to treat their members, as opposed to being paid per service the doctor/provider performs. Doctors and facilities in an EPO network have negotiated with the insurance carrier on lower rates on services they perform for members of the EPO health plan. So doctors and facilities are paid per service, and don’t directly work for or contract with the EPO carrier for a set rate. Similar to an EPO, doctors and facilities in a PPO network have negotiated with the insurance carrier on lower rates on services they perform for members of the PPO health plan. Similar to a PPO, doctors and facilities in a POS network have negotiated with the medical insurance carrier on lower rates on services they perform for members of the POS health plan.
PCPs and referrals: You often have to select a primary care physician or primary care provider (PCP) to be your main health care point of contact. This can sometimes mean you need a referral from your PCP if you want to see a specialist. In an EPO, you are less likely to be required to pick a PCP or to need a referral to see a specialist. As long as your doctor or facility is in-network, you can go where you feel you need to. You do not need to select a PCP, nor do you need a referral to see a specialist, whether in-network or out-of-network. As in an HMO, you often have to select a PCP to be your main health care point of contact. This can sometimes mean you need a referral from your PCP if you want to see a specialist, or in the case of POS, if you want to see out-of-network care.
Preapprovals for health services: Certain health care services may be subject to preapproval, though in many cases if you have a PCP, that provider will take care of that preapproval for you. Because you are often not required to have a PCP, you are likely going to see more health care services subject to preapproval. Because of the freedom you have to choose where to go and who to see, you may be subject to more preapprovals to determine if treatments are medically necessary. As with an HMO, certain health care services may be subject to preapproval, though in many cases if you have a PCP, that provider will take care of that preapproval for you.

Note: The terms and definitions used on this page are common ones. Definitions and terminology may vary by insurance company.

Which Type of Health Insurance Network Is Right for You?

Of course, there’s no one right answer. The different networks represent different ways insurance companies are trying to control their costs and offer affordable health insurance. You should approach your decision that way as well and find the network that controls your costs and works best for your situation.

Network Provider - Doctor

Because you are restricted to staying in-network, you may find that HMO and EPO plans have lower premiums, the amount you pay each month to have your medical insurance. So, choosing a plan with these networks might save you money if:

  • Staying in-network doesn’t bother you
  • You don’t go to the doctor that often
  • Your current doctor is already a part of that network
Freedom of Choice for Network Provider

If you need more freedom of choice and the ability to go outside a narrow network while still retaining some of your coverage, looking at PPO or a more flexible POS plan may be the answer.

Easy Access to Health Care

If easy access to care is important, check the network for doctors, hospitals and pharmacies near you before making your choice.

Staying Fit and Healthy

If you’re focused on staying fit and healthy, an HMO with benefits rewarding gym memberships or other wellness behaviors may be just the plan for you.

In short, jot down what you’re looking for in a network, your “must haves” versus “hope to haves” and any doctors or hospitals you know you want. Have that list with your other information when you start to shop for health insurance.

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