Understanding Health Insurance Plans: Choosing the Right One for Your Needs (and How We Can Help)

Finding the right health insurance plan is critical, whether self-employed or managing a growing business. With so many options—HMO, EPO, POS, PPO, HDHP—it’s easy to feel overwhelmed. But the good news is that solutions are tailored to your specific needs.

Whether you’re a freelancer looking for affordable health coverage or a business needing a comprehensive HR solution, this guide will help you understand your options and how we can help.

Let’s dive into the types of health insurance plans available, how to choose the right one, and how Association Health Plans (AHPs) and Professional Employer Organizations (PEOs) can simplify the process for self-employed individuals and businesses.

What is the Difference Between HMO, EPO, POS, PPO, and HDHP?

First, let’s start by breaking down the most common types of health plans.

HMO (Health Maintenance Organization)

How it works: You choose a primary care physician (PCP) and need referrals to see specialists. You must use the plan’s network for care except in emergencies.

• Pros: Lower premiums and coordinated care.
• Cons: Less flexibility, no out-of-network coverage.

EPO (Exclusive Provider Organization)

How it works: No referrals are needed for specialists, but you must stay in-network for care.

• Pros: No referrals, generally lower premiums than PPOs.
• Cons: No out-of-network coverage.

POS (Point of Service)

How it works: It requires a referral from a PCP to see specialists, but it allows you to go out-of-network for care at a higher cost.

• Pros: Flexibility to go out-of-network, coordinated care.
• Cons: Higher out-of-pocket costs for out-of-network care.

PPO (Preferred Provider Organization):

How it works: No referrals are needed; you can see any doctor in or out of the network. In-network care costs less.

• Pros: Greater flexibility, out-of-network coverage.
• Cons: Higher premiums and out-of-pocket costs.

HDHP (High Deductible Health Plan):

How it works: Higher deductible paired with a Health Savings Account (HSA) for tax-advantaged savings. It can be an HMO, EPO, POS, or PPO.

• Pros: Lower premiums and HSA for medical expenses.
• Cons: Higher out-of-pocket costs until the deductible is met.

How to Choose the Right Plan for Your Needs

Finding the right plan involves assessing your health needs, lifestyle, and financial situation.

Here are a few examples:

Self-Employed Scenario: You’re a freelancer or contractor with no employer-provided insurance. You want affordable coverage that balances premiums and out-of-pocket costs.

Solution: An HDHP with an HSA might work well, offering lower premiums and the ability to save pre-tax dollars for medical expenses.

Additionally, Association Health Plans (AHPs) could provide an even more affordable option. AHPs allow self-employed individuals and small businesses to access group health insurance through associations, giving them the purchasing power of larger companies.

Growing Business Scenario: Your company is expanding, and you need comprehensive health coverage for your employees, but you also want to offer flexibility in provider options.

Solution: A PPO would allow employees to choose in-network or out-of-network care.

However, managing HR, payroll, and benefits becomes more complicated as your business grows. This is where a PEO (Professional Employer Organization) comes in.

A PEO can help you manage health insurance, payroll, compliance, and other HR needs, giving your company access to high-quality benefits typically reserved for larger organizations.

Family with Young Children Scenario: You have children who need regular doctor visits and occasional specialist care.

Solution: An HMO is likely the best choice, offering lower premiums, coordinated care, and predictable out-of-pocket costs for routine visits.

Frequent Traveler Scenario: You travel often for work or leisure and need flexible healthcare options in multiple states or countries.

Solution: A PPO is ideal since it provides out-of-network coverage, allowing you to access care wherever you are.

How to Read a Summary of Benefits and Coverage (SBC)

The Summary of Benefits and Coverage (SBC) is your cheat sheet for understanding what your health plan covers.

Here’s how to read it:

Deductible: This is the out-of-pocket amount before your insurance starts covering services.

Out-of-Pocket Maximum: This is the most you’ll pay during a policy period before your insurance covers everything 100%.

Co-payments vs. Co-insurance

Co-payments are fixed fees for services, such as $30 for a doctor’s visit.

Co-insurance is a percentage of your costs after your deductible is met, such as 20% of a hospital bill.

Coverage Examples: SBCs often include sample costs for standard procedures, such as giving birth or managing diabetes.

These examples can help you gauge your costs under that plan.

How to Search for Provider Networks

Finding out if your doctor or specialist is covered under your plan is crucial. Here’s how you can search for network providers:

Check Your Insurer’s Website: Most insurers have a provider search tool. You can enter your doctor’s name or location to see if they are in-network.

Use our tool to check the health insurance provider database.

Call the Doctor’s Office: If you prefer direct confirmation, call your doctor’s office and ask if they accept your insurance plan.

Use Third-Party Comparison Sites: Tools that allow you to compare plans and see which doctors or hospitals are included in their networks based on your zip code.

Like ZocDoc or HealthGrades.

Association Health Plans and PEOs: Simplifying Health Insurance

For many self-employed individuals and small business owners, finding affordable health insurance is one of the biggest challenges.

Here’s how Association Health Plans (AHPs) and Professional Employer Organizations (PEOs) can help:

Association Health Plans (AHPs): If you’re self-employed or run a small business, you might not have the negotiating power that larger companies do when purchasing health insurance.

That’s where AHPs come in. AHPs allow you to join a larger group of individuals or small businesses to access group health insurance plans through national carriers.

This enables you to secure more affordable rates, better coverage options, and broader networks than if you were purchasing insurance on your own.

AHPs are ideal for freelancers, contractors, and small businesses that need access to affordable health insurance without the complexities of managing a large workforce.

PEOs for Growing Businesses: As your business scales, you’ll need more than just health insurance—you’ll need support managing payroll, HR, compliance, and employee benefits.

A PEO offers a full-service solution by taking on the legal and administrative responsibilities of being an employer.

Through the co-employment model, PEOs allow you to offer large-company benefits—like comprehensive health insurance—while reducing your administrative burden.

PEOs are perfect for businesses with 7 or more employees who want to provide competitive benefits, manage compliance, and offload HR tasks.

Additional Questions to Ask Before Choosing a Plan

Here are some other important questions to consider:

What are the prescription drug benefits?

Some plans cover a more comprehensive range of medications at lower costs, while others may have higher co-pays for certain drugs.

Does the plan cover mental health services?

Mental health coverage can vary widely, so it’s vital to ensure your plan covers services like therapy or counseling if needed.

What’s the maternity and newborn care coverage?

If you’re planning to start a family, it’s crucial to know what’s covered, from prenatal visits to hospital deliveries.

What wellness programs are included?

Some plans offer wellness benefits such as gym memberships, smoking cessation programs, or telehealth at reduced or no cost.

Conclusion: Find the Right Solution for You

Choosing the right health insurance plan is about more than just understanding acronyms—it’s about finding a plan that fits your needs and offers the right balance of coverage, flexibility, and cost.

Association Health Plans can provide access to affordable group insurance for the self-employed while growing businesses can leverage PEOs to manage everything from payroll to benefits as they scale.

If you need help navigating your options—whether you’re self-employed and looking for health coverage or a business ready to explore PEOs—or you want to know if what I talk about can help you, reach out to me, and let's chat.

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Rodney Steele is the CEO of Dinsmore Steele , the leading PEO brokerage that helps businesses simplify their HR, payroll, and employee benefits. With years of experience in the PEO space, Rodney is passionate about helping companies navigate complex decisions, from PEO renewals to benefit plan negotiations.

Known for his humor, wit, and straightforward advice, Rodney provides valuable insights that make the business of HR outsourcing easy to understand and even easier to execute. When he's not closing deals or advising clients, you can find him playing pickleball or enjoying time with his family on Long Island.