US Health Insurance

PPO, HMO, and HDHP Explained

The US healthcare system is notoriously complex. Here's a quick primer on the terms you'll see during your company's "Open Enrollment."

Key Terms

• Premium: What you pay every month (usually deducted from your paycheck).
• Deductible: What you pay out-of-pocket before insurance kicks in.
• Copay: A flat fee you pay for a doctor's visit (e.g., $20).
• Out-of-Pocket Max: The most you'll ever have to pay in one year.

Plan Types

• PPO (Preferred Provider Organization): Most flexible; you can see any doctor, but "in-network" is cheaper. No referrals needed.
• HMO (Health Maintenance Organization): You must pick a Primary Care Physician (PCP) and get referrals to see specialists. Usually cheaper premiums.
• HDHP (High Deductible Health Plan): Low premiums, high deductible. Often comes with an HSA (see next note).