HMO vs PPO vs HDHP: How to Choose a Health Plan

During open enrollment, you may see a list of plans with short names like HMO, PPO, or HDHP. These letters tell you two main things: which doctors you can see and how you pay. Here's what each one means.

First, one key idea: the network

A network is the group of doctors, hospitals, and pharmacies that have a deal with your plan. HealthCare.gov explains that some plans limit you to their network, while others pay part of the cost for care outside it. Going "in network" almost always costs you less.

HMO (Health Maintenance Organization)

HealthCare.gov describes an HMO as a plan that usually limits coverage to doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area. HealthCare.gov also notes HMOs often focus on prevention and wellness.

Might fit you if: you're happy using the plan's doctors and want to keep things simple.

Watch out for: little or no coverage if you go outside the network (except emergencies).

PPO (Preferred Provider Organization)

HealthCare.gov says that with a PPO, you pay less if you use providers in the plan's network. You can also see doctors outside the network without a referral, for an extra cost.

Might fit you if: you want more freedom to choose doctors, or you have a favorite doctor who isn't in other networks.

Watch out for: PPOs often cost more. Check the premium and what you'd pay out of network.

EPO and POS (in brief)

• EPO (Exclusive Provider Organization): HealthCare.gov describes it as a plan where services are covered only if you use doctors, specialists, or hospitals in the plan's network, except in an emergency.
• POS (Point of Service): HealthCare.gov says you pay less if you use the plan's network, and a POS plan requires a referral from your primary care doctor to see a specialist.

HDHP (High Deductible Health Plan)

An HDHP is a little different. The name is about how much you pay before insurance kicks in, not about the network. HealthCare.gov describes an HDHP as a plan with a higher deductible than a traditional plan. The monthly premium is usually lower, but you pay more of your costs yourself before the plan starts paying its share.

The big plus: an HDHP that meets IRS rules lets you open a health savings account (HSA). That's why HealthCare.gov says these are often called "HSA-eligible plans." (See HSA explained.)

To count as an HDHP for HSA purposes, the IRS sets yearly limits. For 2027 (from IRS Revenue Procedure 2026-24):

For comparison, the 2026 figures in IRS Publication 969 are a $1,700 / $3,400 minimum deductible and an $8,500 / $17,000 out-of-pocket limit.

An HDHP still has its own network rules. Check its plan summary to see which doctors are in network.

How to choose: four simple questions

1. Are my doctors in the network? If you have a doctor you love, look them up in each plan's directory first.

2. How much care do I expect next year? If you rarely see a doctor, a lower-premium plan (like an HDHP) may cost less overall. If you expect a lot of care, a plan with lower deductibles and copays may cost less, even with a higher premium. HealthCare.gov makes this same point.

3. What's the worst-case cost? Add up a full year of premiums plus the out-of-pocket maximum. That's roughly your "bad year" number for covered in-network care.

4. Can I handle a big bill early in the year? With a high deductible, you could owe a lot before insurance helps. An HSA can help you save for this.

Made-up example: Priya compares two plans.

• PPO: $150 per month premium, $1,000 deductible, $4,000 out-of-pocket max.
• HDHP: $60 per month premium, $3,000 deductible, $6,000 out-of-pocket max, and her employer adds money to her HSA.

In a quiet year with few visits, the HDHP saves her about $1,080 in premiums. In a very bad year, she'd pay more out of pocket with the HDHP. Priya thinks about which risk she's more comfortable with. (These are made-up numbers, not real plan prices.)

Don't forget

• Compare each plan's Summary of Benefits and Coverage. It's designed for side-by-side comparisons.
• Check your prescriptions. Drug coverage can differ a lot between plans.
• If your spouse has job coverage too, compare both.