Updated June 2026 · Health Insurance Guide · 16 min read
A complete, plain-English comparison of the three most common health insurance plan types in the United States, what each one actually costs, who each one fits best, and what major 2026 changes to ACA premiums and subsidies mean for your decision this year.
Quick Summary
PPO (Preferred Provider Organization): Highest flexibility, no referrals needed, covers out-of-network care at a higher cost. Best for people who want choice and already have specialists they want to keep.
HMO (Health Maintenance Organization): Lowest premiums, requires a primary care physician and referrals for specialists, no out-of-network coverage except emergencies. Best for budget-conscious people comfortable with a coordinated-care model.
EPO (Exclusive Provider Organization): A middle ground; no referrals required like a PPO, but no out-of-network coverage like an HMO. Best for people who want direct specialist access without paying full PPO premiums.
PPOs remain the most common employer-sponsored plan type in the U.S., covering 46 percent of covered workers in 2025, according to KFF’s annual Employer Health Benefits Survey.
The maximum allowable out-of-pocket limit for ACA-compliant plans is rising to $10,600 for an individual and $21,200 for a family in 2026, up sharply from 2025.
2026 is a turning point year for ACA Marketplace shoppers: enhanced premium subsidies expired at the start of the year, and average pre-subsidy premiums rose by more than 23 percent nationally, the largest individual market increase since 2018.
Early 2026 federal data shows ACA Marketplace enrollment dropped roughly 21 percent after the first premium payment deadline, nearly double last year’s drop-off rate, largely attributed to the subsidy changes.
All three plan types fall under what insurers call “managed care,” meaning the insurer negotiates rates with a specific network of doctors and hospitals. The differences between them come down to three core questions: do you need a primary care referral, can you go out-of-network, and how much will you pay each month.
Feature
PPO
HMO
EPO
Monthly premium
Highest
Lowest
Middle
Primary care physician required
No
Yes
No (usually)
Referral needed for specialists
No
Yes
No
Out-of-network coverage
Yes, at higher cost
No, except emergencies
No, except emergencies
Network size
Largest
Smallest
Similar to PPO, no out-of-network benefit
Best for
Flexibility, travel, existing specialists
Lowest cost, simple coordinated care
Specialist access without PPO price
Important caveat: There are no federal definitions that legally separate these plan types. Insurers apply the labels HMO, PPO, and EPO based on general industry conventions, but the actual rules of any specific plan can vary. Always read a plan’s official summary of benefits before assuming it works exactly like the general description below.
PPO
No referrals required
Out-of-network coverage included
Largest provider networks
Highest monthly premiums
Most travel-friendly option
HMO
Primary care physician required
Referrals needed for specialists
No out-of-network coverage
Lowest monthly premiums
Predictable, coordinated care
EPO
No referrals required
No out-of-network coverage
Network similar in size to PPO
Mid-range premiums
Direct specialist access
2. PPO Plans: Flexibility at a Higher Price
A Preferred Provider Organization plan offers the most freedom of the three plan types. Members can see any specialist without a referral, and the plan will still pay a portion of the cost even for providers outside the official network, though the out-of-pocket cost is meaningfully higher for out-of-network care.
PPO advantages
No referral needed to see a specialist
Coverage continues even outside the network, useful for frequent travelers or people who split time between two states
Easier to keep an existing doctor who may not be in a narrower network
PPO drawbacks
Highest monthly premiums of the three plan types
Higher deductibles and coinsurance are common
Out-of-network costs, while partially covered, have no upper limit the way in-network costs do under ACA rules
3. HMO Plans: Lower Cost, Coordinated Care
A Health Maintenance Organization plan is built around a primary care physician who manages and coordinates all of a member’s care. To see a specialist, a member generally needs a referral from that primary doctor first, and care outside the network is not covered except in a genuine emergency.
HMO advantages
Lowest monthly premiums among the three main plan types
Often comes with low or no deductible
Coordinated care can mean better continuity, since one doctor oversees the full picture
HMO drawbacks
Smallest provider networks of the three plan types
Referrals add an extra step and potential delay before seeing a specialist
No coverage at all for out-of-network non-emergency care, which can be a significant risk while traveling
4. EPO Plans: The Middle Ground
An Exclusive Provider Organization plan combines a PPO-like network and direct specialist access with an HMO-like restriction on out-of-network coverage. Most EPO plans do not require a primary care physician or referrals, but stepping outside the network for routine care generally means paying the full cost yourself.
EPO advantages
No referrals required to see specialists
Often a larger network than a comparable HMO
Premiums typically land between HMO and PPO pricing
EPO drawbacks
No out-of-network benefits for routine or planned care
Less flexibility than a PPO for people who travel frequently or split time between regions
Network adequacy varies significantly by insurer and state
5. Cost Comparison: Premiums and Out-of-Pocket Spending
Average premiums differ meaningfully by plan type, based on 2025 national employer survey data, the most recent full-year figures available as of mid-2026.
Plan Type
Average Annual Premium (Single)
Average Annual Premium (Family)
PPO
$9,818
$28,272
HDHP with Savings Option
$8,620
$25,379
HMO / EPO (grouped in survey data)
Generally lower than PPO
Generally lower than PPO
On average, covered workers contributed 16 percent of the premium for single coverage and 26 percent for family coverage in 2025, equal to roughly 1,440 dollars and 6,850 dollars respectively, with the remainder paid by the employer. These figures continue to climb faster than wage growth in most years, which is part of why plan-type selection has a real, ongoing impact on a household’s annual budget.
6. Which Plan Type Is Most Common
According to KFF’s 2025 Employer Health Benefits Survey, the most comprehensive annual look at employer-sponsored coverage in the United States, PPOs remain the dominant plan type nationally.
Plan Type
Share of Covered Workers (2025)
PPO
46%
HDHP with Savings Option
33%
HMO
12%
POS
9%
Conventional / Indemnity
Less than 1%
Note that EPO plans are grouped together with HMO plans in this national survey data, since the two types are similar enough in structure that the survey treats them as one category. There is meaningful regional variation as well; in California, for example, HMO enrollment runs much closer to PPO enrollment than it does nationally, with roughly a third of covered workers in each category.
7. 2026 News: ACA Subsidy Expiration and Rising Premiums
2026 News Update: As of January 1, 2026, the enhanced ACA Marketplace premium subsidies first introduced under the American Rescue Plan and extended through the Inflation Reduction Act expired, with Congress not having passed an extension at the time enrollment began. This means subsidy rules have reverted to pre-2021 levels, and the so-called “subsidy cliff” has returned: households with income above 400 percent of the federal poverty level are no longer eligible for any premium subsidy at all, regardless of how much coverage would otherwise cost them.
The financial impact has been substantial. Insurers raised pre-subsidy premiums by a weighted average of more than 23 percent nationwide for 2026, the largest individual market increase since 2018, according to 2026 analysis from healthinsurance.org. An estimated 21.8 million Marketplace enrollees with subsidized coverage are experiencing sharply higher monthly payments as a direct result of the subsidy enhancement expiration, and roughly 1.6 million enrollees with income above the 400 percent federal poverty level threshold are now newly exposed to the full, unsubsidized premium.
The early enrollment data reflects this pressure. Internal federal data obtained by reporters in 2026 showed that roughly 21 percent of people who enrolled in HealthCare.gov coverage during open enrollment were subsequently dropped from coverage for failing to pay their first month’s premium, nearly double the 12 percent drop-off rate seen the previous year. Several major insurers also exited specific state marketplaces entirely heading into 2026, including Aetna’s exit from 17 states, narrowing plan choices for some shoppers even before cost is considered.
On a more favorable note for anyone enrolled in any ACA-compliant plan, including employer coverage, the maximum allowable out-of-pocket limit for in-network essential health benefits is rising to 10,600 dollars for an individual and 21,200 dollars for a family in 2026, up from 9,200 dollars and 18,400 dollars in 2025. While this is technically a ceiling rather than a guarantee, it is a useful benchmark: most actual plans set their out-of-pocket maximum well below this federal cap, so it’s worth comparing your specific plan’s limit against this number when shopping.
8. Which Plan Is Best for Your Situation
Your Situation
Likely Best Fit
You want the lowest possible monthly premium and rarely see specialists
HMO
You see several specialists regularly and want direct access without a referral
EPO or PPO
You travel frequently or split time between two states
PPO
You have an existing specialist relationship you want to keep regardless of network
PPO
You want predictable, coordinated care managed by one primary doctor
HMO
You want mid-range premiums with easier specialist access than an HMO
EPO
9. What About POS and HDHP Plans
Two additional plan structures often appear alongside PPO, HMO, and EPO options, and are worth understanding briefly.
POS (Point of Service)
A POS plan blends features of an HMO and a PPO. Like an HMO, it typically requires a primary care referral to see a specialist. Like a PPO, it allows out-of-network care, though at a higher out-of-pocket cost. It generally sits in the middle of the cost spectrum.
HDHP with HSA (High-Deductible Health Plan)
An HDHP is not defined by network structure the way the other plans are; rather, it is defined by a high deductible paired with a low monthly premium. HDHPs are frequently paired with a Health Savings Account, allowing pre-tax contributions toward medical expenses. In 2025, HDHP/SO plans carried the lowest average premiums of any plan type tracked nationally, but members pay significantly more out of pocket before coverage fully kicks in.
10. Mistakes to Avoid When Choosing a Plan
Choosing based on premium alone. A lower monthly premium often means a higher deductible or narrower network, so total annual cost matters more than the sticker price.
Assuming your current doctor is in-network. Provider networks change every year. Confirm directly with the plan or your doctor’s office before enrolling, especially with HMO and EPO plans that offer no out-of-network safety net.
Ignoring the out-of-pocket maximum. This single number tells you the worst-case financial exposure for a bad year, and it varies meaningfully between plans even within the same plan type.
Overlooking subsidy eligibility changes. With the 2026 subsidy cliff back in effect, some households that received subsidies in past years may no longer qualify, making it essential to re-run subsidy calculations rather than assuming last year’s numbers still apply.
Forgetting about prescription drug formularies. Two plans of the same type can cover very different medications at very different costs; always check the formulary for any regular prescriptions.
Not accounting for travel or relocation plans. An HMO or EPO with no out-of-network coverage can leave you exposed during travel or a temporary move, where a PPO would still provide partial coverage.
11. Frequently Asked Questions
Which is cheaper, an HMO or a PPO?
HMO plans generally carry lower monthly premiums than PPO plans, often with lower deductibles as well. The tradeoff is a smaller network, mandatory referrals, and no coverage for non-emergency out-of-network care.
Do EPO plans require a primary care physician?
Most EPO plans do not require designating a primary care physician or obtaining referrals to see specialists, which is one of the key differences from an HMO. Always confirm this with your specific plan, since requirements vary by insurer.
Can I see an out-of-network doctor with an EPO or HMO plan?
Generally no, except in a genuine emergency. Both EPO and HMO plans typically exclude coverage for non-emergency out-of-network care entirely, meaning you would pay the full cost yourself.
Why did ACA premiums rise so much for 2026?
Enhanced federal premium subsidies that had been in place since 2021 expired at the start of 2026 and were not extended by Congress before open enrollment, while insurers separately raised their underlying premiums by more than 23 percent on average nationwide, compounding the cost increase for many Marketplace shoppers.
Is a PPO always the best choice if I can afford it?
Not necessarily. A PPO offers more flexibility, but that flexibility comes with a higher premium that may not be worth it if you rarely need out-of-network care or specialist access without referrals. The “best” plan depends on your specific health needs, budget, and how often you travel or see specialists.
What happens if my income changes during the year on an ACA plan?
Subsidy amounts are based on estimated household income for the year, so a significant income change should be reported to the Marketplace as soon as possible to avoid owing money back, or missing out on a subsidy increase, when you file your taxes.
This article is for general educational purposes and does not constitute insurance, medical, or financial advice. Plan structures, costs, and subsidy rules vary by insurer, employer, state, and individual circumstances, and are subject to change by federal and state policy. Always review your specific plan documents or speak with a licensed insurance agent or your HR benefits administrator for advice tailored to your situation.
