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TL;DR:
Choosing the right health insurance plan depends on balancing cost, flexibility, and healthcare needs.
PPOs offer broad provider access, including out-of-network care, without referrals — ideal for employees who need flexibility but come with higher costs.
EPOs require in-network care for non-emergencies, leading to lower premiums while still allowing direct specialist access.
Employers should consider workforce diversity, budget constraints, and employee healthcare needs when deciding which plan types to offer.
Selecting a health insurance plan is a major decision for both employers and employees. While cost is a key factor, so is access to healthcare providers and flexibility in care options. In fact, nearly three-quarters of small business owners recognize that offering competitive benefits is essential for their company’s long-term survival.
Two widely offered plan types — preferred provider organizations (PPOs) and exclusive provider organizations (EPOs) — each provide different levels of access, cost structures, and coverage rules.
Understanding these differences can help employees make informed choices that align with their healthcare needs and assist employers in selecting the best options for their workforce.
| Feature | EPO | PPO |
|---|---|---|
| Network restrictions | Limited to network providers (except in emergencies) | More flexible, can see out-of-network providers |
| Cost | Generally lower premiums | Typically higher premiums |
| Specialist access | No referral needed (in-network) | No referral needed |
| Out-of-network coverage | Not covered (except in emergencies) | Covered, but at a higher cost |
| Best for | Cost-conscious individuals who rarely need specialists | Those who need provider flexibility and frequent specialist visits |
What is an EPO plan?
An EPO plan is a type of health insurance that only covers in-network care, except in medical emergencies.
Unlike a PPO, an EPO does not reimburse costs for out-of-network providers, meaning you may have to pay the full price if you seek care outside the plan’s network.
However, EPOs typically offer lower premiums and out-of-pocket costs than PPO plans, making them an affordable choice for those who don’t require frequent specialist visits.
How EPO plans work
While EPOs provide cost savings compared to PPOs, it's important to understand how they function to ensure they align with your healthcare needs.
Network restrictions: You must use in-network doctors, hospitals, and specialists (except for emergencies).
Lower premiums: Monthly costs are typically lower than PPOs due to the restricted provider network.
No referral requirements: You don’t need a primary care physician (PCP) referral to see a specialist — as long as they are in-network.
Emergency coverage: EPOs cover out-of-network care only in life-threatening emergencies (e.g., ER visits).
Who should choose an EPO?
| ✅ EPO plans are best suited for individuals who: |
|---|
| Want lower monthly premiums and are comfortable staying within a defined provider network |
| Rarely require specialist care or only need in-network specialists |
| Live in an area with strong EPO network coverage, ensuring access to necessary healthcare providers |
| Don’t frequently travel, as care outside the network isn’t covered unless it’s an emergency |
| 🚫 An EPO is probably not the best choice for those who: |
|---|
| Need access to out-of-network providers or frequently seek specialist care |
| Travel frequently and require flexibility in provider options |
EPO eligibility and coverage rules
EPO plans have specific requirements for provider access and coverage, making it important to understand how they work before enrolling.
In-network requirement: EPO members must use in-network providers for all non-emergency care. Out-of-network services are not covered unless it’s a medical emergency.
No referral needed for specialists: Unlike HMOs, EPOs allow direct access to in-network specialists without requiring a referral from a primary care physician (PCP).
Plan availability: EPOs are commonly available through employer-sponsored health plans and the individual marketplace, though network size and provider options vary by insurer.
Coverage limitations: Since EPOs don’t cover out-of-network care (except in emergencies), members should confirm that their preferred doctors and hospitals are included in the plan’s network before enrolling.
What is a PPO plan?
A PPO plan offers greater flexibility in choosing healthcare providers. Unlike EPOs, PPOs cover both in-network and out-of-network care, though out-of-network services cost more.
How PPO plans work
While PPOs offer more flexibility than EPOs, it's essential to understand their cost structure and coverage rules. Knowing how they function can help you determine if the added provider choice justifies the higher premiums.
Network flexibility: You can see both in-network and out-of-network providers, but out-of-network visits cost more.
Higher premiums: PPOs generally have higher monthly costs compared to EPOs due to greater provider flexibility.
No referral requirements: You can see specialists without a PCP referral, whether they are in- or out-of-network.
Emergency coverage: All emergency services are covered regardless of network status.
Who should choose a PPO?
| ✅ PPO plans are best suited for individuals who: |
|---|
| Want maximum provider flexibility, including out-of-network options |
| See specialists frequently and don’t want referral restrictions |
| Travel often and need access to providers across different locations |
| Prefer keeping their current doctors, even if they’re out-of-network |
| 🚫 A PPO is probably not the best choice for those who: |
|---|
| Want the lowest premiums — PPOs are typically the most expensive plan type |
| Don’t need frequent specialist care or out-of-network coverage |
PPO eligibility and coverage rules
EPO plans have specific requirements for provider access and coverage, making it important to understand how they work before enrolling.
Out-of-network coverage: PPO members have the flexibility to see both in-network and out-of-network providers, though out-of-network visits typically cost more.
No referral required: Like EPOs, PPOs allow members to see specialists without obtaining a referral.
Higher costs for greater flexibility: PPO plans generally come with higher premiums, deductibles, and copays in exchange for a broader provider network.
Coverage limitations: While PPOs provide nationwide access to care, members should be aware that out-of-network services often have higher coinsurance rates, meaning they will pay a greater share of the cost when choosing non-preferred providers.
Key differences between EPO and PPO plans
When comparing EPO and PPO plans, the biggest distinctions come down to network flexibility and cost. While both provide comprehensive coverage, the right choice depends on how often you need medical care and whether provider flexibility is a priority.
It’s also important to consider potential tax benefits, such as eligibility for Health Savings Accounts (HSAs) or other pre-tax contributions.
Another important factor to keep in mind is tiered networks, which are available in some states. These plans categorize in-network providers into sub-groups based on cost and quality measures, allowing members to save on cost-sharing by choosing preferred providers within the network.
While PPOs are more likely to offer tiered networks, some EPO plans may also include tiered structures to help control costs while maintaining a broad provider selection.
Cost considerations
Healthcare expenses are a major factor when choosing between an EPO and a PPO.
PPOs generally have higher monthly premiums in exchange for greater provider flexibility, allowing enrollees to see both in-network and out-of-network doctors. However, staying in-network can help keep costs manageable.
EPOs, on the other hand, offer lower premiums but require enrollees to stay within a designated network to avoid unexpected expenses. For those who rarely see specialists or are comfortable with a more limited provider network, an EPO can be the more budget-friendly option.
When deciding between the two, it’s helpful to ask:
How often do you anticipate needing specialist care? If frequent visits to out-of-network providers are likely, a PPO may be worth the extra cost.
Do you prefer lower monthly premiums? If so, an EPO could be a better choice as long as you’re comfortable with a more limited provider network.
For employers, offering both options allows employees to select a plan that best aligns with their healthcare needs and budget.
Tax implications for companies
Providing employees with healthcare benefits is a major investment, but small businesses may qualify for the Small Business Health Care Tax Credit, which can help offset costs.
Eligible businesses can receive a credit of up to 50% of their employee premium contributions (35% for nonprofits). Understanding how the tax credit works is essential, as it’s available for two consecutive years if the employer offers a SHOP (Small Business Health Options Program) plan.
To qualify, businesses must:
Have fewer than 25 full-time employees
Pay at least 50% of employee premiums
Offer a SHOP plan to all full-time employees
Have an average employee salary of ~$56,000 or less per year
Taking advantage of this tax credit can significantly lower the cost of providing health benefits, making it easier for small businesses to offer competitive coverage.
Plan flexibility
Choosing between an EPO and a PPO comes down to balancing provider access with cost.
A PPO offers greater flexibility, allowing you to see both in-network and out-of-network providers without referrals — ideal for those who travel frequently or need access to specialists outside their network. However, this convenience comes at a higher cost, often with higher premiums, deductibles, and more paperwork for out-of-network care.
In contrast, an EPO requires you to stay within the provider network for all non-emergency care, which can limit provider choices but typically results in lower premiums and out-of-pocket costs.
Those who prefer direct access to specialists without referrals may find a PPO more convenient, while an EPO may be a cost-effective option for individuals who don’t need frequent specialist visits. Employees should consider their healthcare needs, provider preferences, and budget when selecting a plan.
How to choose between an EPO and PPO
Selecting the right health plan requires balancing cost, flexibility, and individual healthcare needs. While both EPO and PPO plans offer comprehensive coverage, the best choice depends on how often you seek care, your budget, and whether you need access to out-of-network providers.
Below are key factors to consider when deciding which plan is the right fit:
Cost vs. flexibility: PPOs have higher premiums for a wider provider network, while EPOs offer lower costs but require staying in-network.
Healthcare needs: PPOs provide greater specialist access, whereas EPOs are more cost-effective for those with fewer specialty care needs.
Travel habits: PPOs allow out-of-network coverage, making them ideal for frequent travelers, while EPOs limit coverage to local providers except in emergencies.
Employer-sponsored vs. individual plans: Employer offerings may limit your options, while self-employed individuals or Individual Coverage Health Reimbursement Agreement (ICHRA) participants must choose based on their healthcare needs and budget.
To help illustrate how these factors play out in real-world situations, let's explore a couple of scenarios where employers must decide whether to offer an EPO or PPO plan to their employees.
Scenario 1: A diverse workforce
For companies with a diverse employee base, offering both PPO and EPO plans may be the best approach.
Some employees — such as young, healthy individuals — may prioritize lower premiums and be comfortable using a limited provider network. Others, such as employees with families or chronic health conditions, may need the flexibility of a PPO to access out-of-network specialists or continue seeing trusted providers.
By providing both options, businesses can accommodate a range of healthcare needs while giving employees control over their preferred level of coverage and cost.
Scenario 2: Tight budget constraints
If your company is operating under strict budget constraints, an EPO plan may be the better choice. Because EPOs typically have lower premiums and out-of-pocket costs, they can help businesses reduce overall healthcare expenses while still offering quality coverage.
For employees, an EPO can be a smart option if they don’t require out-of-network care or specialist visits outside the network. While the trade-off is a more limited provider selection, the cost savings can be significant — especially for individuals and businesses looking to control healthcare spending without sacrificing coverage.
FAQ: about PPO and EPO plans
Is an EPO better than a PPO?
The choice between an EPO and a PPO depends on individual needs. EPOs often have lower premiums but require you to use in-network providers for non-emergency care. PPOs offer greater flexibility, allowing out-of-network care at a higher cost, but typically come with higher premiums.
Can I see a specialist with an EPO plan?
Yes, EPO plans generally allow you to see specialists without a referral, provided the specialist is within the plan's network. However, out-of-network specialist visits are usually not covered unless it's an emergency.
Can I see my current doctor with a PPO plan?
Yes, one of the biggest advantages of a PPO plan is its flexibility. You can see any doctor or specialist you choose, even if they are out-of- network. However, you will pay less if you stick to in-network providers.
Why are PPO plans more expensive than EPO plans?
PPO plans tend to have higher premiums because they offer more flexibility, including the ability to see out-of-network providers and not requiring referrals for specialists. This added convenience and broader access typically result in increased costs.
Which plan is better for families?
If family members need flexibility to see out-of-network providers or frequently visit specialists, a PPO might be the better choice. However, if keeping premiums low while using in-network care is the priority, an EPO could be a more cost-effective option.
Some families also consider having two insurance plans through dual coverage, which can help reduce out-of-pocket costs depending on coordination of benefits.
Find the best health insurance plan for your team
Choosing between PPO insurance and EPO insurance ultimately depends on what matters most to your employees.
If they prioritize flexibility and access to out-of-network care, a PPO might be the right fit — even at a higher cost. If lower premiums and in-network convenience align better with their needs, an EPO could be the smarter choice.
No matter which plan works best, Thatch makes it easy to compare options and build a benefits package that fits your team’s needs.
Jeremy Wolf, former professional athlete, is dedicated to enhancing healthcare access. As Customer Success and Broker Operations Lead at Thatch, Jeremy focuses on providing customers with everything they need to navigate the complex health insurance space.
Learn more about Thatch's teamThis article is for general educational purposes and is not legal advice. The opinions shared here belong to the author and are not official statements from Thatch. For legal and tax questions, please feel free to consult with a qualified professional.
