This blog was updated in May 2026
Choosing the right health insurance plan for your employees is a key decision because it affects both your budget and employee satisfaction. For many California employers, two common plan types often rise to the top of the list: PPO (Preferred Provider Organization) plans and EPO (Exclusive Provider Organization) plans.
While both provide valuable healthcare coverage, they function differently in terms of flexibility, cost, and access to providers. Understanding the differences will help you offer a benefits package that aligns with your business goals and meets the needs of your workforce. Let’s take a look at some of the basics of each plan. Once you know the basics, JC Lewis is here to help you determine how each option would impact you and your employees.
Why Plan Type Matters in California
Healthcare in California is unique. With major provider networks like Kaiser Permanente, Sutter Health, Adventist Health, Stanford Health Care, UCLA Health, and local regional providers, access and network compatibility matter. Your employees want a plan that will give them access to quality healthcare without high out of pocket expenses, while you’re looking for plans that keep employee satisfaction high but still fall within your budget.
Employees specifically are looking for plans that allow them to:
- Stay with their current doctor
- Have flexibility if they move within the state
- Access specialists without complicated processes
Because of this, selecting the right plan structure can make a significant difference in employee retention. It can also impact how your business is seen by potential employees. While salary was once the deciding factor in accepting a position, many of today’s workers consider benefits just as important.
What Is a PPO Plan?
A Preferred Provider Organization (PPO) plan offers flexibility and freedom in choosing medical providers. It does make use of a network of preferred care providers, hospitals, and other facilities, but it also allows provides some coverage for providers who are out of the plan’s network. This is more flexible than some plans that provide no coverage for out-of-network providers.
Key Features of PPO Plans:
- Employees can see any provider, even outside the network (though at a higher cost).
- Specialist referrals are typically not required.
- Employees have access to a broad network, which is ideal for multi-location or remote workforces.
- Employees do not have to select a primary care physician.
- Generally higher premiums compared to other plan types.
A PPO is often the best fit for employers with a workforce that values freedom of choice, travels frequently, or has ongoing specialist needs. The biggest downside is the higher cost, especially when compared to something like an HMO. For many, however, the flexibility is worth that cost.
What Is an EPO Plan?
An Exclusive Provider Organization (EPO) plan, on the other hand, provides coverage only when employees use in-network providers, with exceptions for emergencies. It’s similar to an HMO is some ways, but it does allow employees to see specialists without a referral.
Key Features of EPO Plans:
- Lower premiums than PPO plans.
- No primary care physician (PCP) requirement.
- Referrals are usually not needed for specialists, but specialists must be in network.
- Out-of-network care is typically not covered at all.
An EPO is often the best fit for employers looking to balance cost savings with a strong network of providers, especially if most employees live and work in the same California region. It provides some flexibility and easy access to specialists, but employees are locked into a provider network.
How Do PPOs and EPOs Compare?
Let’s break down the key features employees often look for and how PPOs and EPOs address them.
Costs
The monthly premiums for a PPO plan are typically higher than those of an EPO plan because EPOs have less overhead and administrative costs due to their smaller networks. It’s important to remember that you may be looking at the bottom line, your team may value the flexibility of a PPO plan despite the higher costs.
Your employees, on the other hand, will have to manage their out-of-pocket costs. These costs are not covered by their plan, and PPOs here are again usually higher.
Coverage
PPOs provide partial coverage for out-of-network providers, which is what makes them so attractive to employees looking to have choices in their care. This does result in the higher costs, but it makes it easier to find specialists and to continue seeing providers employees are already familiar with. EPOs will cover out-of-network providers in the event of a medical emergency.
Neither EPOs nor PPOs require employees to select a primary care physician, and typically neither require referrals, either, although EPO specialists again must be in-network.
In California, EPO plans have grown in popularity because they strike a balance between cost savings and accessibility, especially for small and mid-sized employers. However, PPO plans are still widely favored for employees with unique medical needs or those wanting provider flexibility.
Questions to Consider Before Choosing
As an employer, ask:
- Do my employees live in multiple areas across California?
- Do they already have preferred doctors or specialists?
- Is keeping premiums low a top priority?
- Do we want to maximize choice or streamline care access?
Understanding your workforce’s needs and budget helps determine whether PPO or EPO is the better fit. If you have mostly younger employees who are in good health, an EPO may be the better option now because it helps to keep everyone’s costs down. On the other hand, if you have employees who are older or have diverse healthcare needs, or have a team who see a wide range of providers, you’ll want to balance the extra costs of a PPO against employee satisfaction and overall health.
Need Help Choosing? We Can Guide You.
As a California-based insurance agency, J.C. Lewis Insurance Services partners with employers to compare coverage, costs, and network access across leading providers. We can help you weight the pros and cons of EPOs, PPOs, and other health insurance plans on the market to determine which one best fits the needs of you and your employees. On one hand, an EPO provides cost savings and a network of healthcare experts, but those providers may not necessarily be the ones your employees see. On the other hand, a PPO gives employees the flexibility to see a wide range of providers, but it comes with a higher price. It can be a hard decision, even when you know what your employees might prefer.
Whether you’re building a benefits package for the first time or reassessing your current offerings, we’ll walk you through the pros and cons of each option so you can make the best decision for your employees and your business. Reach out today to learn more.
