Since it is a rare task to replace your central heating and cooling system, let's start with some basic knowledge about a typical set-up. The most common heating and cooling system set-up is a gas furnace with a coil and an electric air conditioner. This is a ‘split system', which means the coil is located inside the home with the furnace and the rest of the cooling component (the AC) is outside...hence the system is split between locations, giving its name. The air conditioner uses the furnace's blower to distribute cool air when it's hot outside. The furnace heats the home with a fossil fuel (i.e. natural gas, propane or oil) when it's cold outside. The hybrid is different from a typical system because it provides two heat sources: electric heat and a fossil fuel. In many locations, it is more economical to heat the home with the electric heat pump, at least until the outdoor temperature falls below a specific temperature point. Below that temperature point, the furnace heats the home more economically.