What is PPO insurance?

PPO plans, or "Preferred Provider Organization" plans, are one of the most popular types of plans in the Individual and Family market. PPO plans allow you to visit whatever in-network physician or healthcare provider you wish without first requiring a referral from a primary care physician.

How does a PPO plan work?

As a member of a PPO plan, you'll be encouraged to use the insurance company's network of preferred doctors and you usually won't need to choose a primary care physician. No matter which healthcare provider you choose, in-network healthcare services will be covered at a higher benefit level than out-of-network services. It's always important to check if your provider accepts your health plan so you receive the highest level of benefit coverage.

However, you will probably have an annual deductible to pay before the insurance company starts covering your medical bills. You may also have a co-payment of about $10 - $30 for certain services or be required to cover a certain percentage of the total charges for your medical bills.

HMO vs PPO insurance

HMOs and PPOs are two of the most common types of health insurance plans you will see. HMO stands for Health Maintenance Organization. The key to this type of plan is that it builds a network of healthcare providers, and the HMO specifically covers healthcare services within that network.

PPOs are designed as a counter to the HMO network concept. With a PPO, you can choose your physicians and are not bound to any specific insurance-arranged network, while with an HMO, you have to choose a doctor in your network.

In either case, you’re looking at managed care, which helps the insurers keep costs under control.

How much does a PPO plan cost?

When choosing a health plan, cost is always an essential part of your decision. PPOs, like any other type of insurance plan, have varying costs. There is no one-size-fits-all plan, so the price of any you choose will depend on a lot of factors.

Like other insurance plans, PPO costs mostly come in the form of premiums, copays, and deductibles.

The premium is the monthly fee you pay for your insurance plan. It’s the primary cost.

The copay is the amount you are expected to pay for a given healthcare service or medication. Even though you pay the premiums, you’re still responsible for copays.

The deductible is the amount you have to pay in healthcare services, in a single year, before the insurance takes over and covers the rest.

PPO insurance plan: pros and cons

PPO insurance plans differ from other insurance plans in a few specific ways. Those differences definitely generate advantages that make PPOs appealing. But, they come with some downsides too. These are the pros and cons of using a PPO plan.

Pros

The biggest advantage of a PPO is the plan’s flexibility. PPOs come with a wide range of premiums, copays, and deductibles, so you can look for a plan that really caters to your financial and health needs.

Another great benefit of PPO plans is that you don’t need a referral to visit a specialist. If you want to see a dermatologist to take care of a mole, you can schedule an appointment and go. With other plans, you often need a referral before the insurance will even consider covering the cost of the specialist visit.

Lastly, PPOs don’t limit coverage to a predetermined network. While it does still have a preferred network, you have coverage for services outside of that network. You also get a lot more freedom in choosing your own primary care physician.

Cons

So, why doesn’t everyone have a PPO? For the most part, it’s because they cost more than other insurance plans. Limiting coverage to a specific network brings down the cost of insurance, so PPOs have to charge more to offer out-of-network coverage and greater flexibility.

On top of that, PPOs still do have networks. While you will get some coverage if you need to go out of your network, you’ll likely pay more out of pocket when such an occasion arises.

PPO insurance FAQs

What are the benefits of a PPO plan?

There are a few key benefits to choosing a PPO plan. The first is that you get to choose your own preferred care providers. Additionally, you can see physicians outside of your network, and your plan still provides coverage and payment assistance.

Finally, PPOs allow you to see a specialist without getting a referral first. It provides a lot more freedom in how you choose to manage your own health care.

Is an HMO or PPO plan better?

Neither plan is clearly superior to the other. Which is best for you depends on a lot of circumstances. HMOs often save money over time by offering cheaper overall coverage. But when you need the flexibility offered by a PPO, then it’s easily worth the increased cost of coverage.

How do PPO deductibles work?

PPO deductibles work the same as any other short term health insurance plan, with one exception. PPOs have two deductibles. One pertains to in-network coverage. The other is for out-of-network coverage.

When you select the plan, the deductible numbers are included in the paperwork, so the exact amount of your deductible is set by the agreement. It can go up from year to year, but those increases are also part of the agreement.

Let’s say that your deductible is $1,000. This means that if you pay $1,000 for healthcare services in a single year, your overall coverage increases after that. Health insurance deductibles are different because most plans provide some coverage even before you meet the deductible. The coverage often includes an annual checkup and helps to pay for essential medications.

But, if you need emergency or unexpected care, you will have to pay out of pocket until you meet the deductible. After that, the insurance starts covering costs.

With a PPO, each deductible is calculated separately. So, if you pay $1,000 for in-network care, that doesn’t go towards your out-of-network deductible.

A PPO plan may be right for you if:

• You want the freedom to choose almost any medical facility or provider for your healthcare needs
• You want a portion of out-of-network claims to be covered by your insurance company
• You don't want to get referrals before visiting a specialist

If you’re worried about the size of your network coverage, or you want more freedom for scheduling specialist care, then a PPO might be worth the extra cost.

It’s always important to consider all of your options to find the right insurance plan. When you have good insurance, it’s easier to stay ahead of health problems, and that’s something we can all appreciate.

*Definitions may vary by plan provider. Please read the provider's Summary of Benefits.