A Preferred Provider Organization (PPO) is a popular health insurance plan designed for individuals and families. PPO plans involve networks that are made up of contracted medical professionals and health insurance companies. Health care facilities and practitioners offer services to the beneficiary plan policyholders at reduced rates. Plan participants receive the maximum PPO benefit when they visit in-network medical care professionals and are also offered coverage when they see out-of-network providers.
If you receive care from a doctor in the PPO’s network, the insurance company provides the highest level of coverage, and you pay the lowest out-of-pocket cost. PPO plans allow you to get medical care from a provider outside the network, but the services are covered at a much smaller percentage. One huge benefit is that a PPO does not require you to get a referral from your primary care doctor to see a specialist.
How Does a PPO Health Plan Work?
When you visit a doctor in the PPO’s network, your insurance company covers a percentage of the cost once you reach your deductible, and you pay the rest of the cost. This is called cost-sharing. PPO beneficiaries are free to use the services of any provider within their insured network. They are encouraged to name a primary care physician, but they are not required to pick it, and there is no need for referrals to visit a specialist.
While you can go to specialists without getting referral from Primary Care Physician, PPO plans often require preauthorization for certain procedures, medications or types of care. Unless it is an emergency, you may need approval from the insurance company before moving forward with a specific treatment plan such as a surgery. This prevents your insurance company from covering potentially unnecessary expensive treatments.
The average cost for a PPO plan on a monthly basis for a 30-year-old is $458. A PPO is much more expensive than a health maintenance organization (HMO) or exclusive provider organization (EPO) plan, which are much more common in the ACA marketplace.
PPO vs. HMO
Compared to HMO plans, PPO plans typically have higher premiums and more expensive out-of-pocket costs. However, HMO plans do not provide any coverage for out-of-network care. If you want to see a doctor or visit a hospital that is out-of-network, you are responsible for the entire bill and the money you pay won’t count for your annual deductible. On the other hand, PPO plans don’t require referrals and working with a primary care provider is optional.
Who Should Get a PPO Health Insurance Plan?
PPO insurance plans can be a good choice for individuals who want the flexibility to visit any doctor and hospital and to see specialists without a referral. If you prefer to manage your own medical care without oversight from a primary care physician, a PPO might be the right choice.
When considering if a PPO plan is right for you, it is also important to consider the cost. Because PPO plans offer so much flexibility, the premiums are much higher. This type of plan is good for individuals who often see specialists. If you want the most affordable health insurance plan with low out-of-pocket costs, a PPO plan probably is not the right option for you.