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Key takeaways
A PPO (Preferred Provider Organization) is a flexible health insurance plan that allows members to visit any healthcare provider, including specialists, without needing a referral and offers lower costs for in-network services.
PPOs generally have higher premiums, copayments, and deductibles compared to HMOs (Health Maintenance Organizations), but provide more flexibility in choosing healthcare providers, including out-of-network options.
HMO plans require referrals to see specialists and only cover in-network provider visits, offering lower out-of-pocket costs in exchange for less flexibility compared to PPOs.
To determine if one has a PPO plan, individuals should check their insurance card or contact their insurance provider, and they can enroll or switch to a PPO during open enrollment periods or after qualifying life events.
When it comes to health insurance, there’s no shortage of acronyms and unfamiliar terms required to understand how health coverage works. Do you have or are you considering signing up for a PPO? Learn what it is, whether it’s the right option for you, and how to know if you already have one.
What is a PPO?
A PPO is a type of health insurance plan. It stands for “preferred provider organization.” With PPOs, you pay less when you see a provider who is in your insurance company’s network—that’s the “preferred” part. Your PPO has already negotiated a certain rate for the healthcare services that these in-network providers offer.
You’re also able to see many providers outside of the PPO network for medical care. However, you’ll generally pay more for out-of-network providers and medical services. That’s because there’s no negotiated formal rate agreement between the out-of-network provider and your plan.
Why would a person choose a PPO over an HMO?
PPOs are one of the most popular types of health insurance plans because of their flexibility. With a PPO, you can visit any healthcare provider you’d like, including specialists, without having to get a referral from a primary care physician (PCP) first. That can be handy if you’re not near a doctor who’s in your provider network, like when you’re traveling, or if you already have a team of healthcare professionals you’re comfortable with, even if they are out of network.
“The benefits of a PPO include the opportunity to be able to choose the physician and specialist you want without having to go through a primary doctor initially,” explains Yuna Rapoport, MD, MPH, an ophthalmologist at Manhattan Eye in New York City. “This puts the patient in the driver’s seat.”
PPO vs. HMO
PPOs aren’t your only option, of course. Another common type of health insurance plan is an HMO, or health maintenance organization. HMO plans have a few key differences over PPOs that can affect your choice of health insurance company.
With an HMO, you typically must go through your PCP for a referral in order to see an in-network specialist. Your HMO will also not cover out-of-network provider visits unless it’s a genuine medical emergency, and even then, you may be footing part of the bill.
However, Dr. Rapoport says there can be value in HMO plans for patients. “The benefit of HMOs is from a systems-based perspective,” she says. “By maintaining a close relationship with a primary physician, there are fewer unnecessary visits to specialists, less imaging, and fewer diagnostic tests. Outcomes are comparable or better than a PPO, and patients have all their doctors recommended by the system.”
While obtaining a referral before seeing a specialist can be a pain, it also means that your PCP is involved in your health in a way that sometimes doctors in a PPO are not, helping you coordinate care accordingly.
Cost comparison
And of course, you can’t talk about health insurance and not mention out-of-pocket costs. PPO networks usually have higher premiums, copayments, and annual deductibles than HMOs in return for more flexibility. If you see an out-of-network provider, you may have to pay the cost upfront and then file a claim for partial reimbursement. If you value flexibility and don’t mind paying more for it, a PPO might be the right healthcare option for you.
Healthcare costs with HMO networks are generally cheaper overall. You’ll have lower monthly premiums and copays in exchange for using a PCP to coordinate your health care. However, you’re usually unable to see out-of-network providers with an HMO. If you do, you will be responsible for the total cost.
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Additionally, you might consider a high deductible health plan (HDHP), an exclusive provider organization (EPO), or a point of service plan (POS).
How do I know if I have a PPO?
Wondering what type of health insurance plan you have? It usually says so right on the back of your insurance card. Your card may even outline how much you’ll pay in copays for doctor visits. A quick call to your provider or logging into your online account can also provide some clarity.
If you don’t already have a PPO and want to switch to one, you’ll need to do it during open enrollment—usually, but not always, in November or December—unless you’ve had a qualifying life event. Qualifying events include moving to a new zip code or county, getting married, or having a baby.
PPO plans may be available through your employer, your state’s marketplace (if there is one), or the federal marketplace. The best place to start for this option is at healthcare.gov.
Medicare also offers a PPO option (among HMO and other options) under Medicare Advantage (Part C) if you’re 65 years old or older and eligible. Something to keep in mind when considering a PPO plan is that health savings accounts (HSAs) and flexible savings accounts (FSAs), along with things like your SingleCare card, can also help lower the costs of your medical care and prescriptions.