What does PPO Mean in Health Insurance: What It Is and How It Works

If you are looking for a health insurance plan that offers flexibility, choice, and coverage for out-of-network care, you may want to consider a PPO plan.

PPO stands for Preferred Provider Organization, and it is one of the most common types of health insurance plans in the United States.

In this article, we will explain what a PPO plan is, how it works, and what are its advantages and disadvantages compared to other types of health insurance plans.

Preferred Provider Organization(PPO)
Photo Courtesy: forbes.com

 

What is a PPO plan?

A PPO plan is a type of managed care health insurance plan that has a network of healthcare providers that have agreed to provide care to the plan members at a certain rate.

These providers are called preferred providers, and they include doctors, hospitals, specialists, therapists, and other healthcare professionals.

As a PPO member, you can choose to get your healthcare services from any provider in the network, and you will pay less for your care.

You will also have lower deductibles, coinsurance, and copayments, which are the amounts that you pay out of your own pocket for your healthcare services.

However, unlike some other types of health insurance plans, such as HMOs (health maintenance organizations) or EPOs (exclusive provider organizations), a PPO plan also allows you to get your healthcare services from providers outside the network.

This means that you have more flexibility and choice in selecting your healthcare providers. However, you will pay more for your care if you go out of network, and you may have to file claims to get reimbursed by your insurance company.

PPO Health Plan
Photo Courtesy: thebalancemoney.com

 

How does a PPO plan work?

A PPO plan works in the following way:

  • You pay a monthly premium to your insurance company to be enrolled in the plan.
  • You choose a primary care provider (PCP) from the network, who will coordinate your care and refer you to specialists if needed. However, unlike an HMO plan, you do not need a referral from your PCP to see a specialist, and you can change your PCP at any time.
  • You pay a copayment, which is a fixed amount, every time you visit a provider in the network. For example, you may pay $20 for a visit to your PCP, or $40 for a visit to a specialist.
  • You pay a deductible, which is the amount that you have to pay out of your own pocket before your insurance company starts to pay for your care. For example, you may have a deductible of $1,000 per year, which means that you have to pay the first $1,000 of your healthcare expenses before your insurance company pays anything.

 

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  • You pay coinsurance, which is a percentage of the cost of your care, after you meet your deductible. For example, you may pay 20% of the cost of your care, and your insurance company pays 80%, after you meet your deductible.
  • You have an out-of-pocket maximum, which is the maximum amount that you have to pay for your healthcare services in a year. After you reach this limit, your insurance company pays 100% of your covered healthcare expenses. For example, you may have an out-of-pocket maximum of $5,000 per year, which means that once you pay $5,000 for your healthcare services, your insurance company pays the rest.
Note:

You can get your healthcare services from providers outside the network, but you will pay more for your care. You may have to pay a higher copayment, deductible, coinsurance, and out-of-pocket maximum for out-of-network care. Furthermore, you may also have to file claims to get reimbursed by your insurance company, and you may be responsible for the difference between the amount that your insurance company pays and the amount that the provider charges, which is called balance billing.

Pros and Cons of a PPO Plan
An image illustration of the Pros and Cons of a PPO Plan

 

Conclusion

A PPO plan is a type of health insurance plan that offers flexibility, choice, and coverage for out-of-network care, but also comes with higher costs and less coordination of care.

Whether a PPO plan is right for you depends on your personal preferences, healthcare needs, and budget.

Before you enroll in a PPO plan, make sure to compare it with other types of health insurance plans, such as HMOs, EPOs, or POS (point of service) plans, and review the benefits, costs, and network of providers of each plan.

Photo Courtesy: healthinsurance.org

 

You can also use online tools, such as Healthcare.gov or eHealth, to shop for and compare different health insurance plans available in your area.

 

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