Health Insurance

PPO Plans: What Are They?

PPO Plans: What Are They?

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A preferred provider organization, or PPO, is a health or dental insurance plan that contracts with hospitals and doctors to create a network of coverage. Typically, PPO insurance will offer cheaper costs if you use providers within the network. However, you can still go to out-of-network doctors but can expect to pay an additional cost for coverage. Overall, on average, a PPO policy will be more expensive when compared with other types of provider networks due to increased freedom and flexibility.

What is a PPO insurance plan?

A PPO health or dental insurance policy is a type of health insurance plan that will usually allow you to pay less if you use a doctor, hospital or facility that is within the network. However, unlike other plan types like health maintenance organizations (HMOs) or exclusive provider organizations (EPOs), a PPO provides flexibility in that you can still visit out-of-network providers, but you may need to pay slightly more for any services that are provided to you.

What is a provider network?

A provider network is a list of the doctors and hospitals that a plan has contracted with to provide medical care to its members. These are called "in-network" providers. Providers that are not contracted with the health insurance plan are designated as "out-of-network" providers.

One exception to this is if you need emergency care. Under the Affordable Care Act (ACA), insurers are required to cover out-of-network costs for emergency care since a consumer often will not have a choice as to where the ambulance will take them. Often, care is provided at the closest hospital available.

A PPO insurance plan also allows you to visit any doctor without the need for a referral. In some other health plans, you may need to first visit your primary care physician (PCP) to get evaluated, and then you would be able to go to a specialist once your PCP has made the referral. PPOs allow you to bypass this and won't require you to select a PCP for your health insurance.

What are the differences between a PPO and other networks?

All types of health insurance policies will provide coverage for services. The main difference will be where you can get those health services, which will be determined by the provider network of the health insurance plan.

HMO vs PPO

In addition to where you receive care, different networks will also determine how much you will pay for those health services. This makes choosing a health policy with the right network for your needs extremely important. We have provided detailed descriptions of each provider network compared to a PPO below.

HMO vs. PPO

The main difference between a health maintenance organization (HMO) and PPO is that you will need to designate a primary care physician (PCP) who will coordinate your care if you have an HMO health insurance plan. In this case, you will also have to receive a referral from that PCP in order to visit any specialists and most likely will need to pay full price for any health services out of your network.

An HMO will have a slightly cheaper premium when compared with a PPO policy since you have tighter restrictions on where you can receive care.

EPO vs. PPO

Exclusive provider organizations (EPOs) differ from PPOs in that these policies have the strictest rules regarding which health facilities and doctors you can visit. In fact, with an EPO you can only visit in-network providers unless you need emergency care. Given these restrictions, before selecting an EPO health insurance plan you should check that there are in-network providers within your area that accept the policy.

POS vs. PPO

Point of service (POS) policies and PPOs only differ in the amount of flexibility that they offer. Both types of networks will allow you to visit in-network providers at reduced rates and even provide cheap rates if you visit an out-of-network specialist. However, with a POS plan, you will need to designate a PCP who will need to refer you to see specialists.

How much does a PPO plan cost?

Since PPO plans provide the most flexibility for the insured, most individuals will find that they have the most expensive monthly premiums. The average monthly cost of a PPO health insurance plan for a 40-year-old is $517, which is 21% more expensive than an HMO policy.

Plan type
Monthly cost
PPO$517
POS$462
EPO$469
HMO$427

Even though a PPO plan is typically the most costly health insurance policy you can purchase, you should not disregard this option. For example, a PPO policy can be useful for someone who may have unique health needs, such as back pain that requires a visit to a specialist chiropractor.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.