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, in a PPO health plan, you will pay less 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.

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 HMOs or 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 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 policy.

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 and how much it will cost you. Below you can see a summary of all the types of health insurance available:

Plan typeDetails
Preferred provider organization (PPO)In-network coverage is cheaper, but you can still go out-of-network if necessary (at a slightly higher cost). No referrals are needed, and no PCP needs to be designated.
Point of service (POS)This plan allows for both in-network and out-of-network coverage, but you must choose a PCP for any specialist referrals.
Exclusive provider organization (EPO)You can only visit in-network providers unless you need emergency care.
Health maintenance organization (HMO)Only in-network providers are covered, but you can visit out-of-network doctors at full price. Often, you will need a PCP referral for specialist doctors.

How much does a PPO plan cost?

Since a PPO plan provides 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 $561, which is 17% more expensive than an HMO policy.

Plan typeMonthly cost
PPO$561
POS$508
EPO$492
HMO$479

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.

Sterling Price

Sterling Price is a research analyst at ValuePenguin specializing in health and life insurance. He graduated from Syracuse University with a bachelors degree in Finance and Accounting and has previous experience as a licensed life insurance representative.

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