What is PPO Insurance?

PPO (preferred provider organization) insurance is a type of health plan in which families can choose their specialty care doctors without a referral from a primary care physician. This is even true when traveling out of the state or internationally. Choosing an in-network provider results in lower costs. This contrasts with an HMO plan, in which only care provided by a doctor within the plan network is covered, and referrals are required for specialty care.

How Does a PPO Plan Work?

PPO plan members are encouraged to use providers from the insurer's preferred doctor network. If you choose these providers, a higher percentage of your costs will be covered than if you choose an out-of-network provider. To receive the highest level of benefit coverage, opt for providers who are in your insurer's network. With a PPO plan, you'll need to meet an annual deductible before your care will be covered. Most copayments range from $10 to $30, though in some cases you'll be responsible for a percentage of the costs of your care.

Do I Need to Designate a Primary Care Physician?

While HMO plans require families to designate a specific primary care physician (PCP) who coordinates all health care services, those with a PPO plan can see whichever doctor they choose and do not need to designate a PCP. However, choosing a provider within the PPO plan's network is less costly.

Is a Referral Needed?

PPO plans do not require a referral for specialty care. However, HMO plans require a referral. For example, a patient who has severe allergies will first see his or her designated PCP, who will provide a referral to an in-network allergist.

If I Have a Doctor or Specialist Who Is Out-of-Network, Will I Still Be Able to See Them and Have My Care Covered?

PPO plans offer the flexibility to visit out-of-network providers, including hospitals and other facilities. However, while costs will be covered by the plan, you'll be responsible for a separate deductible and higher copayment fee. For HMO plans, out-of-network doctors and specialists are not covered. Exceptions may be made in the case of true medical emergency.

Will I Have to File a Claim?

Some PPO plans require you to pay an out-of-network provider directly for his or her services. You will then need to file a claim for reimbursement with your insurance company. Since HMO plans require you to see in-network providers and pays them directly, you will not have to file a claim for this type of plan.

How Much Will It Cost?

PPO plans usually have higher monthly premiums that allow you the flexibility to choose both in and out-of-network providers without referrals. They also tend to have higher out-of-pocket costs. HMO plans tend to have lower costs but do not offer flexibility. With both plans, costs are covered by a combination of cost-sharing, co-insurance, copayments, and deductibles.

Is a PPO Plan Right for Me?

Families deciding whether to enroll in a PPO plan should consider the following factors:

  • Do you have an existing provider relationship that you want to maintain even when switching insurance plans? A PPO plan will allow you to keep seeing this doctor even if he or she is out of network.
  • Choosing an in-network provider will cost less than choosing an out-of-network provider. PPO plans usually have a higher monthly premium than HMO plans as well as copayments and a deductible that must be met before care is covered.
  • Families who don't require a lot of specialty care or who value care coordination through a PCP can save money with an HMO plan. Some families can opt for an EPO plan, which has a smaller doctor network and lower premiums.

It's important to find the balance between an affordable premium and coverage that fits your needs.

What's the Difference Between HMO, PPO, and EPO Plans?

An HMO, or health maintenance organization, includes a network of providers that offer lower rates for plan members while promising to meet certain standards of quality care. HMO plan members pick one PCP who coordinates all their health care services. When choosing an HMO, make sure the network offers providers who meet your family's needs.

EPO plans offer the flexibility of a PPO plan while integrating the cost savings on an HMO plan. While you don't need to designate a PCP with an EPO plan, you will have to stick to doctors within a limited network. Care outside this network is only covered in medical emergencies.

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