PPO Health Insurance Plans – Forbes Advisor

Filed in Health by on July 22, 2022 0 Comments

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There are multiple health insurance plans available, which differ by network size, covered services, flexibility, out-of-pocket costs and price.

Preferred provider organization (PPO) plans are the most common type of health plan in the employer-sponsored market, but make up a small percentage of Affordable Care Act (ACA) plans: Roughly 46% of Americans with a workplace health plan are enrolled in a PPO plan, according to the Kaiser Family Foundation. But only 19% of ACA plans are PPOs, according to a Forbes Advisor analysis of ACA plans.

What Is a PPO Health Insurance Plan?

A PPO is a type of health insurance plan known for its flexibility. Insurance companies contract medical care providers and health care facilities to create networks. If you receive care from a doctor in the PPO’s network, the insurance company provides the highest level of coverage, and you pay the lowest out-of-pocket cost.

PPO plans allow you to get medical care from a provider outside the network, but the services are covered at a much smaller percentage.

In addition, a PPO doesn’t usually require you to get a referral from your primary care doctor to see a specialist, like an orthopedic surgeon or dermatologist.

How Does a PPO Health Plan Work?

When you visit a doctor in the PPO’s network, your health insurance company covers a percentage of the cost once you reach your deductible. You pay the rest. This is called cost-sharing.

Health care providers and facilities in the PPO’s network agree to get paid a certain amount for various services, typically at a discounted rate.

For example, let’s say you injure your wrist and need an X-ray, which will cost $300. In this example, the cost of an X-ray at an in-network facility has a $60 copay, whereas your cost at an out-of-network provider on the plan has a 35% coinsurance. In this case, the cost of an X-ray at an in-network facility would only be $60, compared to a $105 charge you would face for going out-of-network.

With a PPO, your health insurance company tries to incentivize you for getting care in-network because it costs you less out-of-pocket. However, you still have the flexibility of managing your own care, without the need for specialist referrals from a primary care provider.

While you can go to specialists without getting pre-authorization, PPO plans often require preauthorization for certain procedures, medications or types of care. Unless it’s an emergency, you may need approval from the insurance company before moving forward with a specific treatment plan such as a surgery. This prevents your insurance company from covering potentially unnecessary expensive treatments.

How Much Does a PPO Health Insurance Plan Cost?

The average monthly cost for a PPO plan for a 30-year-old is $458. See below for averages for other ages, couples and families.

PPO health plan costs

A PPO is much more expensive than a health maintenance organization (HMO) or exclusive provider organization (EPO) plan, which are much more common in the ACA marketplace.

Cost of PPO vs. HMOs vs. EPO

If you’re buying an individual health insurance plan from the Affordable Care Act marketplace or directly from an insurer, your health insurance premium depends on factors such as your age, tobacco use, dependents on the plan, plan tier and your location. That’s different from employer-sponsored health insurance, which is a group plan that offers the same rates regardless of health status.

Employer-sponsored health plans are less expensive than ACA plans without government subsidies. Data from the Kaiser Family Foundation show that employees with a group health plan pay an average of $1,389 a year for a PPO plan for single coverage, and $6,428 a year for family coverage. Employers typically pay the majority of premium costs for health plans ($6,702 for single coverage on average and $16,884 for family coverage).

In general, PPO plans have higher average premiums than other types of health insurance. However, you’re getting access to a much wider network of doctors and health care facilities.

PPO Health Insurance Pros and Cons

Whether a PPO health plan is the best choice for you depends on what you want from your coverage. Here are pros and cons for PPOs.

PPO pros

  • Don’t need specialist referrals: With a PPO plan, you aren’t required to work with a primary care provider, and you don’t need a referral to see specialists. It’s a good option if you feel comfortable managing your medical care on your own and don’t want the barrier of needing to go through your primary care provider (PCP) to see a specialist.
  • Flexibility to go out-of-network: PPO plans allow you to receive treatment from health care providers and facilities that aren’t in-network. Other health plans, such as an EPO and HMO, often don’t pay for out-of-network care.

PPO cons

  • More expensive premiums: PPO health insurance premiums are generally more expensive than other types of health insurance. If you’re healthy and visit the doctor infrequently, you might be able to find a cheaper plan to fit your needs.
  • PCP No.: A primary care provider can help you navigate the health care landscape, but PPOs don’t usually require that you choose a PCP.

POP vs. HMOs

Compared to PPO plans, HMO plans typically have lower premiums and cheaper out-of-pocket costs. However, HMO plans don’t usually provide any coverage for out-of-network care. If you want to see a doctor or visit a hospital that is out-of-network, you’re responsible for the entire bill and the money you pay won’t go toward your annual deductible.

On the other hand, PPO plans don’t require referrals and working with a primary care provider is optional.

POP vs. HMO main differences


EPO plans are popular options for people who want affordable health insurance. Not only are the premiums lower compared to a PPO plan, but EPO health insurance also often has lower out-of-pocket costs. The main drawback is that you can only get coverage from an in-network provider, which means you have less flexibility and fewer provider options.

POP vs. EPO main differences


A point of service (POS) plan is a true hybrid between a PPO and HMO plan. The insurance company provides coverage for out-of-network care, but you’re responsible for a much larger portion of the cost sharing. You’re still incentivized to get treatment from an in-network provider, but you’re allowed to visit providers that aren’t in-network.

In terms of cost, POS plans are usually less expensive than PPO plans. This is because PPO plans offer the greatest flexibility to see providers in-network and out-of-network. Unlike a PPO, POS plans require referrals.

POP vs. POS main differences

Who Should Get a PPO Health Insurance Plan?

PPO insurance plans can be a good choice for individuals who want the flexibility to visit any doctor and hospital and to see specialists without a referral. If you prefer to manage your own medical care without oversight from a primary care physician, a PPO might be the right choice.

When deciding if a PPO plan is right for you, it’s also important to consider the cost. Because PPO plans offer so much flexibility, the premiums are much higher. If you want the most affordable health insurance plan with low out-of-pocket costs, a PPO plan probably isn’t the right option for you.

PPO Health Plan Frequently Asked Questions

Does a PPO cover out-of-network care?

Yes, PPO plans cover out-of-network care, but often don’t help out as much as if you receive in-network care. The exact cost sharing structure for out-of-network care depends on the specifics of your plan. But you generally pay less for seeing a provider who is in the PPO’s network.

Do you need a primary care physician if you have a PPO?

Primary care physicians aren’t required if you have a PPO. You can manage your own care and see any doctor you want, without needing to visit or contact your primary care doctor first.

If you already have a relationship with a primary care physician though, you can continue working with them. If they contract with the PPO’s network, their services will be covered at the highest rate.

Do PPOs require a referral to see a specialist?

No, PPO insurance doesn’t require a referral from a primary care physician if you want to see a specialist. This can expedite the process of getting specialized care.

If you’re choosing a specialist on your own, however, make sure to look for specialists that are in your PPO’s network to get the most coverage for your insurance company.

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