Choosing health insurance can often be daunting. Unfamiliar terms like HMO, PPO, and EPO can seem like an alphabet soup when you’re trying to sort through your coverage options.
Therefore, it can be difficult to know whether you have made the right decision. To help you better understand your PPO options, read on to learn more about what a PPO is and how they differ from other types of plans.
What does PPO stand for?
“PPO” stands for Preferred Provider Organization. It is a type of health insurance for individuals and families. The program connects healthcare professionals (including doctors and dentists) and medical facilities with a provider network.
The “preferred” portion means that subscribers generally pay lower rates to providers within the network. Also, depending on your plan, there may be no co-pays or other out-of-pocket costs for access to in-network providers.
PPOs are also available to individuals enrolled in Medicare. If you choose Medicare Advantage (Medicare Part C) coverage, you can choose a PPO plan that is run by a private insurance company.
What are the advantages and disadvantages of PPO?
PPOs are the most popular type of health insurance, ahead of health maintenance organizations (HMOs) and exclusive provider organizations (EPOs). Almost half of the workers participated in one. Here are the pros and cons of such plans.
What are the advantages of PPO?
More flexibility: You don’t have to choose a primary care provider (PCP) with a PPO compared to an HMO. Plus, a PPO partially pays for out-of-network care, giving you more choices of doctors and specialists.
No wire transfer required: PCP is optional in PPO. This means no doctor manages your overall care, so you don’t have to convince anyone to refer you to another provider.
More services may be offered: Some PPOs offer participants a wider range of services, from traditional assessments and preventive care to chiropractor and acupuncture services. These details vary by program.
Walks with you: PPO insurance protects you while you’re away from home because you’re not limited by a healthcare provider’s network. You still have coverage when you travel or need to see doctors and specialists abroad. HMOs, by contrast, typically limit you to networks in your area.
What are the disadvantages of PPO?
The price of flexibility: PPO premiums are usually higher than other plan types. The Kaiser Family Foundation (KFF) reports that annual PPO program awards for 2021 are $1,389 for individual workers and $6,428 for salaried families. That compares to $1,204 for individuals and $5,254 for families in HMO incentives.
Higher likelihood of annual deductibles: The KFF study also found that 43 percent of workers in HMOs had no deductibles, compared with 15 percent of workers in PPOs. (For employees whose plans have a general annual deductible, the average HMO and PPO costs are similar: $1,271 for the HMO and $1,245 for the PPO.)
Other costs to consider: While PPO members can see any doctor or specialist, cost-sharing rules vary. Typically, you pay higher deductibles when you see a doctor out of network. For example, you can pay 20% coinsurance for online doctors and 40% for offline doctors.
More paperwork may be required: If you leave the PPO network, you may need to file a claim form with your insurance company. Filling out and filing paperwork can be time-consuming and frustrating if you regularly see suppliers offline.
Responsibility for Coordinating Care: Direct selection of doctors and specialists means you are responsible for coordinating your care. In contrast, HMOs and some other plans make your GP the central figure in coordinating and managing your care.
How does the PPO deductible work?
A deductible is the amount you must pay out of pocket for covered services before your insurance company pays for something.
Example: Let’s say your deductible is $1,200 per year. After your visit, your doctor will settle the bill with your health insurance company. The amount you pay for that visit will be added to your excess. Once you’ve paid your total medical bills of $1,200, your insurer will pay future charges for the remainder of the year, as indicated on your policy document.
However, with a PPO, you may need to meet more than one deductible. You may have an in-network deductible and another deductible for out-of-network services. Typically, deductibles are higher for off-grid care. Check the fine print of the program contract to understand its requirements.
Can I have a PPO and HSA?
Yes. Some PPOs are set up as high deductible health plans (HDHPs). If the PPO you signed up for is also a qualifying HDHP, you may also have a Health Savings Account (HSA). An HSA is a special pre-tax dollar savings account that you can use later to pay for medical expenses out of your own pocket.
However, certain rules apply. Even if you’re in PPO, you’ll have to pay a high deductible before your provider will pay. Through 2022, eligible HDHP deductibles must be at least $1,400 for individuals and $2,800 for families. They cannot exceed $7,050 or $14,100.
