UPDATED: Sep 10, 2013
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A Preferred Provider Organization, or PPO, is one of the most common types of insurance plans available. PPO’s are typically common options in employer-sponsored health care packages, and it’s a popular choice for individual consumers thanks to its flexibility. Unlike an HMO, which requires the insured to receive treatment at a specific doctor’s office, a PPO plan allows you to seek care at just about any doctor you wish without requiring a referral.
Most well-known insurance companies offer a PPO plan. These policies are usually widely accepted by healthcare providers, and it’s typically very easy to find a doctor within the company’s network. Depending on the policy, you should also be able to use your PPO plan when traveling to another state or even country: Even if an in-network provider is unavailable, the insurance should cover a portion of the out-of-network expenses.
How Preferred Provider Organizations Work
The insurance company will provide you with a list of in-network doctors and other healthcare providers. You are encouraged to use one of these doctors, but are not required to select a primary care physician. As long as the doctor you choose is within the insurance company’s network, you will receive the highest benefits available under your policy. If you choose to venture outside of your insurer’s network, your insurance will pay a lower contribution but should still offer some coverage as long as the doctor accepts your PPO.
Under a PPO plan, you will generally have both an annual medical deductible and maximum out-of-pocket expense. Certain services or treatments will also have a co-payment. These figures vary between providers and will be a major determining factor in the overall price of the policy. In general, policies with high deductibles and co-payments will have lower monthly premiums. People with PPO plans may sometimes even qualify for a health savings account to help with insurance costs.
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Pros and Cons of PPO Plans
The primary benefit of a PPO is its flexibility. You can seek medical attention at almost any doctor you would like, and networks usually include a variety of providers. Unlike an HMO, you do not need to select a primary care physician or receive a referral before obtaining medical care. Thanks to recent legislation, some types of preventative care should be available to you without a co-payment under this type of policy; you’ll need to confirm with your provider first though to determine whether there are any limitations.
One major drawback to a PPO plan is cost. Premiums can be very affordable, but PPO policies do tend to be a more expensive option over other plans like an HMO. You can keep your premiums low by choosing a high-deductible policy and using a health savings account to save on taxes. Many customers feel that the flexibility offered by a PPO is worth the extra expense, and these additional costs should be factored into the decision process when deciding on what type of plan to get.