A Preferred Provider Organization (PPO) is one of the most popular types of health insurance plans. PPO insurance offers more flexibility and a more extensive network of doctors than other common insurance types like HMOs and POS plans. Most PPO plans also do not require picking a primary care physician or getting a referral to see a specialist, like a dermatologist or cardiologist.

PPOs also provide coverage if you see a doctor outside your plan’s network, though out-of-pocket expenses may be higher. However, the tradeoff for this flexibility and freedom is higher monthly premiums and other out-of-pocket costs, like deductibles.

Understanding the Preferred Provider Organization (PPO) Plan

PPOs differ from other health plan types through their large overall network size and flexibility when it comes to how you seek care.

Like with most other insurance types, using a preferred provider — a physician, pharmacy, or facility within the PPO’s network — results in lower costs for care. But unlike other insurance types, patients can also use providers outside their network and still be covered by PPO insurance, though the PPO plan may not contribute as much to the cost of out-of-network providers.

For example, you may pay higher deductibles, copays, and coinsurance when you seek out-of-network care. But PPOs still offer more coverage for out-of-network options than HMOs and POS plans, which provide limited or no coverage for services not within network.

Key Features of a PPO

Flexibility in choosing your preferred health care providers
No referral needed to see specialists
Reduced cost for in-network care
Coverage for out-of-network care
Large network size

PPO Insurance vs. Other Insurance Types

	PPO	HMO	EPO	POS
Average premium	High	Low	Moderate	High
Average network size	Large	Moderate	Large	Variable
Designated primary care physician	Not required	Required	Not required	Required
Referrals to seek specialist care	Not required	Required	Required	Required
Out-of-network care coverage	Yes, partially covered	Not covered	Medical emergencies only	Yes, with limitations

Health Maintenance Organizations (HMO): A big draw of an HMO plan is that you typically pay a lower monthly premium and have lower out-of-pocket costs for medical services. However, you may have less flexibility in choosing healthcare providers and facilities in comparison to a PPO plan, as networks tend to be smaller.
Exclusive Provider Organizations (EPO): The main benefit of an EPO plan is that it often offers lower out-of-pocket costs than a PPO, but a wider range of healthcare options than an HMO. However, an EPO does not cover out-of-network care unless it is deemed a medical emergency and tends to have a higher deductible than PPO plans to offset its lower premiums and out-of-pocket costs.
Point of Sale (POS): Most POS plans do not have a deductible that patients must meet before their insurance kicks in. However, this is only the case if you seek care from in-network doctors, and premiums are usually comparable to or higher than PPO insurance premiums.

Assess which factors matter the most to you to find the plan type that best balances your priorities. For example, if you value having a wide network and do not mind paying a higher premium for those options plus the flexibility to seek out-of-network care, then a PPO could suit your needs.

Should You Consider a High Deductible Health Plan (HDHP)?

As the name suggests, a high deductible health plan (HDHP) is a type of health insurance that features significantly higher deductibles compared to traditional insurance plans. HDHPs can still be PPOs, or any of the other insurance types. The higher deductible and generally higher out-of-pocket costs are in exchange for lower monthly premiums.

This means you’ll pay less each month to keep your health coverage, but you would pay more before your insurance’s cost sharing kicks in. This type of plan is best suited for those who are generally healthy and looking to keep costs low, with the HDHP acting as protection against unexpected emergencies that may arise. In contrast, those who need more specialized or recurring health care would find a traditional health insurance plan more cost effective than an HDHP.

Carefully consider your healthcare needs and risk tolerance when deciding whether to enroll in an HDHP or traditional PPO.

See It In Action: Your Care With PPO Insurance

To understand how PPO insurance may work, consider Rachel, a young remote employee seeking health care. Rachel has some recurring health needs to help her manage her diabetes. Because of her need for regular checkups and medication, Rachel opted for a traditional PPO instead of an HDHP.

Because she has a PPO, she has access to an extensive network of healthcare providers, making it relatively easy to find nearby doctors and pharmacies that accept her insurance. Rachel also travels regularly for work, and her PPO’s wide network spans state lines, ensuring she can still find in-network care while on the road to keep healthcare costs low.

Rachel’s preferred dermatologist is out of network. Her PPO still provides coverage when she sees this dermatologist once a year, though she must pay a higher copay and coinsurance rate.

Rachel does not need a referral to see specialists like the dermatologist. However, because she does not need to coordinate her care through a designated primary physician, she is responsible for ensuring all of her doctors have access to her health records and treatment history.

The Costs of a PPO Plan

There are 5 general costs of a PPO: premiums, deductibles, copayments, coinsurance, and your out-of-pocket maximum.

Premium: The premium is the amount you pay each month for your plan. You pay this amount regardless of whether or not you access any health services. PPOs generally have higher premiums than HMOs and EPOs.
Deductible: The deductible is the amount you pay out of pocket each year before your insurance begins helping with cost sharing. Some PPO plans have different deductibles for in-network care, prescriptions, and out-of-network care.
Copays: The copay is the flat fee you pay out of pocket every time you have a health appointment or pick up a prescription. The fee amount can range from $10-20 for a routine doctor’s appointment to $30-60 for a specialist appointment.
Coinsurance: The coinsurance is usually represented as a percentage and designates how much of the total cost of the healthcare service you and your insurer will pay once your deductible has been met. For example, your insurer may cover 80% of costs for a service, leaving you to cover the remaining 20%. The coinsurance percentage can differ based on the type of procedure, test, or treatment.
Out-of-pocket maximum: The out-of-pocket maximum is a set amount that indicates the most you would have to pay for services covered by your health insurance each policy year. Any eligible costs beyond this amount would be completely covered by your health insurance.

On average, PPOs have higher premiums and deductibles than HMOs or POS plans because they provide greater flexibility when it comes to choosing a provider, specialist access without referrals, and out-of-network coverages.

See It in Action: Your Costs With PPO Insurance

Here is an example of these costs in action if your plan had the following costs:

Premium: $500 per month

Deductible: $2,000 per year

Copay: $25 per appointment

Coinsurance: 30% for outpatient surgery

Out-of-pocket maximum: $8,700

This means that you pay $500 per month whether you use your plan or not.

When you do go to the doctor or receive any kind of in-network medical treatment, you pay a $25 copayment.

Until you have paid $2,000 in applicable health costs for the year, your insurance will not cover anything. Your monthly premium and copays do not count towards this deductible.

Once you have paid the deductible, you would pay for 30% of the procedure’s cost while your insurer would pay for the remaining 70% of the cost.

Then, if your covered medical procedures end up costing you more than $8,700 — not including your premiums— you would only pay up to that amount and any remainder would be covered by your health insurance.

Pros and Cons of PPO Insurance

When it comes to determining whether a PPO insurance plan is a good option for you, consider the pros and cons of this insurance type.

Pros of PPO Insurance

Access to a large network. PPO plans usually have a large network of healthcare providers, which can give patients access to a broad range of medical specialists and facilities without having to go out of network — including in different cities or states.
Flexibility in choosing healthcare providers. Patients can see any healthcare provider within the PPO network without a referral, and they can also choose to see out-of-network providers, although the cost is typically higher.
No designated primary care physician needed. A primary care doctor or physician is a general practitioner that’s in your insurance network. Not having to stay with one specific doctor for all your needs could make it easier to find appointment times that work with your schedule.
No referrals required. Specialist services can be accessed directly. This reduces the time it takes to get the care you need, as well as the overall cost as you do not need to book and pay for two separate appointments. However, some PPO insurers do still require referrals for specific specialist services.
Out-of-network coverage. Seeing an out-of-network healthcare provider will result in higher costs, but PPO plans do provide some coverage for out-of-network care. This can be especially beneficial for patients who need to see a specialist who is not part of the PPO network.

Cons of PPO Insurance

Higher premiums. The increased freedom and flexibility of PPO plans means premiums tend to be more expensive than other types of plans, such as HMOs. This can make them less affordable.
More care management needed. While accessing specialists without a referral is a benefit of PPOs, it also means more time spent managing your own care to make sure all of your doctors and specialists have access to your health and care history and plans.
Complexity of coverage. PPO plans can be complex to navigate because they have multiple coverage options and different cost structures. This can make it difficult for patients to understand their coverage and compare plans effectively.
Potential for balance billing. Balance billing is when you are billed for the difference between what your insurance covers and what the healthcare provider charges. While some states have laws to protect patients from balance billing, it can still be a potential issue for those with PPO plans. However, PPO plans must disclose this possibility if applicable.

How to Choose a PPO Insurance Plan

If you’re considering a PPO health insurance plan, it’s worth taking stock of your current provider network, the overall costs of PPO insurance, and how it compares to other insurance plans.

What to Consider When Evaluating a PPO Plan

Does the PPO network include your preferred doctors, clinics, and pharmacies? The network of healthcare providers included in the PPO plan is an important consideration. Ensure that the PPO network includes your preferred healthcare providers.
What are the overall costs of this plan? PPO plans can be more expensive than other plans, so carefully consider the monthly premium, deductible, copay, coinsurance, and out-of-pocket maximum. Plan your anticipated healthcare needs in the coming year to decide whether a high or low deductible plan is the best option.
What are the out-of-network costs? If you know you will likely need out-of-network coverage at some point, such as if your preferred specialist is out of network but everyone else is within network, you will want to ensure the coverage is still within your budget.
What is the coverage for your specific healthcare needs? Consider whether the PPO plan covers your specific healthcare needs, including any prescription medications, medical devices, or specialized treatments or procedures you may require.
What are the specific plan features? Review the specific features of the PPO plan, including whether referrals are required for specialist care, whether there are any exclusions or limitations on coverage, and whether there are any wellness or preventive care benefits included.
What is the overall reputation of the insurance company? Research the reputation of the insurance company offering the PPO plan, including its financial stability, customer service, and satisfaction ratings.

How to Compare Your PPO Options

Make a comparison chart or table of your options. Using the factors mentioned above, make a table or spreadsheet listing out all of the details for each plan you are considering. This way, you may look at the different options side by side and see how they stack up.
Prioritize what matters to you the most. Make a note of which factors matter the most. For example, perhaps you are most concerned about whether your preferred doctors are within network, the insurer’s overall reputation, and the overall costs of care. Knowing this, you can focus your comparisons on those factors first.
Consider your current and anticipated care needs. If you have specific appointments and procedures planned for the coming year, this could inform which costs and coverages you ought to focus on. For example, if you plan to get pregnant, coverage for obstetrics, maternity care, and your preferred birthing hospital should be heavily weighted.
Narrow your options. Once you have your current and anticipated care needs as well as priority factors in mind, narrow your options to only the plans that best suit all of those needs and wants.
If you are still stuck, ask for advice. Picking a plan can be overwhelming, but you do not have to do it entirely on your own. If you need a second — or even third — opinion, consult with a trusted healthcare provider. Or, reach out to a trusted insurance agent or broker to determine which PPO plan may be the best fit for your specific healthcare needs.

Putting It All Together

PPO insurance offers more flexibility and choice overall, especially in comparison to other health insurance types. For example, you may have more control over choosing your doctors and hospitals, even if the doctor is out of network. PPO plans are also one of the most popular plan types, so networks tend to be large, allowing for more in-network options.

The cost of this flexibility, however, is that PPO insurance plans have higher premiums compared to most other types of insurance plans. It’s essential to compare different health insurance plans and their benefits to determine which one is the best fit for your individual needs and budget.

What is a PPO Plan?

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