What is a PPO plan? How does it work? Should you get one?
What is a PPO plan? Navigating health insurance in America can be confusing and stressful. There are so many different options, but some are out of your budget, others don’t provide the coverage you need, and others you may not be eligible for. And there are so many different types of plans. One you may come across frequently is called a Preferred Provider Organization (PPO) plan.
What is a PPO Plan?
A PPO plan is a type of Medicare Advantage Plan that is offered by private insurance companies. PPO plans give their contracts access to a network of medical providers, such as hospitals, primary care doctors, and specialists. If you use a provider that belongs to your plan’s network, you pay less out of pocket. You also have the option to use out-of-network doctors, hospitals, and providers, but have to pay an additional cost.
How do PPO Plans Work?
Members of PPO plans are encouraged but not required to use in-network health services. Typically on a PPO plan, you are not required to select a primary care physician, and you don’t need a referral to see a specialist. A PPO plan also usually has an annual deductible that you will need to meet before the insurance company starts to cover your medical bills. Many routine services will also have a copay, usually around $10-40, or a certain percentage of the total bill.
Are Prescriptions Covered?
Prescriptions are covered in most cases on a PPO plan. On PPO plans, all prescription drugs that the plan covers are broken into a three-tiered prescription drug list, with different coverage for the different tiers.
Tier-1 drugs have the lowest copay. This should be your first option for the lowest out-of-pocket expense.
Tier 2 drugs have a medium copay. If there are no appropriate drugs covered in tier 1, tier 2 is your next-best option
Tier 3 drugs have the highest copay. These drugs are the most expensive.
The drugs in each of these tiers will depend on your specific plan. The best way to see which tier any prescription you need is in is by checking your plan’s drug list on your health insurance provider’s website or online portal. If you need more information, most health insurance providers have a help hotline available to call.
Who Should Use a PPO?
A PPO plan may be a good choice for you if:
- You have existing doctors that you like and want to continue seeing, but are not able to find a plan with them in-network. In this case, a PPO plan can be a good option, because it allows you to see out-of-network doctors for a higher cost. If you are planning on traveling or moving to an area where you may not be able to find an in-network doctor, a PPO can also be a good option
- You don’t want to pick a primary care doctor or get a referral to see a specialist. If you prefer to make appointments with specialists directly, a PPO option may be better for you
- You are OK with paying a higher monthly fee. Typically, a PPO plan requires a higher monthly payment than other options, like HMO plans. If you don’t mind paying the higher amount, a PPO plan can be a good choice
- You are OK with filing claims. In some cases, you may have to pay an out of network doctor directly for services rendered, and then submit a claim for reimbursement. If you are OK with paying the doctor yourself and then submitting a claims form, a PPO plan can be a better option for you.
A PPO plan is a plan offered by private insurance companies that gives you access to a network of medical providers but also gives you the option to go out of network. It is typically more expensive than an HMO plan, but it is also a more flexible plan that gives you direct access to specialists, and the option to go out of network for services. When considering getting a PPO plan, you should weigh the pros and cons carefully before making a decision.