A preferred provider organization (PPO) is a type of health care plan that offers lower out-of-pocket costs to members who use doctors and other providers who are part of the plan’s network.
These preferred providers have signed onto the network at a lower negotiated rate than they might charge outside of the network.
PPOs also offer members the flexibility to see providers outside of the plan’s network, although they will most likely pay more in out-of-pocket costs to do so.
To learn more about PPOs, and how this type of plan compares to other health insurance options, read on.
How Does PPO Insurance Work?
When you join a PPO health plan, you’re joining a managed care network that includes primary care doctors, specialists, hospitals, labs, and other healthcare professionals. PPO networks tend to be large and geographically diverse.
health savings account (HSA). Money saved in an HSA can be used to pay for qualified medical expenses.
HDHPs are generally best for relatively healthy people who don’t see doctors frequently or anticipate high medical costs for the coming year.
What are the Pros and Cons of PPO Insurance?
As with all health insurance options. PPOs have both advantages and disadvantages. Here are a few to consider.
Advantages of PPOs
• Flexibility. PPO members typically do not have to see a primary care physician for referrals to other health care providers, and they may see any doctor they choose (though they may pay more for out-of-network providers).
• Lower costs for in-network care. Out-of-pocket costs, such as copays and coinsurance, for care from in-network providers can be lower than some other types of plans.
• Large provider networks. PPOs usually include a large number of doctors, specialists, hospitals, labs, and other providers in their networks, spanning across cities and states. As a result, network coverage while traveling or for college student dependents can be easier to access than with more restricted plans.
Disadvantages of PPOs
• High premiums. In return for flexibility, PPO members can expect to pay higher monthly premiums than they may find with other types of plans.
• High out-of-pocket costs for out-of-network care. Depending on where you live, the treatment you receive, and how your insurer calculates “usual, customary and reasonable” fees, you may find you are responsible for a large portion of the bill when you receive care outside of the PPOs network.
• Might be more insurance than you need. If you rarely see doctors and wouldn’t mind potentially switching doctors, you may be able to save money by going with an HMO or a HDHP.
PPOs are a popular type of health plan because of the flexibility, ease of use, and wide range of provider choices they offer.
Patients with a chronic disease or other illness who have a close relationship with their doctors and specialists may find a PPO is the most appealing choice because they can likely continue to see their current doctors.
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