How does a PPO plan work?
PPO plans have a network of physicians and hospitals you may visit, just like an HMO plan does. PPOs have provider networks, just like an HMO, to reduce the cost of health insurance. In return for access to patients who are part of the insurer's network, providers in the network agree to accept reduced payments. PPO networks, however, do offer some coverage for out-of-network treatment, unlike HMOs. Your health insurance will still pay for services when you go to a provider outside the PPO network, but you'll probably pay extra. If you use an in-network provider, your out-of-pocket expenses will be at their lowest.
Example of a PPO
As mentioned above you will have in-network discounts and some limited out-of-network discounts. Below is an example comparing the difference between in and out of network.
As you can see there are many benefits of staying in network. But in the case of having to go outside of the network, you are still covered for almost all medical events. Any coinsurance that is required will go towards either the in-network or out-of-network deductible and max out of pocket. These are separate and each will need to be reached separately.
Pros and cons of a PPO plan
Comparing your alternatives is made easier by being aware of the benefits and drawbacks of a PPO health plan. When compared to plans like HMOs, PPO plans have a lot of freedom, but this flexibility comes at a price.
Pros:
- You are not required to select a primary care doctor (PCP)
- You can go to doctors in or out of the plan’s network.
- There is no need to get a referral from your PCP for specialist visits
Cons:
- More than likely higher premiums than other plans
- Pay more for coverage outside of the network
- Usually have higher deductibles
EPO vs PPO
An EPO (Exclusive Provider Organization) is more limited and offers less reimbursement or coverage for providers who are not in its network. One of the biggest benefits of an EPO is that patients can see a specialist without a primary care doctor's referral. EPO plans are typically a little less expensive than PPO plans but have less flexibility. An EPO can save money for someone who has few medical needs. At the same time, in most circumstances, a PPO is better suited to a family with a diverse set of medical conditions.