PPO: Preferred Provider Organization

  1. How they work: This type of plan sets up networks with "preferred" providers from which you can choose. You do not need a primary care physician to refer you to other doctors in your network, so you can decide to use any provider in your network at any time. If you decide to go somewhere out-of-network, you will pay a higher amount but, unlike an HMO, you will be protected from paying the full cost of care. To be reimbursed for out-of-network care, you will need to pay the doctor directly yourself and then request a partial reimbursement from your insurance company by filing a claim.

  2. What you pay: PPOs usually have a deductible in addition to copays, coinsurance and a monthly premium. You usually have a higher deductible and pay a larger share of the cost if you see an out-of-network doctor. If you see an out-of-network provider who charges higher prices than the "maximum allowable" or "negotiated" rates that your insurance company would pay an in-network provider, you will also have to pay the extra amount in addition to your usual coinsurance amount.

  3. Is a PPO right for you? PPOs provide more freedom to choose than HMOs. You don't need referrals to see specialists and you have more flexibility to see doctors in- and out-of-network without paying the full cost of care. If you need to see several doctors and have specific preferences when it comes to care, a PPO will be cost-effective and provide you with better options for health care. If you are satisfied finding care within a network and do not anticipate too many health problems, an HMO or EPO might be your better option.