PPO Plan

What is PPO Plan

PPO (Preferred Provider Organization) is a type of health plan that has a large network of partners (hospitals, doctors, and other medical providers).

Typically, a subscriber is charged less for using providers in the plan’s network. The use of providers outside of the network comes with a higher cost. They also have higher monthly premiums, and out-of-pocket costs (copays, coinsurance, and deductibles).

PPOs allow subscribers to visit in-network physicians or healthcare providers without a referral from a primary care physician (PCP).

PPOs are deemed a perfect fit because:

• You do not need a PCPs.
• A referral is not required to see a specialist.
• Huge in-network and out-of-network providers.

How does PPO Plan work

Negotiated Fees

Insurers negotiate discounted fees with in-network providers. Use of out-of-network providers is also allowed, but at a higher cost (usually based on the schedule of fees as designated by your insurance provider).

There are usually separate deductibles for in-network services and retail prescription drugs.

Since you have an option to choose providers at any time, choosing a primary care doctor or referral when seeing a specialist is not a must.

Prior authorization

Prior authorization is required for non-emergency services. This ensures the PPO is only paying for healthcare services that are really necessary especially when it comes to expensive tests, procedures, or treatments.

It also ensures that providers don’t overcharge for tasks that are accomplished more cheaply in a different manner.

Remember, Claims without prior authorization are usually rejected.

Cost Sharing

The insurer sets the out-of-pocket limits. The more of the cost you pay, the less your PPO insurance plan pays, hence the lower the monthly premium charges.

This will be in form of;

• Deductibles,
• Coinsurance, and
• Co-payments

Once you meet your annual out-of-pocket limit, the PPO Plan caters to 100% of the expenses (including coinsurance and copayments) for the remainder of the calendar year.

Adding Flexible Spending Accounts (FSA) to the PPO

Subscribers can enroll in an FSA. They do help their members pay for medical or child care using saved pre-tax dollars. Two types of FSAs are available:

• Health Care FSA and
• Dependent Care FSA.

PPO Plan type.

Local PPO

They do serve a mall service area e.g. in a single county or group of counties. They usually have approximately 2,000-5,000 providers in their network.

Regional PPO

They serve a single state or multi-state area and have a contracted network that serves an entire region(s). They do have between 16,000-and 17,000 providers in their panel.

A regional PPO is mandated to do business in regions stated by the government, which includes both urban and rural areas.

HDHP vs. PPO

While HDHPs and PPOs plans serve distinct purposes, here is a table of their respective pros and cons:

PPO plan vs HSA

While HSAs and PPOs plans serve distinct purposes, here is a table of their respective pros and cons:

When to choose what

Choose an HDHP with an HSA if:

• You are young and healthy and hence require less frequent medical care.
• Individuals without families
• Have enough set aside for a high deductible in case of an emergency.
• Putting savings aside for medical care when you retire.
• Willing to shop around for drugs and other medical services to save on costs.

Choose a PPO plan if:

• Old with chronic health problems, high history of doctor visits, and taking drugs.
• Individuals without families
• Facing a major medical expense e.g. surgery or childbirth.
• The tradeoff between higher premiums for lower out-of-pocket costs seems attractive.
• Not good in investment accounts like HSA hence PPO looks attractive

Bottom Line

When settling for a PPO health plan it’s important to note;

• It’s key to choose a PCP who will act as a champion for your personal health care
• Services not offered in in-service do higher charges. Also, the claims have to be submitted by yourself. Lastly, you might need a separate out-of-network deductible.
• Note the PPO plan is available 24 hours a day, seven days a week for any emergency and urgent care coverage.