Benefits 101: A Guide to PPO Plans

Benefits 101: A Guide to PPO Plans

by | Sep 8, 2025 | Custom Content, Employee Benefits, Health Insurance

When navigating the world of health insurance, you will likely encounter the term PPO (Preferred Provider Organization). A PPO plan – whether medical or dental – is about balancing the cost and convenience of care.  With a PPO plan, you get the flexibility to see a wide range of doctors. You’ll save money by staying within the plan’s network of preferred providers, but you can still choose to go out of network and receive partial coverage.  Unlike some other plans, a PPO allows you to see specialists without a referral.

How a PPO Works

A PPO plan functions much like other health insurance plans, but with a key difference in how it handles providers. The plan pays its contracted providers a set, pre-negotiated rate for services. Because of this arrangement, you pay less in cost-sharing—such as copays or coinsurance—when you receive care from an in-network provider.

While PPO plans offer the flexibility to see out-of-network providers, your costs will be significantly higher. You will likely pay more and may need to submit an insurance claim yourself. It’s also important to note that most PPO plans have a separate out-of-network deductible that you must meet before your plan benefits will begin to cover those costs.

Key Advantages of a PPO Plan

PPO plans are often chosen for their flexibility and convenience. Key benefits include:

  • No Referrals Needed: You do not need a referral from a primary care provider to see a specialist. You have the freedom to schedule an appointment with any in-network specialist at any time.’
  • Out-of-Network Coverage: You can choose to see providers outside of the plan’s network, which is particularly beneficial for those who travel frequently or live in different states.
  • Large Provider Networks: Many PPO plans have a broad, nationwide provider network, offering a wide range of choices for care.
  • No PCP Requirement: Unlike some other plan types, you are not required to choose a primary care provider(PCP).

PPO vs. HMO: The Main Differences

The primary difference between a PPO and an HMO (Health Maintenance Organization) plan lies in their approach to networks and referrals.

An HMO plan typically provides coverage only for services received from providers within its network, except in emergency situations. You are also required to choose a primary care provider and obtain a referral to see a specialist. HMO plans often come with lower premiums, but they offer less flexibility.

A PPO plan, on the other hand, gives you greater freedom. You can see specialists without a referral and have coverage for out-of-network care (albeit at a higher cost). While premiums are generally higher for a PPO, the added flexibility can be a major advantage for those who prioritize choice in their healthcare.

Ultimately, choosing the right health and dental plan depends on your individual needs and priorities. By understanding the core principles of a Preferred Provider Organization, you can make a more informed decision that aligns with your lifestyle and ensure you get the most value from your benefits.

Health Insurance Basics: Part 2

Health Insurance Basics: Part 2

by | Mar 12, 2024 | Health Insurance

Does a Health Plan Typically Pay for Services from Any Doctor?

Not always. Some types of plans encourage or require consumers to get care from a specific set of doctors, hospitals, pharmacies, and other medical service providers who have entered into contracts with the plan to provide items and services at a negotiated rate. The providers in this designated set or network of providers are called “in-network” providers.

  • In-Network Provider: A provider who has a contract with a plan to provide health care items and services at a negotiated (or discounted) rate to consumers enrolled in the plan. Consumers will generally pay less if they see a provider in the network. These providers may also be called “preferred providers” or “participating providers.”
  • Out-of-Network Provider: A provider who doesn’t have a contract with a plan to provide health care items and services. If a plan covers outof-network services, the consumer usually pays more to see an out-of-network provider than an in-network provider. If a plan does not cover out-of-network services, then the consumer may, in most non-emergency instances, be responsible for paying the full amount charged by the out-of-network provider. Out-of-network providers may also be called “non-preferred” or “non-participating” providers.
Some examples of plan types that use provider networks include the following:
  • Health Maintenance Organization (HMO): A type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency, or when a prior authorization to obtain care outside the network has been approved, or as otherwise required by law. An HMO may require a consumer to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness. An HMO may require enrollees to obtain a referral from a primary care doctor to access other specialists.
  • Exclusive Provider Organization (EPO): A type of health plan where services are generally covered only if the consumer uses in-network doctors, specialists, or hospitals (except in an emergency). In general, EPOs do not require a referral from a primary care doctor to see other specialists, and in general there is very limited, if any, out-of-network coverage.
  • Point of Service (POS): A type of plan where a consumer pays less if they use in-network doctors, hospitals, and other health care providers. POS plans may require consumers to get a referral from their primary care doctor in order to see a specialist.
  • Preferred Provider Organization (PPO): A type of health plan where consumers pay less if they use in-network providers. They can use out-of-network doctors, hospitals, and providers without a referral for an additional cost.

Originally posted on CMS.gov