How Does a PPO Plan Work?
When you sign up for insurance, you generally have a few options including HMO, PPO, and POS. The PPO plan is often one of the most popular because of its flexibility. While it’s more expensive than an HMO, it may suit your medical needs better than an HMO.
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The Basics of the PPO
PPO stands for Preferred Provider Organization. In other words, there is a network of providers the insurance company wants you to use. If you use these providers, you are rewarded with lower deductibles and co-pays. You do have the option to look outside of those providers, but you will genre ally pay higher deductibles and higher co-pays.
PPO plans usually require that you pay one of three things:
Deductible – This is the amount that you must pay out of pocket before the insurance will kick in and pay for your services. For example, if you have a $500 deductible, your insurance won’t pay for any services until you cover the first $500.
- Co-pay – This is a predetermined amount or flat fee that you must pay when you see certain doctors. Sometimes your primary care physician doesn’t have a co-pay, but specialists do. It depends on the plan.
- Co-insurance – This is a percentage of the costs you incurred for your medical services. You’ll know the percentage, such as 20%, but you won’t know exactly how much it will cost you as it depends on the doctor’s bill. If you stay within the PPO network, though, you’ll get a discounted rate for the services, which will save you money in the end.
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The Downside of Going Outside of the PPO Network
The advantage of the PPO plan is the discount you get by seeing doctors within the network. If you go outside of the network, you’ll pay a higher deductible and co-pay, as we already discussed. However, there’s one more downside – the provider can balance bill you.
In other words, you can’t get the discount you would get if you went inside the network. The medical provider has the right to bill you for the balance that your insurance didn’t cover. If you had gone to a doctor in the network, the balance that the insurance doesn’t pay that is outside of your deductible and/or copays would be written off.
Before you choose a PPO plan, make sure you research the doctors in the network. Many PPO plans have a wide variety of doctors in the network, but if you have a specific doctor you use, you’ll want to make sure that doctor is in the plan. You should also make sure to choose a plan that has a premium and deductible that you can afford. Don’t make the mistake of choosing the lowest premium in order to reduce your monthly expenses, but take a deductible that is unaffordable for you. In the end, your insurance should be something you can afford and that should protect you at the same time.
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