Define PPO Insurance

A large number of group health insurance plans in are Preferred Provider Organizations or PPO plans. This type of health insurance is designed to offer maximum benefits to enrolled members. Many advantages exist for employees covered by a PPO plan that are unavailable for those participating on other types of plans, like HMO's. Understanding exactly what a PPO health insurance plan is and the basics of how benefits are provided, will improve the overall quality of medical treatment.

Purpose

• The purpose of a PPO insurance plan is to provide major medical coverage to enrolled employees in the most flexible and convenient manner possible, while still attempting to maintain affordable treatment costs. PPO products are managed care health insurance plans that offer members more cost effective pricing for services rendered by providers within an established group or network. While the existing network of physicians and facilities may have acceptable and appropriate providers, members may opt to visit a non-network physician, if they are willing to pay an increased cost differential.

In-Network Coverage

• PPO plans encourage members to visit providers within the network by limiting out of pocket treatment costs to a nominal copay. Payment for any services rendered by participating doctors will be paid entirely by the insurance carrier, except for the patient's office visit copay, which typically ranges from ten to thirty dollars. Members are free to visit any participating doctor or specialist and are not required to obtain a referral from a primary care physician before scheduling an appointment.

Out-of-Network Coverage

• Costs for treatment rendered by a non-network physician or facility will still be paid by the insurance carrier but at a rate dramatically less than for services from participating providers. Members are not obligated to visit network physicians and can seek treatment from any licensed medical professional. However, since no contract exists between non-network providers and the insurance carrier, the cost of services will be much higher. Non-network benefits in PPO insurance plans are intended to protect members who travel extensively and may need treatment while outside the normal geographic boundaries of the carrier's network.

Deductibles

• A major component to PPO insurance plans is the deductible. When services are provided by a non-network doctor, the member is obligated to contribute an initial amount up front, the deductible, before the carrier will pay their portion. Deductibles are not required for treatment received from within the network. Insurance carriers may have multiple variations of available PPO plans but most deductibles range from $500 to $5000.

Generalities

• Many people consider PPO insurance plans the "gold standard" of health benefits. Members covered by PPO plans enjoy greater appointment scheduling flexibility because there is no need to obtain referrals to specialists and benefits extend beyond the existing network of physicians and facilities. However, the costs within PPO plans are usually much higher than other similar managed card products, such as HMO's. Aside from the increased treatment costs, monthly premiums for PPO coverage are significantly more expensive.