Employee Benefits

What Is a PPO Insurance Plan? 

2 min read
Nov 07, 2022

A PPO insurance plan works with a network of providers to help create more affordable and flexible care for those enrolled. PPO plans are often available for health, dental, and vision insurance.

What does PPO stand for?

PPO stands for preferred provider organization, which simply refers to the network of providers (doctors, dentists, etc.) whose services are covered under the plan’s terms.

How does a PPO work?

PPO insurance plans work with a designated network of providers who agree to provide services at a lower negotiated rate than what they typically charge. PPO participants will often have the lowest out-of-pocket costs if they visit an in-network provider, but out-of-network care is often still covered — just at a lower percentage.

For example, say you’re feeling sick. If you visit your primary care physician or another provider who’s within your insurance network, you’ll have the lowest out-of-pocket costs. However, if the only available doctor is an out-of-network provider, you still won’t have to pay the full cost of service on your own. Your insurance provider will likely cover part of the bill.

PPOs and out-of-network providers

When you visit an out-of-network provider while on a PPO insurance plan, your visit is covered, but at a higher cost to you.

How much does PPO insurance cost?

In 2021, the average annual cost of PPO premiums associated with employer-sponsored plans was $1,389 for individuals and $6,428 for families, according to the Kaiser Family Foundation (KFF). In comparison, HMOs — another type of managed care insurance — cost policyholders $1,204 annually for individuals and $5,254 for families.1

In addition to monthly premium payments, PPO policyholders are often responsible for copays, a deductible, and coinsurance.

Why are PPOs often more expensive?

PPO insurance plans tend to be more expensive than other types of health, dental, and vision insurance plans because of the flexibility they offer. They give patients the option to see both in- and out-of-network providers, and they often don’t require referrals to see specialists. This level of flexibility makes these plans a bit costlier to manage and, therefore, raises the price.

Are PPOs better than HMOs?

PPO plans aren’t inherently better than HMO plans. They’re just different. When considering PPOs vs. HMOs, you’ll be looking at variations in cost, the size and location of the provider networks, the extent of coverage, and referral processes.

Is PPO insurance right for me?

When open enrollment time comes around, you’ll likely have to choose which type of insurance plan you’d like to enroll in. PPO insurance plans typically offer a higher level of flexibility than many other types of health, dental, and vision insurance options.

To determine what kind of insurance plan is best for you, consider your personal circumstances and which options align with your long-term goals and lifestyle. Then, discuss options with your HR representative to decide if a PPO plan is a good match for your priorities.

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1Summary of Findings – 9805 | KFF.” 2021. KFF. November 10, 2021.

This article is intended to provide general information about insurance. It does not describe any Metropolitan Life Insurance company product or feature.