PPO Health Insurance: How Preferred Provider Organization Plans Work

PPO Health Insurance Plans – Forbes Advisor

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There are several health insurance plans available that vary in network size, covered services, flexibility, out-of-pocket costs, and price.

Preferred provider organization (PPO) plans are the most common type of health plan in the employer-sponsored market, but make up a small percentage of Affordable Care Act (ACA) plans: About 46% of Americans with a workplace health plan are enrolled in a PPO plan, according to the Kaiser Family Foundation. But according to Forbes Advisor’s analysis of ACA plans, only 19% of ACA plans are PPOs.

What is a PPO health insurance plan?

A PPO is a type of health insurance plan known for its flexibility. Insurance companies enter into agreements with medical care providers and health facilities to create networks. When you get care from a doctor in a PPO network, the insurance company offers the highest coverage and you pay the lowest deductible.

PPO plans allow you to get medical care from an out-of-network provider, but services are covered at a much lower percentage.

Additionally, PPOs typically do not require a referral from a primary care physician to see a specialist such as an orthopedist or dermatologist.

How does a PPO health plan work?

When you see a doctor in a PPO network, your health insurance company covers a percentage of the cost if you reach your deductible. You pay the rest. This is called cost sharing.

Health care providers and PPO network facilities agree to receive a certain amount, usually at a discounted rate, for various services.

For example, let’s say you injure your wrist and need an X-ray that costs $300. In this example, the cost of an X-ray at an in-network facility is $60, while at an out-of-network provider in your plan, your cost is a 35% coinsurance. In that case, the cost of an X-ray at an in-network facility would be just $60, compared to the $105 fee that would be incurred for an out-of-network facility.

With a PPO, your health insurance company tries to incentivize you to get care online because it costs you less out-of-pocket. However, you have the flexibility to self-manage your treatment without needing a specialist referral from your primary care provider.

Although you can see specialists without prior authorization, PPO plans often require prior authorization for certain procedures, drugs, or types of care. Unless it’s an emergency, you may need to ask your insurance company before proceeding with a specific treatment plan, such as surgery. This prevents your insurance company from covering potentially unnecessary, expensive medical expenses.

How much does a PPO health insurance plan cost?

The average monthly cost for a 30-year PPO plan is $458. Averages for other ages, couples and families can be found below.

PPO health plan costs

A PPO is much more expensive than a health maintenance organization (HMO) or exclusive provider organization (EPO) plan, which is much more common in the ACA marketplace.

Costs PPO vs. HMO vs. EPO

If you buy an individual health insurance plan through the Affordable Care Act Marketplace or directly from an insurer, your health insurance premiums will depend on factors such as your age, tobacco use, plan dependents, plan level and location. This differs from employer-sponsored health insurance, which is a group plan that offers the same rates regardless of health status.

Employer-sponsored health plans are cheaper than ACA plans without government subsidies. Kaiser Family Foundation data shows that employees with a group health plan pay an average of $1,389 a year for a PPO plan for single coverage and $6,428 a year for family coverage. Employers typically pay most of the premiums for health plans (an average of $6,702 for single coverage and $16,884 for family coverage).

In general, PPO plans have higher average premiums than other types of health insurance. However, you get access to a much wider network of doctors and healthcare facilities.

Pros and cons of PPO health insurance

Whether a PPO health plan is the best choice for you depends on what you want out of your coverage. Here are the pros and cons of PPOs.

Pros of PPO

  • No specialist referrals required: With a PPO plan, you don’t have to work with a primary care provider and you don’t need a referral to see specialists. This is a good option if you feel comfortable managing your medical care on your own and don’t want to go through a primary care provider (PCP) to see a specialist.
  • Flexibility to go off-grid: PPO plans allow you to receive treatment from health care providers and facilities that are not in the network. Other health plans, such as EPOs and HMOs, often do not pay for out-of-network care.

Disadvantages of PPO

  • More expensive premiums: PPO health insurance premiums are generally more expensive than other types of health insurance. If you’re healthy and rarely visit the doctor, you may be able to find a cheaper plan that fits your needs.
  • No PCP: A primary care provider can help you navigate the healthcare landscape, but PPOs typically don’t require you to choose a PCP.


Compared to PPO plans, HMO plans typically have lower premiums and cheaper costs. However, HMO plans typically do not cover out-of-network care. If you want to see a doctor or visit a hospital that’s out of network, you’ll be responsible for the entire bill, and the money you pay won’t go toward your annual deductible.

On the other hand, PPO plans do not require referrals and working with a primary care provider is optional.

Key differences between PPO vs HMO


EPO plans are popular options for people who want affordable health insurance. Not only are premiums lower compared to a PPO plan, but EPO health insurance often has lower costs. The main disadvantage is that you can only get coverage from an in-network provider, which means you have less flexibility and fewer provider choices.

Key differences between PPO vs EPO


A point of service (POS) plan is a true hybrid between a PPO and an HMO plan. The insurance company will provide out-of-network care, but you will be responsible for much more of the cost sharing. You are still encouraged to receive treatment from an in-network provider, but you are allowed to visit providers who are not in-network.

In terms of cost, POS plans are usually cheaper than PPO plans. That’s because PPO plans offer the most flexibility to see in-network and out-of-network providers. Unlike a PPO, cash plans require a referral.

Key differences between PPO vs POS

Who Should Get a PPO Health Insurance Plan?

PPO insurance plans can be a good choice for people who want the flexibility to visit any doctor and hospital and see specialists without a referral. If you prefer to manage your own medical care without the supervision of a primary care physician, a PPO may be the right choice for you.

Cost is also important to consider when deciding whether a PPO plan is right for you. Because PPO plans offer so much flexibility, premiums are much higher. If you want the most affordable health insurance plan with low costs, a PPO plan is probably not the right choice for you.

PPO Health Plan FAQs

Does a PPO cover out-of-network care?

Yes, PPO plans cover out-of-network care, but it often doesn’t help as much as in-network care. The exact cost-sharing structure for out-of-network care depends on the specifics of your plan. But you’ll generally pay less to see a provider in a PPO network.

Do you need a primary care doctor if you have a PPO?

If you have a PPO, primary care doctors are not necessary. You can arrange your own treatment and see any doctor you want without having to visit or contact your primary care doctor first.

If you already have a relationship with a primary care physician, you can continue to work with them. If they contract with a PPO network, their services are covered at the highest rate.

Do PPOs require a referral to see a specialist?

No, PPO insurance does not require a referral from a primary care physician if you want to see a specialist. This can speed up the process of getting specialist medical care.

However, if you choose a specialist yourself, be sure to look for specialists who are in your PPO’s network to get the most coverage for your insurance company.

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