It’s confusing, it can be pricey, and there are several household chores you’d rather do than deal with it… It’s your health benefits. But don’t worry, you can do this. Consider this your health benefits 101.
What is a PPO?
A PPO is a common type of health insurance plan. “PPO” is short for Preferred Provider Organization. The PPO health plan pays for both “in-network” and “out-of-network” care.
Want provider flexibility?
A PPO health insurance plan is less strict about requiring that you live and/or work in a specific geographic area to be eligible for coverage.
The PPO plan might be right for you if you frequently travel or live outside of other available health plans’ service areas.
Keep in mind that out-of-network services will be at a much greater out-of-pocket expense.
When talking about any health insurance plan, a provider simply means the doctor or health care facility which provides health care services to you.
Examples of healthcare providers:
- Urgent care centers
- Primary care centers, etc.
PPO health plans utilize networks. Networks consist of select providers or hospital systems and the doctors and clinics associated with those systems. When an insurance carrier aligns their coverage with a network, that network provides the carrier with a discounted cost per service. The discount can be anywhere between 10 to 30 percent of the usual and customary cost, commonly called “retail cost.”
In-network health care services cost you less. Insurance carriers allow you to pay lower out-of-pocket costs for the health care services you receive in network while you are covered by the PPO plan.
Examples of out-of-pocket costs include deductibles, co-insurance, and copays.
Out-of-network health care services cost you more. Insurance carriers require you to pay higher out-of-pocket costs for the health care services you receive out of network while you are covered by the plan. Because the carrier is paying “retail cost” for these services, health care outside of the insurance company’s network costs the insurance company more, so your share of the costs out-of-pocket will also be higher.
Understanding which health care providers are in-network for your PPO plan will help you control out-of-pocket costs. In-network providers are often listed in resources from your insurance company.
However, it is important to always directly confirm with a provider that they are in your network before receiving services from that provider. Do not rely on the online network directory, as these are not always up to date. Just as you can change your job, a health care provider can change its arrangement with an insurance company.
Taking time to confirm a provider is in-network with your health insurance company will help you to avoid unexpected expenses. Another good source is the administrative office of your provider.
Providers not necessarily in one particular network include:
- mental health services
- ambulance (or other emergency transport service)
- dialysis centers
It is important to find out whether ALL your providers (for any given health situation) are in your network. This includes the individuals who treat you, as well as the location of your health care services.
Preauthorization and Referrals
Health insurance plans including PPOs will only pay for care that is deemed medically necessary. If you are seeking care from a specialist doctor, check beforehand with your insurance company.
It is important to make certain that the procedure has been authorized for payment by your insurance carrier. This is called “preauthorization.”
A referral from your primary care physician may be required by your insurance company for the specific treatment. Reading your insurance company’s plan documents can be very helpful in determining whether a referral is required.
Referrals are a common part of PPO plans, and all health insurance plans require preauthorization for certain procedures. Regardless of your insurance plan, be sure to read the rules regarding preauthorization and referrals carefully.
Other Types of Plans
When it is time to enroll in a health insurance benefit plan, there may be different options available. HMO plans, PPO plans, or POS plans are some of the types of health coverage plans that are available to you. Other types of plans also utilize networks. Each type of plan may vary in cost, coverage regions, and network providers.
An HMO (health maintenance organization) doesn’t give you access to health care outside of the network, except in the case of a true emergency.
A POS (point of service) uses the network of the HMO and allows for a limited amount of out-of-network care. But, the POS plan usually comes with very high out-of-pocket costs for out-of-network care.
It is up to each individual to elect coverage that is best for his or her situation. When determining which health plan is right for you, there are a few factors to take into account:
- Geographic location
- Personal budget
- Dependent family members
- Type of health care services needed
- Frequency of services needed
Choosing a health plan can be tricky. There can be a lot of information to deal with. But, the more you understand the general concepts, the better equipped you will be.
You can make an educated choice!
Recognizing your needs and a bit of prep will lead you down the right path. This will empower you to proceed confidently when it is time to enroll in benefits, instead of being overwhelmed.
Even if your employer provides only one option, carefully reading the information in the plan documents will help you use the health plan wisely.
But wait, there’s more. This is a general description of a PPO, but that isn’t all of it. Check your Summary Plan Description (SPD) from your health insurance company. It contains what you need to know about the specific rules of your plan.
If you want to know rules about any of our Employee Benefits Corporation plans, please check the specific Plan's Summary Plan Description (SPD) by logging in at www.ebcflex.com to access it. There you will also find other helpful information that explains the specific rules for your BESTflexSM Plan health care flexible spending account, EBC HRASM, or SimplyHSA; the benefits that give you ways to save pre-tax money on your healthcare expenses.