Key takeaways:
Preferred provider organization (PPO) insurance is a type of network-based health plan. This is the most common plan design for health insurance.
Compared to health maintenance organizations (HMOs), PPOs offer you more flexibility around choosing healthcare professionals, and there’s no need for a referral from a primary care provider.
To pay less for care with PPO coverage, see doctors and other healthcare professionals who are within your plan’s network and avoid out-of-network services.
Choosing a health insurance plan can feel overwhelming. If you’ve been trying to sort out your coverage options, shorthand terms such as HMO, PPO, and EPO may have caused even more confusion. Here, we’ll cover information about PPO, or preferred provider organization, plans and how they differ from other types of health insurance.
What does PPO stand for?
PPO stands for preferred provider organization. It’s a type of health insurance plan available to individuals and families. You pay less if you use “preferred” healthcare professionals and facilities within the PPO’s network. But you can see healthcare professionals outside the plan’s network for an additional cost. You also don’t need a primary care provider (PCP) or other care coordinator to access services.
People enrolled in Medicare can access a PPO if they choose a Medicare Advantage option that offers this type of plan.
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How do PPO plans work?
A PPO has a network of preferred healthcare professionals and facilities that provide services to members of the plan at certain rates. Staying within your plan’s network means having lower out-of-pocket costs than you’d have for out-of-network services. You aren’t required to have a PCP coordinate your care, and you don’t need a referral to see a specialist.
PPOs typically have higher premiums than other plans, but they often pay a portion of the cost for out-of-network care.
PPO dental insurance
PPO dental insurance plans are similar to PPOs for medical care. They offer more flexibility than other coverage options, because you can choose from a network of dental professionals who have agreed to provide services at a discounted rate. You can go outside the network, but you’ll pay more. You can also see dental specialists without a referral.
This type of dental insurance also often has higher premiums than other plans.
What are the benefits of PPOs?
PPOs are the most common type of health insurance coverage, ahead of both health maintenance organizations (HMOs) and exclusive provider organizations (EPOs). In 2024, nearly half of all workers with employer-based health benefits were enrolled in a PPO. Here are the benefits of this type of plan:
More flexibility: Unlike HMOs, PPOs do not require you to select a PCP. Also, PPOs pay part of the costs of out-of-network care, which frees you up to choose from a wider selection of healthcare professionals and facilities.
No referrals needed: Selecting a PCP is optional with PPOs. This means you don’t have to wait for anyone to give you a referral to specialists or other healthcare professionals.
Potentially more services covered: Some PPOs cover a range of benefits beyond preventive care and other routine services. Specifics vary depending on the plan.
Travels with you: PPO coverage protects you when you’re away from home, because you aren't limited to a local healthcare network. You still have coverage when you’re traveling or if you move during a coverage year. By contrast, HMOs typically limit you to a network in your local area.
Free and low-cost health insurance: You may be able to find health coverage that fits your budget through the Affordable Care Act (ACA) marketplace, a parent’s plan, or a partner’s insurance.
How to choose an insurance plan: Selecting the right health insurance coverage involves assessing your family’s healthcare needs, understanding the benefits of different plans, and comparing costs.
What is a high-deductible health plan (HDHP)? An HDHP provides health insurance with a low premium, but you pay fully for services other than preventive care until you meet your high deductible.
What are the disadvantages of PPOs?
Here are some potential downsides to PPO plans:
Higher cost for the flexibility: PPO premiums tend to be higher than those for other types of plans. KFF reported that, in 2024, annual PPO plan premiums for people with employer-sponsored plans averaged $9,383 for individual workers and $26,678 for families. By comparison, overall annual plan premiums for people with job-based insurance averaged $8,951 for individuals and $25,572 for families.
Higher likelihood of having an annual deductible: KFF research also found that 46% of workers with HMOs didn’t have general annual deductibles in 2024, compared to only 12% of those with PPOs. (Among workers whose plans had a general annual deductible, the average PPO deductible was $1,252 — less than the average HMO deductible of $1,484.)
Other potential out-of-pocket costs: While PPO enrollees can see any healthcare professional, the cost-sharing rules vary. You’ll typically pay a larger coinsurance percentage for seeing a healthcare professional outside your network. For example, you may pay 20% in coinsurance with an in-network doctor and 40% with an out-of-network one.
Potentially more paperwork and up-front cost: Going outside your PPO network may require you to pay the bill up front and submit a claim form to your plan for reimbursement. If you frequently see out-of-network providers, completing and submitting this documentation could be time-consuming.
Responsibility for coordinating care: Choosing healthcare professionals directly means you are responsible for coordinating your own care. By contrast, HMOs and some other plans make your PCP the point person for coordinating and managing your care.
How does a PPO deductible work?
A deductible is the amount of money you must spend out of pocket for covered services before your insurer will pay for anything. So if your annual deductible is $1,200, you will need to spend that amount on covered medical visits and other services before your plan begins cost-sharing or paying 100% of costs for the rest of the year.
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With a PPO, though, you may have more than one deductible to meet. You may have an in-network deductible and an out-of-network deductible, which is typically higher.
Can I have a PPO and an HSA?
Some PPOs are set up as high-deductible health plans (HDHPs). If you enroll in a PPO that is also a qualifying HDHP, you are able to have a health savings account (HSA). An HSA holds pretax dollars you can use to pay for many out-of-pocket medical expenses. In 2025, an HDHP is a policy with a deductible of at least $1,650 for an individual or $3,300 for a family.
What are the differences between PPOs, HMOs, and EPOs?
The main differences between PPOs, HMOs, and EPOs are how much autonomy you have in choosing your healthcare professionals, how services are covered, and how much they cost.
Differences Between PPO, HMO, and EPO Insurance Plans
PPOs: Preferred provider organizations | HMOs: Health maintenance organizations | EPOs: Exclusive provider organizations | |
Do the plans rely on a network of providers? | Yes | Yes | Yes |
Is a PCP required? | No | Yes | Depends on the plan, but often yes |
Do you need a referral to see a specialist? | No | Yes | Depends on the plan, but often no |
Do you need to file claims paperwork? | Yes, but only for out-of-network care | No | Depends on the plan |
Can you get coverage for out-of-network providers? | Yes | Only in a medical emergency | Only in a medical emergency |
What are the costs of seeing out-of-network providers? | You typically pay a higher rate of coinsurance than for in-network care. | You must pay all costs (except covered emergency fees) out of pocket. | You must pay all costs (except covered emergency fees) out of pocket. |
Why would a person choose a PPO over an HMO?
Aside from general flexibility, a PPO has advantages over an HMO in certain situations:
If you see several specialists: If you have a chronic condition and need to see a number of specialists, you won’t need to wait for referrals with a PPO.
If you travel: If you’re away from home frequently, you may gain peace of mind knowing you can see a doctor whenever and wherever you need to with a PPO.
If you’re looking for certain types of care: You may need specific treatments, such as in vitro fertilization (IVF), for which an HMO network lacks providers. A PPO enables you to seek treatment within or outside its network.
Frequently asked questions
For the most part, yes, you can see any specialist with a PPO. For full or partial reimbursement, the care you receive must be included in your covered services.
You can check your summary of benefits and coverage or contact your insurance company directly for information about your health plan.
For the most part, yes, you can see any specialist with a PPO. For full or partial reimbursement, the care you receive must be included in your covered services.
You can check your summary of benefits and coverage or contact your insurance company directly for information about your health plan.
The bottom line
Preferred provider organization (PPO) plans offer enrollees options for choosing care. With this type of health insurance, you can choose from a broad selection of in-network healthcare professionals and facilities, and often qualify for partial coverage for out-of-network services. You’ll pay more when you opt for out-of-network care.
Before you choose a PPO, understand its pros and cons, and take some time to figure out if this type of insurance works well for everyone covered by the plan.
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References
Cigna Healthcare. (n.d.). What is PPO insurance?
Claxton, G., et al. (2024). Employer health benefits 2024 annual survey. KFF.
HealthCare.gov. (n.d.). Health insurance plan & network types: HMOs, PPOs, and more.
Humana. (2024). What is a PPO?
KFF. (2024). 2024 health benefits survey: Section 7: Employee cost sharing.
KFF. (2024). 2024 health benefits survey: Summary of findings.
Medicare.gov. (n.d.). Preferred provider organizations (PPOs).
UnitedHealthcare. (n.d.). Dental PPO vs. dental HMO insurance plans.
UnitedHealthcare. (n.d.). What are HMO, PPO, EPO, POS and HDHP health insurance plans?
UnitedHealthcare. (n.d.). What is a PPO health plan?
