A View of Preferred Provider Organization Plans

The Preferred Provider Organization Plans (PPO) is a cross between the FFS plan and the Health Maintenance Organization (HMO) plan and is a form of managed care. Your insurance carrier "manages" your care by directing you to contracted providers. Although you can select your own provider as you would in a FFS plan, by using the contracted provider, you will have a lower co-payment and your insurance provider can keep costs down.

Typically, Preferred Provider plans cover immunization and preventative medicine such as routine physicals or annual gynecological exams and well-baby visits. Like all policies, you are required to pay a monthly premium. The amount you select for a deductible is one factor which will greatly influence the cost of your policy. If you select a policy with a low deductible of $250 you will pay a higher premium than on a policy with a $2500 deductible. When selecting an insurance policy be sure the deductible is an amount you can afford to pay!

Consider, for example, if you are admitted to the hospital and have a $5000 deductible. Can you afford to make one payment of $5000? If you are good at stashing money away for emergencies, this may not be a problem. But, if you are like most people, the amount you have in savings isn’t enough for a trip around the block!

If you have several complex medical conditions, a higher deductible may not be in your best interest. You need to consider how much you will have to pay in your co-payments (including prescription costs) throughout the year, in addition to the deductible. You may find yourself facing a financial nightmare if the deductible is high and the amount you have to pay in the form of co-payments is large.

The good news is, both your co-payments and your deductible are considered out-of-pocket expenses. Once you reach a set amount of out-of-pocket expenses, your insurance carrier will cover all future costs of covered services at 100% (typically with the exception of prescription coverage). If you use a non-participating provider, you may still be responsible for covering charges which are above the usual and customary fee.

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