The acronym Medicare PPO refers to Preferred Provider Organization within the Medicare insurance system. This signifies that the insurance company has established a network of healthcare providers who have mutually agreed to treat members of the plan at rates negotiated through contracts. These providers within the network work together to ensure the coordination of your healthcare needs.
A Medicare Preferred Provider Organization (PPO) is a Medicare Advantage plan option that offers a private alternative to Original Medicare. By utilizing in-network providers, you can typically benefit from lower co-pays. Unlike some other plans, you are not obligated to select a primary care physician or obtain referrals to see specialists. It is important to review the plan’s Summary of Benefits to understand the specific rules and coverage details before enrolling.
The A & B benefits must be provided to you by a Medicare Advantage PPO plan. This plan is required to have a cap on your out-of-pocket spending, which serves as protection against excessive medical costs in a year with higher-than-normal expenses.
For the year 2024, the maximum out-of-pocket limit that any Medicare Advantage plan can establish is $8,850 annually. This means that $8,850 is the most you would have to pay out-of-pocket for hospital and outpatient services in a worst-case scenario.
Features of Medicare PPOs include:
The option to visit doctors outside of the network at a higher cost is a freedom provided by some plans.
Premiums might be more affordable compared to traditional Medicare Supplements due to adherence to the plan’s regulations and restrictions.
Part D prescription drug plan benefits are commonly part of the package. It’s worth noting that having a Medicare PPO with only medical benefits prohibits you from having a separate Part D drug plan. To receive drug coverage under a Medicare PPO plan, you must select one that includes an integrated Part D plan.
Some plans may offer additional benefits like vision exams or discounted gym memberships. Be aware that there may be limitations, copayments, and restrictions in place.
Every January 1, there may be changes to benefits, formulary, pharmacy network, provider network, premium, and/or co-payments/co-insurance. It’s essential to review the Annual Notice of Change letter sent by the insurance company each September to determine if any adjustments to your coverage are necessary.
PPO Plan Costs
When enrolling in a Medicare PPO plan, there are several expenses to consider:
1. You will still be responsible for paying the monthly premium for Medicare Part B, which is $174.70/month in 2024. However, it’s important to note that individuals with higher incomes may have to pay more.
2. In addition to the Part B premium, you will also have a monthly premium for the Medicare Advantage PPO plan itself. While some plans may offer a $0 premium, this can vary from year to year and depends on the specific plan you choose.
3. As you receive medical services, there will be co-pays involved. For instance, you may have to pay $20 for a primary care visit or $50 for a specialist. Hospital co-pays can either be charged on a daily basis or as one larger co-pay for the entire stay. It’s worth mentioning that certain services, such as chemotherapy, often require a 20% co-pay. However, the Summary of Benefits document provided by your plan will outline the specific benefits and co-pays. Your insurance agent can assist you in understanding these details.
4. It’s important to be aware that out-of-network costs may be higher and may require an up-front deductible in some cases.
5. Many Medicare Advantage PPO plans include Part D drug coverage, which means you generally won’t have any additional costs for Part D medications.
Medigap vs. Medicare PPO?
When deciding between Medicare Supplements and Medicare Advantage plans like PPOs, the choice ultimately comes down to personal preference. Medicare Supplements, also known as Medigap plans, cover costs after Medicare and result in minimal out-of-pocket expenses. Typically, there are no doctor co-pays with these plans, but they tend to be more costly compared to Medicare PPO plans.
On the other hand, Medicare PPO plans generally have lower premiums, but require the use of a network of doctors to receive the best co-pays. With this plan, you will pay co-pays at the time of each service, including doctor visits, lab-work, hospital stays, surgeries, durable medical equipment, diagnostic imaging, and more. Some individuals opt for this plan due to the lower monthly premium. Ultimately, the decision is entirely yours to make.
Takeaways
PPO plans provide the flexibility to visit healthcare providers who are not in their network. Nevertheless, it is important to note that this may result in increased expenses for you. If you are uncertain about whether a PPO plan includes Part D coverage, it is advisable to directly reach out to the plan for confirmation.
Mario Arce
I have been working with Medicare clients since 2016. I serve California members in San Bernardino & Riverside county.
