When shopping for a Medicare Advantage plan, you might come across two terms: HMO and PPO.

Those are essentially two popular types of plans, each with its own rules, costs, and peculiarities. Compared to HMO, PPO plans offer less limitations for beneficiaries, but are generally more expensive.

What is Medicare Advantage PPO?

Essentially an alternative to your traditional Medicare coverage, Medicare Advantage PPO offers a network of healthcare providers that you can prefer without referrals – giving you more control over your healthcare choices and decisions.

Unlike Health Maintenance Organization (HMO) plans, PPO plans do not require you to choose a primary care physician or get a referral to see a specialist.

In a Medical Advantage Preferred Provider Organization (PPO) Plan, you pay less if you use doctors, hospitals, and other healthcare providers that belong to the plan’s network and more if you use doctors outside the network.

Medicare PPO plans cover all the same services that Original Medicare (Part A and B) covers, which include:

• Hospital care
• Doctor’s visits
• Preventive service
• Emergency services
• Outpatient care
• Some home health care, durable medical equipment, and more.

Many Medicare PPO plans offer additional benefits that Original Medicare doesn’t cover. For instance, some PPO plans might include:

• Prescription drug coverage (Part D)
• Routine vision, hearing, and dental care
• Wellness programs
• Gym membership: It’s important to note that coverage can vary by plan.

Don’t worry — your PPO plan won’t charge more than what Original Medicare would charge for services like chemotherapy, dialysis, or skilled nursing facility care.

Plan costs, out-of-pocket maximums, and the specific providers in a PPO plan’s network can vary, so you should review each plan thoroughly when choosing coverage.

Medicare PPO costs

Your Medicare PPO costs vary depending on factors like plan type, benefits offered, and geographical location. They’ll typically involve premiums (monthly payment), deductibles (amount before coverage kicks in), and co-payment or coinsurance amount for services used.

Plan premium 

This is the monthly fee you pay to have the plan, whether or not you use medical services. Some PPO plans may offer a $0 premium, but they may have other costs.

Remember that the plan premium is in addition to the monthly Medicare Part B that you will be paying (may be deducted from your Social Security check). 

Deductible

The amount you have to pay out-of-pocket for healthcare services before your PPO plan starts to pay. A plan with a higher deductible usually has lower monthly premiums.

Co-pays and coinsurance 

These are your out-of-pocket costs for each service or visit. Co-pays are fixed amounts, whereas coinsurance is usually a percentage of the cost.

Providers 

PPO plans have a network of preferred providers. Going to these preferred providers will be cheaper than those out of the network. However, unlike some plans like HMOs, PPOs will still provide some coverage if you choose to see an out-of-network provider.

Prescription drug coverage 

If the PPO plan includes drug coverage, the cost and coverage for medications can vary by plan. Understanding the plan’s formulary (list of covered drugs) and tiers can help determine costs.

Out-of-pocket maximum 

In 2024, the limit is set to be $8,850 for in-network and $13,300 for out-of-network services. This means once you spend this amount for covered healthcare services, the plan will pay 100% of all your healthcare costs for the rest of the year.

Additional benefits 

Some Medicare PPO plans offer extra benefits like vision, hearing, dental, or wellness programs. The costs for these additional benefits is usually included in the premium, but in some instances, there could be additional costs.

Location 

The cost of PPO plans can also vary depending on where you live. Each state or region has different costs and available plans.

As of 2023, the average monthly Medicare Advantage Prescription Drug Plan Premiums were $17 for local and $46 for regional PPOs.

It’s worth noting that the cost of Medicare PPO plans can change from year to year, so it’s important to review the specific details and costs of the plans available in your area during Annual Open Enrollment (every fall).

Who should go for Medicare PPO?

A straight answer is impossible, given how individually unique our health needs and preferences can be.

If your priority lies in having flexibility of choice amongst healthcare providers or foresee frequent travels outside your current state; you might want to consider enrolling into one among several Medicare PPO Plans. 

Making Medicare PPO work for you

Medicare Advantage PPO plans offer flexibility and extra benefits compared to Original Medicare. However, the cost of these plans can vary widely depending on the level of benefits you choose, your location, and the company you go with.

To sum up – if you’re looking to enjoy the liberty of picking your trusted healthcare providers over sticking within network boundaries or waiting on referrals for specialists, then Medicare Advantage PPO could be the right bet for you. 

To find out if there is a plan out there that meets your needs better than your current one use this plan finder.  You can create a profile to customize the search and find out if you can be better off; either by paying less premiums, less deductible, having more flexibility, having more coverage, or any extra benefit that is of value to you.  

Article updated on January 11, 2024.