The term Medicare PPO stands for Preferred Provider Organization. It means that the Medicare insurance company has a network health providers that have agreed to see the plan’s members at contract negotiated rates. These network providers will coordinate your care.
What is a Medicare PPO?
A Medicare PPO is a type of Medicare Advantage plan that you can join as a private alternative to original Medicare. In a Medicare PPO, you will generally pay lower co-pays if you see providers that are in the network. You are not usually required to choose a primary care physician or get referrals to see specialists. Each plan has its own rules though, so always check the plan’s summary of benefits before enrolling.
A Medicare Advantage PPO must provide your A & B benefits to you under the plan. The plan must include an out-of-pocket maximum cap on your spending. This cap protects you against catastrophic spending during a year when you are experiencing higher than normal medical costs.
In 2017, the maximum that any Medicare Advantage plan can set as your out of pocket max is $6700 per calendar year. That means that $6700 out-of-pocket on hospital and outpatient expenses is the worst case scenario.
Some of the features of Medicare PPOs include:
- Freedom to see out-of-network doctors at a higher cost
- Premiums may be lower than a traditional Medicare supplement because you agree to the plan’s rules and limitations
- Part D prescription drug plan benefits are often included. It’s important to note that if you have a Medicare PPO with medical benefits only, you are not allowed to have a separate Part D drug plan. To get drug coverage on a Medicare PPO plan, you must choose one with an integrated Part D plan.
- Some plans may include “extra” benefits for things such vision exams or discounted gym memberships. Limitations, copayments and restrictions may apply.
- Annual Changes – The benefits formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1 of each year. You must remember to review the annual notice of change letter The insurance company will send you this letter each September. Then you can decide if you need to make any changes to your coverage.
Typical Costs You May Incur on Medicare PPO Plan
When you enroll into a Medicare PPO plan, you may have the following kinds of expenses:
- You will still pay for Medicare Part B, which is $134/month in 2017. Some people pay more due to higher incomes.
- You will pay a monthly premium for the Medicare Advantage PPO plan itself. Some plans may offer a $0 premium, but it depends on the plan and this can change from year to year as well.
- There will be copays for medical services as you go along. You might pay $20 for a primary care visit or $50 for a specialist. You’ll usually pay a hospital copay that may be daily or could be one larger copay for the entire stay. Often there are some services where you will pay 20%. This is commonly seen for chemotherapy. However, every plan will outline its specific set of benefits and copays in the Summary of Benefits document. You insurance agent can go over this with you.
- Out-of-network costs may be higher and sometimes require an up-front deductible
- Part D drug plans are often built into the plan, so you will generally not have any additional costs for Part D.
Which is Better – Medigap or Medicare PPO?
People new to Medicare often ask which is better: Medicare supplements or Medicare Advantage plans like PPOs? The answer is that it depends on your personal preferences. Medicare supplements (also called Medigap plans) pay after Medicare and leave you with very little out of pocket. Most of the time you will not even have a doctor copay. However, they are typically more expensive than Medicare PPO plans.
Medicare PPO plans will generally have lower premiums, but you agree to use a network of doctors to get the best copays. You will pay as you go along, so there will be copays collected from you at the time of each service. This includes doctor visits, lab-work, hospital stays, surgeries, durable medical equipment, diagnostic imaging, etc. Some people don’t mind this because they prefer a lower monthly premium. It’s completely up to you.
Do I Still Pay for Part B on a Medicare PPO?
Yes, you must be enrolled in both Medicare Parts A and B and live in the plan service area to be eligible for a Medicare Advantage PPO plan.
Learn more about Medicare PPO plans
Medicare PPO plans are just one option you have for your Medicare-related insurance coverage. They are not the same as Medigap plans. The coverage is different so you’ll want to understand both types of plans before you make your choice.
Selecting a plan can be tricky. You want to ensure that you will have access to the healthcare providers and medications that you require. A licensed agency specializing in Medicare plans can do this research for you at no cost. After you enroll through us, we provide support to you when you have questions about how your benefits will pay for certain services or claims. Consult a Boomer Benefits representative to determine whether a Medicare PPO plan would be suitable for you.