Do PPO Plans Have Copays?

Preferred provider organization (PPO) plans are a popular type of health insurance in the United States. As of 2020, over 59 million Americans were enrolled in a PPO plan.

PPO plans offer members flexibility in choosing health care providers. They also typically have copays and deductibles like other types of private health insurance.

So do PPO plans have copays? The short answer is yes, PPO plans usually have copays for services like doctor visits, prescriptions, and hospital stays. However, copays can vary significantly between different PPO plans.

Below we’ll explain in more detail how copays work in PPO plans, including:

• What is a PPO plan?
• How is a PPO different from an HMO?
• What are the typical copays for PPO plans?
• How do copays work with the deductible?
• What is coinsurance and how is it different from a copay?
• Are there copays for out-of-network care?
• How can you reduce your copays?

What is a PPO Plan?

A PPO, or preferred provider organization plan, is a type of managed care health insurance. PPO plans negotiated discounted rates with doctors, hospitals, and other providers in their network. As a PPO member, you pay less when using in-network providers.

However, you can also get care from out-of-network providers if you wish. You’ll pay more for out-of-network care, but it will still be covered to some extent. This flexibility to see any provider is the key advantage of PPO plans compared to HMOs.

With a PPO, you don’t need a referral to see a specialist. You also don’t have to choose a primary care doctor. These features make PPOs more flexible than HMOs.

Most PPOs have deductibles you need to meet before coverage kicks in. They also use copays and coinsurance to share costs with members. Let’s look at some typical copays next.

Typical PPO Copays

Copays for PPO plans can vary, but here are some commonly found amounts:

• Doctor visit copay – $20 – $50
• Specialist visit copay – $40 – $75
• Urgent care copay – $50 – $100
• Emergency room copay – $250 – $500
• Hospital copay per day – $250 – $1,000
• Prescription drug copay – $10 – $50

As you can see, copays are usually fixed dollar amounts set by the insurance company. They won’t change based on the actual cost of the medical service.

Copays apply once you’ve met the plan’s annual deductible. This brings up an important point…

How Copays Work with the Deductible

Most PPO plans have a deductible you need to meet first before copays apply. For example, the deductible could be $1,000.

That means you would pay the full negotiated rate for covered services until your total medical spending hits $1,000. At that point, you’ve met the deductible for the year and copays would kick in.

Let’s say your plan has a $30 copay for doctor visits. If your deductible is $1,000 and you haven’t had any medical spending yet this year, your first visit would cost the full negotiated rate.

But once you meet that $1,000 deductible, future doctor visits that year would just cost $30 each. The copay takes over once the deductible is satisfied.

Some PPO plans have copays that apply before the deductible is met. For example, there may be a $30 copay for doctor visits regardless of whether you’ve met the deductible yet. Check your specific plan details to see if any copays apply before the deductible.

Coinsurance vs. Copays

In addition to copays, PPO plans also commonly use coinsurance. What’s the difference between the two?

Copays are fixed dollar amounts, while coinsurance is a percentage you pay of the total cost. For example, the coinsurance for a service could be 20% after you meet the deductible.

That means you would pay 20% of the negotiated rate while the insurance company pays the other 80%. Coinsurance percentages may apply to hospital stays, lab tests, and other services.

The advantage of coinsurance is that your payment is proportional to the cost. With copays, you pay the same amount regardless of the complexity.

For expensive procedures coinsurance can save you money compared to a high fixed copay. But for low-cost services, the certainty of a copay may be preferable.

PPO plans may use coinsurance, copays, or both depending on the specific service.

Out-of-Network Copays

A major advantage of PPO plans is that they cover out-of-network providers, usually at a higher cost to you. This gives you flexibility to see any provider you want.

Out-of-network copays are typically higher than in-network copays. For example, an out-of-network doctor visit might cost $60, vs. $30 for in-network.

The insurance company will pay a portion of the claim, but at a lower rate than for in-network care. You pay the copay plus any amount exceeding the plan’s allowed amount for that service.

So your total costs will generally be much higher for out-of-network care due to reduced plan payment and higher copays. It’s always best to use in-network providers when possible to minimize your out-of-pocket costs.

How to Reduce PPO Copays

Here are some tips to reduce your copays and other out-of-pocket costs with a PPO plan:

• Use in-network providers – This is the #1 way to reduce copays and your share of costs. Try to stay in-network whenever feasible.

• Use urgent care – For non-emergency care needs, visit an urgent care instead of the ER. Copays are much lower, often around $75.

• Use generic prescriptions – Most plans have lower copays for generic drugs, some just $10. Compare costs before getting a brand name.

• Use mail order prescriptions – Plans may offer a mail order benefit with reduced copays for maintaining a 90 day supply of medications.

• Get preventive care – PPO plans cover certain preventive services like checkups at no charge before the deductible. Take advantage of this.

• Shop around – If needing a costly procedure, contact different in-network providers for quotes. Look for ones with quality outcomes at lower prices.

• Use tax-advantaged accounts – Paying copays and coinsurance from an HSA or FSA allows you to use pre-tax dollars for health costs.

Summary

Copays don’t apply until after meeting the annual deductible first. And coinsurance, which is percentage-based rather than a fixed fee, is also commonly used.

Always check your plan details to understand the copays, deductibles, and coinsurance that apply. This allows you to estimate costs and budget accordingly.

The combination of copays, coinsurance, and deductibles in PPOs provides flexibility and member cost-sharing. This helps keep premiums lower than plans that cover services in full.

So while copays cost more at the point of care, reasonable copay amounts help balance overall affordability for members with the flexibility of PPO network coverage.