PPOs (Preferred Provider Organizations) and Original Medicare differ in four key ways:
- Coverage. Both PPOs and Original Medicare will cover your care from most doctors and hospitals in the country. PPOs must cover your out-of-network care, but you might pay more if see out-of-network providers.
- Benefits. PPOs must offer all the benefits available under Original Medicare (Part A and Part B). Many Medicare PPOs also offer Medicare prescription drug coverage (Part D). If you are in a PPO, you must get your drug coverage from that same company. Some PPOs may offer benefits that are not covered by Original Medicare, such as dental care or eye care.
- Premium. In Original Medicare, you pay only the Part B premium. PPOs generally charge a monthly premium in addition to the Medicare Part B premium. The premium may be higher if the PPO offers prescription drug coverage (Part D) benefits.
- Out-of-pocket costs. With Original Medicare you generally pay 20% coinsurance for doctors’ and other medical services. With a PPO, you usually pay a fixed amount for services (copay) when you receive in-network care and a coinsurance when you receive out-of-network care. If you are generally healthy and only see doctors and other providers in the PPO’s network, your out-of-pocket costs may be lower than in Original Medicare. Also, PPOs must have both an in-network and out-of-network limit on how much you will pay out of pocket. These limits can be high, but will protect you from excessive costs if you have a lot of medical care or expensive treatments. For certain kinds of care, or if you receive care from non-network providers, PPOs may charge you higher cost-sharing than Original Medicare.
Note: Many people who have Original Medicare also purchase a Medigap plan to help pay some of their costs (such as deductibles and coinsurance). Medigap plans are supplemental insurance policies that work specifically with Original Medicare. You cannot have a Medigap and a Medicare PPO together.