PPOs (Preferred Provider Organizations) and Original Medicare differ in four key ways:

  1. 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. 
  2. 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.
  3. 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.
  4. 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.