How Medicare PPO Plans Work and What They Cost

What a Medicare PPO Is

A Medicare PPO (Preferred Provider Organization) is a type of Medicare Advantage plan that lets you see any doctor or specialist without getting permission first, and you can change doctors whenever you want. You pay a monthly premium, a yearly deductible, and a copay or coinsurance each time you use a service. PPOs cost more out of pocket than HMOs in most cases, but you get more freedom to choose your providers and don't need referrals.

Medicare PPOs are run by private insurance companies, not by Medicare directly. They must cover everything Original Medicare covers — hospital stays, doctor visits, prescription drugs — but they can charge different amounts and have different rules about which doctors and hospitals are in their network.

Key Takeaways

Medicare PPOs let you see any doctor without a referral, and you can switch doctors at any time without penalty.
You pay a monthly premium, a yearly deductible, and a copay or coinsurance for each service, with costs varying by plan and by whether you use in-network or out-of-network providers.
Out-of-network care costs more but is still covered, unlike in an HMO where out-of-network care is usually not covered at all.
PPO plans include prescription drug coverage and often include dental, vision, and hearing benefits that Original Medicare does not.
You can join a PPO during the Annual Enrollment Period (October 15 to December 7 each year) or if you have a may have access to life event.

How PPO Costs Work

Every Medicare PPO charges a monthly premium, which is the base cost you pay whether you use the plan or not. This premium varies by plan and by where you live — a plan in one county may cost $50 a month, while the same company's plan in another county costs $120. You can see the exact premium for each plan in your area during enrollment.

On top of the premium, you pay a yearly deductible before the plan starts to help pay for most services. After you meet the deductible, you pay a copay (a flat dollar amount like $20 for a doctor visit) or coinsurance (a percentage of the cost, like 20 percent). In-network providers — doctors and hospitals that have a contract with the plan — charge lower copays and coinsurance. Out-of-network providers charge more, but the plan still pays its share.

There is also an out-of-pocket maximum, a yearly cap on what you will pay. Once you reach it, the plan pays 100 percent of covered services for the rest of that year. This maximum varies by plan but is set by Medicare each year.

In-Network Versus Out-of-Network Providers

PPOs have a network of doctors, hospitals, and specialists who have agreed to charge set rates. When you see an in-network provider, your copay or coinsurance is lower, and the plan pays a larger share of the cost. You do not need to get a referral to see a specialist in-network.

You can also see an out-of-network provider — a doctor or hospital not in the plan's network — and the plan will still help pay, but you will pay more. Your coinsurance for out-of-network care is usually higher (for example, 40 percent instead of 20 percent), and you may have to pay the provider upfront and then file a claim to get reimbursed. Some plans require you to notify them before seeing an out-of-network provider, so check your plan documents.

The key difference from an HMO: in an HMO, out-of-network care is usually not covered at all unless it is an emergency. In a PPO, out-of-network care is always covered, just at a higher cost to you.

What Is Covered Under a Medicare PPO

All Medicare PPOs must cover the same core services that Original Medicare covers: hospital stays, doctor visits, lab tests, imaging, and emergency care. They also must include prescription drug coverage (Part D), which Original Medicare does not provide unless you add it separately.

Many PPOs also offer extra benefits that Original Medicare does not cover, such as dental care (cleanings, fillings, extractions), vision care (eye exams, glasses, contact lenses), hearing aids, fitness programs, and transportation to medical appointments. These extras vary widely by plan — some plans offer robust dental coverage, while others offer only a small annual allowance. Check the plan's benefit summary to see what is included.

PPOs do not cover long-term care (nursing homes or assisted living), custodial care, or most dental work beyond basic cleanings and extractions. They also do not cover services that Original Medicare does not cover, such as routine foot care or hearing exams.

How to Enroll in a Medicare PPO

You can join a Medicare PPO during the Annual Enrollment Period, which runs from October 15 to December 7 each year. Changes take effect on January 1. You can enroll online through Medicare.gov, by phone at 1-800-MEDICARE, or by mail using the enrollment form from your plan.

If you are new to Medicare (turning 65 or becoming may be able to access due to disability or end-stage renal disease), you have a seven-month window to join a PPO without penalty. If you miss this window and do not have other creditable coverage, you may pay a late enrollment penalty for as long as you have Medicare.

You can also switch to a PPO outside the Annual Enrollment Period if you have a may have access to life event, such as losing employer coverage, moving out of your plan's service area, or experiencing a major change in income. You have 60 days from the event to make a change.

PPO Versus HMO: When to Choose Each

The main trade-off is freedom versus cost. A PPO costs more in monthly premiums and out-of-pocket expenses but gives you the freedom to see any doctor without a referral and to switch doctors anytime. An HMO costs less but requires you to pick a primary care doctor, get referrals to see specialists, and use only in-network providers (except in emergencies).

Choose a PPO if you have doctors you want to keep seeing, you travel frequently, or you want the flexibility to see specialists without asking permission. Choose an HMO if you want lower monthly costs and do not mind having a primary care doctor coordinate your care.

Some people also choose Original Medicare plus a Medigap policy instead of a Medicare Advantage plan (PPO or HMO). Medigap covers some of the copays and coinsurance that Original Medicare does not, but it does not include prescription drug coverage or extra benefits like dental. Compare all three options during enrollment to see which fits your budget and health needs.

Common Mistakes to Avoid

Do not assume all PPOs in your area cost the same or cover the same doctors. Plans vary widely, and a doctor in-network with one plan may be out-of-network with another. Always check the plan's provider directory before enrolling to make sure your doctors are included.

Do not wait until December to compare plans. Plans change every year — premiums go up, benefits shrink, and networks change. Enroll during the Annual Enrollment Period (October 15 to December 7) so you have time to review your options and make a change if your current plan no longer fits your needs.

Do not forget to update your plan if you move, lose a doctor, or your health needs change. You can switch plans during the Annual Enrollment Period, and you may also be able to switch if you have a may have access to life event.

Frequently Asked Questions

Do I need a referral to see a specialist in a Medicare PPO?

No. Unlike an HMO, a Medicare PPO does not require a referral to see a specialist. You can call a specialist directly and make an appointment. However, if you want the specialist to be in-network (and thus cost you less), check the plan's provider directory first to confirm they are included.

What happens if I see a doctor who is out of network?

The plan will still help pay, but you will pay more. Your coinsurance for out-of-network care is usually higher than for in-network care. You may also have to pay the provider upfront and file a claim to get reimbursed. Some plans require advance notice before you see an out-of-network provider, so check your plan documents.

Can I change PPO plans during the year?

You can change plans during the Annual Enrollment Period (October 15 to December 7). Outside this window, you can switch only if you have a may have access to life event, such as moving, losing employer coverage, or a major change in income. You have 60 days from the event to make a change.

Does a Medicare PPO cover prescription drugs?

Yes. All Medicare PPOs must include prescription drug coverage (Part D). The drugs covered and the copays vary by plan. During enrollment, check the plan's formulary (the list of covered drugs) to make sure your medications are included and at an affordable cost.

What is the difference between a Medicare PPO and Original Medicare?

Original Medicare is run by the federal government and covers hospital and doctor services nationwide. A Medicare PPO is run by a private insurance company, covers the same services, but adds prescription drugs and extra benefits like dental. PPOs have networks and copays; Original Medicare does not. PPOs often cost more per month but may cost less overall if you use many services.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.