Many people have a PPO plan. year after year you get unexpected bills, because you do not understand how a PPO works. In this article we will explain, giving understandable examples as we go along.

Preferred Provider Organization or PPO is very popular these days. Many people prefer this insurance over and HMO. The reason being, that a PPO gives you freedom to pick any doctor you want. If you stay in network however, you get an added discounted cost.

Where many people get confused is with the deductible. Simply said, the deductible must be meet before the insurance company shares and expense. So if you have a $2000 deductible you will have to pay that out of your pocket.

Co insurance is what we are talking about when we say the insurance company will “share ” some expenses with you. Your co insurance may be 70/30, up to $2000. So you will pay 30% up to an additional $2000 out of your pocket.

So let’s say you go in the hospital and your bill comes out to be $32000. You will need to pay $5000 so your balance is now $27000. The insurance company now expects you to pay 30% up to the $2000 limit. Now they will pay the rest.

Ok so, your bill way $32000 and you had to pay $5000. That leaves $27000. Now you will pay 30%. That is $8100. But since you only have to pay 30% up to $2000. You only pay $2000 and the insurance company pays the remains balance.

Now if you go to the hospital again in that same year you will pay nothing. Your deductible has been satisfied and your co insurance has been meet for the year. Your total out of pocket of $7000 has been paid.

Hopefully by now you understand the most misunderstood aspect of health insurance PPO’s. You will never get another mystery bill in the mail from the hospital and have to call the insurance company asking why.