PPOs are the most common employer-sponsored health insurance design in the US, covering roughly 47 percent of workers with employer health benefits per the Kaiser Family Foundation's latest employer health benefits survey. The appeal is straightforward: members get strong negotiated rates with a wide network of doctors and hospitals, no referral required to see a specialist, and the option to see out-of-network providers at a higher cost. The tradeoff is premium. PPO plans cost employees and employers more per month than HMO or EPO equivalents, and the cost gap has widened as healthcare prices have continued rising faster than wages.
How a PPO Plan Actually Works A PPO contracts with a network of providers (doctors, hospitals, labs, imaging centers, and specialty clinics) at negotiated rates. Members pay lower out-of-pocket costs when they see in-network providers and higher costs out of network. There's no requirement to designate a primary care physician, and no referral is required to see a specialist.
The cost-sharing structure usually includes a deductible (the amount the member pays before insurance starts contributing), a copayment for routine visits, coinsurance (a percentage of cost the member pays after the deductible), and an out-of-pocket maximum that caps annual member spending for in-network care. Out-of-network care typically has a higher deductible and higher coinsurance, often capped at a separate, higher out-of-pocket maximum.
PPO vs HMO vs EPO: Where Each Plan Wins HMO plans require members to choose a primary care physician and get referrals before seeing specialists. They almost always cost less in monthly premium but provide no out-of-network coverage except for emergencies. EPO plans (Exclusive Provider Organizations) sit between PPOs and HMOs: no referrals required, but no out-of-network coverage. PPOs offer the most flexibility at the highest cost.
For employees who travel frequently, have established relationships with specific specialists, or live with chronic conditions requiring multiple specialists, PPO flexibility usually justifies the cost. For employees in geographies where the HMO network covers their preferred providers, the savings can be substantial.
What's the Difference Between a PPO and a POS Plan? A POS (Point of Service) plan combines features of HMO and PPO designs. POS members designate a primary care physician (like an HMO) and need referrals to see specialists, but can see out-of-network providers at higher cost (like a PPO). POS plans are less common in the employer market than they used to be, but they remain a middle option for employers seeking lower premiums than a PPO with more flexibility than an HMO.
What a PPO Costs Employees and Employers The 2025 average annual premium for employer-sponsored PPO family coverage was around $26,000 per the Kaiser Family Foundation's annual employer health benefits survey, with employers covering roughly 71 percent and employees covering the remaining 29 percent through paycheck deductions. PPO single coverage averaged about $9,000 annually. Premiums are typically the highest of any common plan structure.
Cost-sharing has shifted in PPOs over the past decade. Median PPO deductibles for single coverage exceeded $1,800 in 2024, up from under $1,000 a decade earlier. Higher deductibles and tighter networks are the main mechanisms employers have used to keep PPO premium growth in check.
Picking the Right Preferred Provider Organization for Your Benefits Lineup For benefits leaders, the PPO decision is rarely about whether to offer one but about how to structure the broader plan menu. Most employers offer at least one PPO option in their lineup, often paired with an HMO or HDHP alternative tied to a cafeteria plan . The PPO usually carries the highest premium share for employees, with employer contribution structured to nudge employees toward the lower-cost options when their healthcare needs allow.
Network adequacy is the make-or-break factor. A PPO with a thin network in your employee population's geography won't deliver on its core promise. Most carriers publish network adequacy data and provider directories employees can search before enrollment. Pair the PPO with an HSA-eligible high-deductible plan and a strong open enrollment communication program, and the benefits team gives employees genuine choice rather than a single high-cost default. The federal government's plan comparison tool at healthcare.gov covers PPO design for the individual market, and CMS publishes network adequacy rules that influence employer carrier selection.
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