When seeking to obtain a health insurance quote, a consumer can be confronted with a number of different options. On one end of the spectrum is the Health Maintenance Organization, also known as an HMO. On the opposite end is the conventional fee for service plan, also referred to as an indemnity insurance plan. While HMOs typically offer the lowest cost, they are widely considered to be the most restrictive with regards to their network of acceptable health care providers. Conversely, fee for service plans can be one of the more expensive options, but in turn they can provide greater freedom when it comes to choosing a health care provider. Somewhere along this spectrum, between the HMOs and indemnity insurance plans, is the Preferred Provider Organization, or PPO plan.

A PPO is a health insurance plan that relies on a network of cooperating doctors, hospitals, labs and other health service providers. This network has an agreement to provide discounted health care costs to PPO members. The participating providers, while not receiving the standard amount of payment per service, benefit by having a steady stream of patients. The PPO member benefits by paying considerably less for any heath care services that they receive from the list of preferred providers.

Consumers enrolled in a Preferred Provider Organization plan are charged for their health care services by paying monthly premiums, annual deductibles, and per visit co-payments. First, members of a PPO are required to pay an agreed upon monthly premium, which can vary among individual plans. In addition, a PPO plan normally includes an annual deductible, which can be viewed as the amount of money a given member will be responsible for paying out of his pocket before receiving coverage benefits offered by the PPO. Also, whenever a member attends a medical appointment, he will be liable for providing the physician's office with a co-payment. Co-payments usually range from $10 to $30 and count against the annual deductible. In other words, if the annual deductible was $1,200 and the patient paid $300 worth of co-payments, the amount of deductible due would be reduced to $900.

Flexibility is offered by PPOs by their allowing the patient to choose from outside the preferred network of providers. However, if a patient chooses to do so, he should also expect to pay a higher percentage of the cost. For example, a PPO plan may cover up to 70% of a medical procedure from a preferred provider, but only 30% of the cost from a provider from out of the network. The relative low cost, coupled with the flexibility offered, has resulted in PPOs becoming one of the most popular considerations for those seeking a health insurance quote.