Health insurance companies offer two types of health insurance plans that enable a customer to seek out medical care. One is an HMO, or Health Maintenance Organization network, and the other is a PPO, or Preferred Provider Organization network. The PPO has more flexibility in that it allows the insured to use the health provider of his choice as opposed to only being able to use a doctor that is in an HMO network. Many individuals prefer to go with a PPO due to the ability to stay with a physician that he has been seeing for many years. However, a PPO network is structured in a way that means the patient potentially pays more out-of-pocket for his care than they would with a HMO network.

In general, a patient with a PPO can see any medical professional he chooses, no matter if that health provider is in the network or not. Utilizing a doctor that is outside of the network costs the patient more money in the form of reduced coverage. The trade-off is that the patient gets to see the doctor that he prefers and still have some of the bill covered by the health insurance plan. To some, this may be worth it in order to see a doctor that he is comfortable with.

The PPO consists of health providers, labs, care facilities and hospitals that enter into a contract with a health insurance company for services. All of the health service providers agree to take a set fee for the services they provide to the patient. In turn, health insurance plans in PPO networks have what is known as an 80/20 split, where the insurer pays 80 percent of the charges and the patient pays 20 percent of the charges. This translates into higher co-pays for the patient as well as having to pay more for treatments, hospital stays and labs. Coverage typically turns into 100 percent after the patient has met the deductible over the course of a year.

All PPO health insurance plans come with a deductible that has to be met before receiving 100 percent coverage on a majority of health services. The deductible can be met in different ways, such as having several expensive procedures done at once or a combination of co-pays and prescriptions in the case of a combined PPO and prescription plan. Meeting the deductible lasts for one calendar year and does not carry over into the next year.

A PPO costs more to the patient over time than an HMO, but the ability to see a preferred health provider minimizes cost for many. Read over the policy carefully to make sure costs are reasonable before signing.