How to Compare PPO & High-Deductible Insurance Plans

Know your terms before you begin. Three terms are in most insurance policies: deductible, co-insurance and stop-loss. Stop-loss is the maximum amount of money you have to pay for allowable medical expenses. Not all expenses fall into this category, regardless of the insurance plan.

Pay everything until you pay the deductible in your insurance plan. Both PPO's and high deductible plans have deductibles. The amounts for these vary according to your selection. The higher the deductible, the lower the premium is for that type of plan. Both plans also contain a co-insurance clause in them. In the PPO, if you go to a physician or hospital not in the network, you may not pay a higher co-pay, but the insurance company might not pay as large a percentage of the bill.

Understand what a PPO plan is. The letters PPO stand for Preferred Provider Organization. The doctors, hospitals and other health care providers make a deal with the insurance company to give the company a break on their prices.

Check out your high deductible insurance plan. The reason the cost is lower for these plans is that they don't have to pay smaller claims. With a high deductible, most people don't reach the deductible amount, so the money they receive only offsets bigger claims, something they'd have to do regardless of the deductible.

With a high-deductible plan, select any doctor you choose. The biggest difference between PPO plans and high deductible, besides the out of pocket expense upfront, is the selection of doctors. PPO plans use only their network of doctors for full credit, and pay less if you use a physician, hospital or provider not in their network. If you find a plan that only has a small network of providers in your area, you might consider going to the high deductible, since the insurance company pays a smaller percentage for out of network providers.

Look at your past history of illness. If you aren't ill very often, consider going with a high deductible. You can start a health savings account with many of them and put those extra dollars into a tax-sheltered account; you can then remove it tax-free if you use it to pay medical or dental expenses. As the account grows, raise your deductible and lower the premium.

Consider a PPO if you don't have a physician, normally see a doctor several times during the year or don't feel comfortable with the concept of paying a large expense out of pocket. You need to weigh the freedom of the high deductible with the smaller amount of bills you're responsible for in the PPO. Neither plan is better; the best plan is the one that fits your needs.