PPO vs Indemnity

Finding the right dental insurance plan to fit your budget and oral health care needs can be an arduous process. PPO and indemnity are two terms that often cause confusion when shopping for dental insurance. Knowing the difference can make an impact on your out-of-pocket costs and overall satisfaction with the coverage you choose.

Preferred provider organizations (PPOs)

A preferred provider organization, typically referred to as a PPO, offers a network of providers who provide services at a discounted rate. Consumers covered by PPOs are free to seek out-of-network services; however, they typically cost more.

Those covered by a PPO pay a fixed monthly premium, and the dental insurance carrier pays basic medical benefits. Such plans commonly include a deductible and sometimes consumers are require a copayment and/or coinsurance. Once care is received, the dentist will submit a bill to the carrier.

Indemnity plans

An indemnity plan allows consumers to receive services from any dental provider. There are no network provisions, and consumers are reimbursed for a specific amount of a service rendered, regardless of who provides it. For example, when someone covered by an indemnity plan receives a dental cleaning, his or her plan pays a flat amount for the service. Any charge above that amount is the consumer’s responsibility.

Indemnity plans can be more costly; however, these plans can be more flexible, especially for people living in rural areas or locations where a traditional PPO network is not as robust.

Deciphering the terminology and plan options will help secure your overall health care future. For a full health insurance terminology visit healthinsurance.org’s glossary page.