Medicare · Supporting
Medicare PPO plans: how they work and what they cost
Last reviewed July 31, 20264 min readBy the Goodsurance editorial team Reviewed by the Goodsurance editorial team
A Medicare PPO (Preferred Provider Organization) is a type of Medicare Advantage plan, sometimes called Part C. Medicare Advantage plans are offered by private insurers approved by the Centers for Medicare and Medicaid Services (CMS) and must cover everything Original Medicare covers. A PPO adds a layer of flexibility on top of that baseline: you can see any provider who accepts Medicare without needing a primary care physician's referral, and you can go outside the plan's preferred network, though you will pay more when you do.
What a Medicare PPO is
PPOs sit alongside HMOs (Health Maintenance Organizations) and other plan types within Medicare Advantage. The defining difference is the network rule. An HMO generally requires you to stay in network except for emergencies; a PPO does not.
In-network vs. out-of-network costs
Every PPO has two cost tiers: in-network and out-of-network. Providers in the preferred network have contracted rates with the plan, so your copays and coinsurance are lower there. Providers outside the network still accept Medicare's fee schedule, but the plan covers a smaller share, leaving you with a higher cost for the same visit.
This two-tier structure also affects your out-of-pocket maximum (MOOP), which is the most you can spend on covered services in a calendar year before the plan pays 100%. In 2026, the federal in-network MOOP cap for Medicare Advantage is $9,250; plans may set lower limits. For combined in-network plus out-of-network spending, the 2026 cap is $13,900. According to KFF, the 2026 enrollment-weighted average in-network MOOP is $5,421, meaning many people are enrolled in plans with limits below the federal ceiling.
Once you hit your MOOP, covered services cost you nothing for the rest of the year. Out-of-pocket maximums do not exist in Original Medicare, which is one reason some people find Advantage plans appealing.
Prior authorization in PPO plans
Because PPOs allow out-of-network care, they rely on prior authorization (PA) for certain services to manage costs. Prior authorization is a requirement that the plan approve a service before you receive it. Under CMS rule CMS-0057-F, which took effect January 1, 2026, standard PA decisions must come within 7 calendar days. Expedited PA decisions, for cases where waiting could seriously harm you, must come within 72 hours, and any denial must include a specific reason you can act on.
Understanding the PA requirements for a plan you are considering is important, especially if you have predictable specialist needs or anticipate procedures. To find out more about coverage details for specific plans, please contact us to discuss plan options.
What PPOs do not cover
A PPO's flexibility does not extend to everything. Dental, vision, and hearing benefits vary by plan and are not standardized. Fitness perks such as gym memberships vary by plan and carrier and are never universal. Long-term custodial care is not a Medicare benefit at all, PPO or otherwise.
You also still pay the standard Part B premium. In 2026, the standard Part B premium is $202.90 per month, and the annual Part B deductible is $283. Both apply whether you are in Original Medicare or any Medicare Advantage plan, including a PPO.
If your income is above $109,000 (single) or $218,000 (joint) based on your 2024 tax return, you pay an Income-Related Monthly Adjustment Amount (IRMAA) on top of the standard Part B premium. IRMAA uses a two-year lookback and a cliff structure: one dollar over a threshold moves you to the full next tier. It also applies a parallel surcharge to your Part D (prescription drug) premium. The full IRMAA bracket table is shown below.
Is a PPO right for you
A PPO tends to suit people who want flexibility over cost predictability. If you travel frequently, split time between two states, or have established relationships with specialists you are unwilling to leave, a PPO lets you keep those relationships without losing all Advantage coverage. You pay more for out-of-network visits, but you are not locked out.
An HMO may cost less overall if you are comfortable staying in a defined network and want lower copays. Original Medicare plus a Medigap (Medicare Supplement) policy is another path: it covers providers nationwide with predictable cost-sharing, though in 2026 the high-deductible threshold for Medigap Plans G, F, and J is $2,950, and Medigap premiums add to your monthly costs.
No single structure is best for everyone. The right choice depends on your providers, your prescriptions, how often you travel, and your budget. Availability of specific PPO plans is market-dependent; not every county has the same options. To find out more about what is available where you live, please contact us to discuss plan options.
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References
- Medicare & You 2026CMS's official handbook; covers Medicare Advantage PPO structure and out-of-network access.
- Medicare Advantage plan types (medicare.gov)How PPO in- and out-of-network tiers and referral-free specialist access work.
- KFF Medicare Advantage 2026 dataSource for in-network and combined MOOP caps and PPO premium trends.