A point-of-service plan (POS) is a form of managed-care health insurance plan that offers different benefits depending on whether the policyholder uses in-network or out-of-network healthcare providers. A POS combines the qualities of the two most popular forms of health insurance plans, the health maintenance organization (HMO), and the preferred provider organization (PPO). Point-of-service coverages only represent a small share of the health insurance market; most policyholders have either HMO or PPO insurance.
A POS combines the qualities of the health maintenance organization and the preferred provider organization.
How Point of Service Insurance Plans Work
POS plans combine the qualities of both HMO and PPO plans. Like an HMO plan, you may be necessitated to designate a primary care doctor who will then make referrals to network specialists when needed. Depending upon the plan, services offered by your PCP usually are not subject to a deductible, and preventive care benefits are typically included. Like a PPO plan, you may receive care from non-network providers but with more significant out-of-pocket expenses. You may also be in charge of co-payments, coinsurance, and an annual deductible.
A POS plan may be right for you if:
- You are willing to play by the rules and probably coordinate your care through a primary care physician
- Your favorite physician already participates in the network
POS health insurance plans provide nationwide coverage, which benefits patients who travel often.
Nevertheless, the POS plan will pay more toward an out-of-network service if the primary care physician refers to it than if the policyholder goes outside the network without a referral. The premiums for a POS plan lie in between the lower premiums offered by an HMO and the higher premiums of a preferred provider carrier.
POS plans necessitate the policyholder to make co-payments, but in-network co-payments are typical $10 to $25 per appointment. POS plans also do not have deductibles for in-network services, which is a significant benefit over PPOs.
POS plans provide nationwide coverage, which benefits patients who travel often. A drawback is that out-of-network deductibles tend to be high for POS plans. When a deductible is high, it means people who utilize out-of-network services will pay the full expense of care out of pocket until they reach the plan’s deductible. A patient who never uses a POS plan’s out-of-network services would possibly be better off with an HMO due to its lower premiums.
Shortcomings of Point-of-Service Plans
Though POS plans combine the best features of HMOs and PPOs, they hold only a moderately small market share. One reason may be that POS plans are marketed less aggressively as compared to other plans. Additionally, pricing might be an issue. Though POS plans can be up to 50% affordable than PPOs, premiums can cost as much as 50% more than for HMOs.
Besides, POS plans can be up to 50% cheaper than PPOs. Nevertheless, POS plan details can be challenging, the plans can be confusing, and many customers don’t understand how the associated costs work. Read the plan documents particularly carefully—and compare them to other options—before deciding this is the best choice.
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