What is POS health insurance?

Insights:

A point of service (POS) health insurance plan combines aspects of preferred provider organization (PPO) and health maintenance organization (HMO) plans.

A point of service plan health plan (POS) is a hybrid between preferred provider organization (PPO) and health maintenance organization (HMO) plans. 

POS plans were more common previously, but now only about 8% of covered employees are enrolled in POS plans, according to the Kaiser Family Foundation.

“POS plans used to be more popular in the 1990s and early 2000s,” says Mark Hope, senior director, health & benefits consulting at Willis Towers Watson. “They were phased out in favor of PPO and high-deductible health plans.” 

Here’s what you need to know if your employer offers a POS plan as one of its options.

How does a point of service (POS) plan work?

A POS plan is a managed care health insurance plan with a network of health care providers. Like a PPO, you can see providers outside of the plan’s network, but you have higher copayments or other out-of-pocket costs. 

Like an HMO, you may need to get a referral from your primary care provider (PCP) for specialist and hospital visits.

“The main difference between a PPO and a POS is the network. POS plans historically had a network that most closely resembled an HMO, meaning that the number of providers and hospitals might be a bit narrower than a PPO network,” says Hope. “I would say that the POS was a bit of an evolution from the HMO world to the PPO world.”

How do plan costs compare? The employee pays on average $1,419 for single POS coverage annually, which is compared to $1,212 for HMO single coverage and $1,335 for PPO single coverage, according to the Kaiser Family Foundation. 

The higher costs is one reason that members choose PPOs and HMOs more than POS plans. In 2020, 31% of the employers surveyed by the Kaiser Family Foundation offered POS plans, compared to 11% for HMOs, 56% for PPOs and 26% for high-deductible health plans. But few people chose the POS plans.

The 2020 market share for all covered employees was 8% for POS plans, 12% for HMOs, 31% for high-deductible health plans, and 47% chose PPOs. POS plans are more common in small firms than large firms — with 17% of the market share at small firms and 5% at large firms.

Key Takeaways

• POS health plans allow members to get care outside of their network of providers, but you have to pay more for out-of-network medical care.
• The health insurance plans require that you have a primary care physician who helps coordinate your care.
• POS plan members need referrals from their primary care provider to see specialists.
• These plans aren’t nearly as common as PPOs and HMOs.

Pros and cons of POS insurance

POS insurance has some of the flexibility of a PPO but also some of the restrictions of an HMO. With a POS plan, you can use both in-network and out-of-network providers. You have higher cost-sharing if you go to out-of-network providers, but you still have coverage, similar to a PPO. 

You pay the lower copayments if you use providers that are in the plan’s network, but you also have coverage for out-of-network providers. You just have to pay higher copayments to see them. 

However, you may need to get a referral from your primary care provider before you can see a specialist or go to the hospital.

“POS plans were an evolution from HMO on the way to the PPO,” says Hope. “As such, they are rarer these days, and we would not expect to see many, if any new POS plans offered in the future.”

Premiums for POS plans tend to be higher than HMOs and lower than PPOs.

Unlike a PPO, you generally have a primary care provider who coordinates your care. The provider often serves as a gatekeeper before you can see a specialist. POS plans generally have lower premiums than PPOs.

Here are the pros and cons of a POS plan:

Pros

• Members can get out-of-network care
• Primary care provider coordinates care

Cons

• Higher premiums that other plans
• Need a referral to see a specialist

POS vs. PPO

Like a PPO, you will pay less if you go to providers who are in the plan’s network. You can also go to out-of-network providers, but the copayments will be higher. 

However, you don’t have as much flexibility to choose the providers you want to see. Unlike a PPO, your plan may require you to get a referral from your primary care doctor in order to see a specialist. The employee’s share of premiums for POS plans tend to be higher than PPOs and PPOs are much more commonly offered by employers.

Claims for POS plans are handled in a similar manner as PPO plans, says Hope. For in-network providers, the claim is generally handled by the provider and sent directly to the insurance company. But you generally need to file the claims for out-of-network providers.

What is better — an HMO, POS or PPO?

It depends on what you want from your health plan in terms of network, premiums, flexibility, and coverage.

“The main choice would be the network,” says Hope. “Individuals should always research if their providers are in the network.” 

Before choosing a plan, make a list of the doctors that are important for your family — whether it’s a particular cardiologist, pediatrician, ob-gyn, dermatologist or others. Then, find out which plan networks they participate in when comparing your plan options during open enrollment. If they aren’t included in the plan’s network, find out how much you’d have to pay to continue to see them.

Also, see what hospitals are in the plan’s network. 

“Nearby hospitals should also be a consideration if you have an ongoing health condition that requires treatment or surgery,” says Hope. “Other considerations include treatment away from home (for example, for a college student) and the availability of network providers in those areas.”

If your doctors are all in the plan’s network, or you don’t mind choosing some new doctors, you may want to save money in premiums with an HMO. If you don’t mind having a primary care physician coordinate your care and control referrals to specialists, you may be interested in an HMO or a POS plan. If you don’t mind paying more for the ability to use doctors and facilities that aren’t in the plan’s network, you may want a POS or a PPO plan.

Estimate how much you’ll pay in premiums plus copayments and other out-of-pocket costs for the health care you typically use for the year, and how much you may have to pay if you have a major medical condition under each of the plans you’re considering. 

Find out what the plan’s maximum out-of-pocket spending limit is for the year (which includes copayments and deductibles but not premiums). Your employer may have tools to help with these calculations for each of the plans offered. 

“Individuals can model various scenarios based on known health needs and potential ‘what-if’ scenarios,” says Hope. “Your optimal choice might not always be the most obvious one. So, it’s important to take a fresh look at the models each year to find the right balance of cost and choice.”

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