Health Insurance

What is POS Insurance?

Point-of-service (POS) health insurance plans are less common than HMO or PPO plans, but offer advantages such as the ability to go out-of-network for care while still keeping costs relatively low.

What is POS Insurance

A point-of-service (POS) health insurance plan combines elements of health maintenance organization (HMO) plans and preferred provider organization (PPO) plans. The result is a plan with more flexibility than an HMO, but lower costs than a PPO. Here’s a look at how PPOs work, what sets them apart from other plans, and what to look for if you’re considering POS insurance.

Understanding the Point-of-Service (POS) Plan

FeaturePOSPPOHMOEPO
Primary care physicianYesNoYesNo
Out-of-network careYes, with limitationsYes, partially coveredNoMedical emergencies only
Pre-approval for medical servicesYesYesYesYes

POS plans occupy the space between HMO and PPO plans. Unlike an HMO, patients can go outside their healthcare network for care and have part of the cost covered — though like PPOs, POS plans have restrictions and limitations on how reimbursement may work for non-network care. Unlike a PPO, meanwhile, patients have primary care physicians (PCPs) in a POS. Point-of-service plans also stand out because deductibles for these plans are less common, meaning patients may be able to access care without paying a specific amount upfront. 

The POS Health Insurance Network

Health insurance plans rely on provider networks. These networks may include PCPs, specialists, and outpatient care providers. Insurance companies establish these networks by negotiating agreements with providers, which allows policyholders to access care services at a lower cost. The tradeoff for this potentially lower cost is if patients go outside the health network, the insurance company may not cover any of the services provided.

For example, policyholders covered under an POS must select a PCP from within the POS’s healthcare network and obtain a referral from their primary care physician if they’re looking for specialist care. Without this referral, the costs of a specialist visit may not be covered.

Do You Need a Primary Care Physician In a POS?

POS health insurance plans require policyholders to select a PCP who provides both an initial point of contact for healthcare concerns and can provide specialist referrals.

A primary care physician — also called a primary care provider — is a healthcare provider who handles common medical issues. While a PCP may be a doctor such as a family practitioner, pediatrician, or geriatrician, other professionals such as obstetricians, nurse practitioners (NPs), and physician assistants (PAs) can also serve this role if permitted by the insurance company.

Can You Get Out-of-Network Care In a POS?

Much like PPO plans, most POS plans allow you to access out-of-network care, but come with additional costs depending on your plan details. 

Out-of-network care refers to any care obtained from healthcare providers outside the insurance company’s health network. For example, if you choose to see a specialist that is not on your insurance company’s list of approved providers, any service obtained is considered out-of-network.

Out-of-network care often come with additional costs. In some cases, insurance companies may pay only a portion of what they would ordinarily cover for in-network care, or they may cover none of this cost at all.

Some POS plans also have higher coinsurance or copayment fees for out-of-network care. For example, your coinsurance for in-network providers might be 20%, where you pay 20% of the cost and the insurer would cover the remaining 80%. For out-of-network care, though, your coinsurance rate could be higher.

Do You Need Pre-approval for Procedures In a POS?

POS plans typically require pre-approvals for procedures such as genetic testing, mental health visits, or major surgeries. Regular doctor visits, physical therapy, or laboratory services, meanwhile, may not require pre-certification. 

Pre-approval, also called pre-certification or pre-authorization, occurs when healthcare providers recommend a course of treatment and insurers assess the treatment to determine if it is medically necessary and falls within the guidelines of the patient’s insurance policy.

For example, if your doctor recommends the use of a specific medication, you may need pre-approval for coverage of the medication. The pre-approval process typically involves doctors submitting documentation about the recommended treatment to your insurance company, which then assesses the potential cost, risk, and impact of the treatment. If the treatment is not approved, your insurance company may not cover some (or any) of the cost.

What Are the Costs of a POS?

  • Premium: Premiums are the amount you pay every month for health insurance to keep your coverage active. In general, POS plans fall between HMOs and PPOs when it comes to premium costs. You pay a premium each month regardless of whether or not you access healthcare services.
  • Deductible: This cost is less common in POS health plans compared to PPOs and HMOs. A deductible is the amount you pay before your insurance plan begins covering healthcare costs. For example, if you have a $2,000 deductible, you’re responsible for covering the first $2,000 worth of services each year. Once your deductible is paid, your insurer would begin paying for your covered benefits.
  • Copayments: Copayments refer to upfront flat fees for service. For example, you might have a copayment of $10 for a PCP visit, which you would pay every time you went to see your PCP for an appointment. This generally does not count towards your plan’s annual deductible.
  • Coinsurance: Coinsurance refers to the percentage amounts covered by you and your insurer for healthcare. For example, if your coinsurance rate is 20%, then you would pay for 20% of the cost of a covered service, and your insurer would cover the remaining 80%.
  • Out-of-pocket maximum: Many health insurance plans have an annual out-of-pocket maximum for covered services, which is a limit to how much you would be expected to pay each policy term after your deductible has been met. For example, if your out-of-pocket maximum is $3,500, your insurer would cover all costs completely after you have paid that amount.

Advantages of POS Insurance

POSs occupy the middle ground between HMO and PPO plans. As a result, they offer advantages such as:

  • Lower costs from in-network providers, while still maintaining the ability to go outside of your network. Like with other health plans, if you use in-network providers, your insurance company typically covers the bulk of the cost. However, POS plans permit the use of out-of-network services and specialists, and will still cover some of the cost.
  • Typically, POS plans do not have a deductible. As long as you stick with your network’s providers, many POS plans do not require you to pay for covered services out of pocket before your insurance kicks in.

Disadvantages of POS Insurance

Depending on what you want from your healthcare plan, a POS may be of limited use. Potential disadvantages of POS insurance include:

  • Specialist visits require referral. Specialist visits require a referral from your PCP, and some services require pre-approval, which could take several weeks. 
  • Out-of-network paperwork is your responsibility. For care received out-of-network, all paperwork, receipts, and bill payments are the responsibility of the policyholder. POS policyholders would need to submit a claim to their insurer for out-of-network coverage.

POS vs. Other Health Plan Types

In addition to POS plans, other common types of health insurance include PPOs, HMOs, and exclusive provider organizations (EPOs). Each comes with its own benefits and drawbacks. Depending on your healthcare history, current health, and overall financial situation, you may find that one type of plan offers a better mix of affordability and coverage.

POS vs. PPOs

Preferred provider organizations differ from POS plans because there is generally no requirement to select a PCP. In addition, specialist care can usually be obtained without the need for a referral, in turn providing greater flexibility than other plans. However, this flexibility comes with a cost: PPOs are generally more expensive than their POS counterparts. POS plans may also require you to file your own paperwork for compensation after paying for out-of-network healthcare services, while PPO plans typically take care of this step automatically.

If your priority is the flexibility of care and a larger healthcare network, and you can afford both a deductible and a higher monthly premium, a PPO plan may make sense. But those looking for the ability to go out of network on rare occasions, but prefer lower costs and no deductible may find a POS plan a better fit. 

POS vs. HMOs

HMOs are often described as budget-friendly because they come with lower deductibles than PPOs and lower premiums than POS and PPO plans. Policyholders in an HMO select a PCP who is the primary point of contact for all medical care. This means that along with regular checkups, HMO PCPs are responsible for submitting specialist visit requests for approval by your insurance company. HMO plans may not offer any coverage for out-of-network services.

PPOs, meanwhile, allow you to access out-of-network coverage —  albeit at an extra cost — and may not come with a deductible, meaning your insurance can kick in right away for covered services.

Those without significant health concerns or recurring medical needs may find an HMO plan a good choice to keep costs down. However, if your health needs are more varied or require specialist care, it may be worth investing in a POS plan to access out-of-network coverage as needed.

POS vs. EPOs

Exclusive provider organizations are generally less expensive than PPO and POS plans, but may be more costly than HMOs. What sets these plans apart is their large in-network provider base; often, EPOs have networks that span multiple states or the entire country, making it easier to access in-network care. The tradeoff for this larger network is that out-of-network care is typically only authorized in case of emergencies. 

An EPO may make sense if you travel often and prefer to use in-network care wherever you go, while a POS may be a good fit if you occasionally need out-of-network care, but typically stay closer to home.

What to Consider When Buying a POS Plan

If you’re considering a POS health insurance plan, there are several questions worth considering before signing on the dotted line, including:

  • Is there a deductible?
  • What are your monthly premiums?
  • What is your copayment?
  • What is the coinsurance split? 

Also consider your need for out-of-network coverage. If you choose to see an out-of-network provider, find out how much of the cost is covered by your insurance company and what paperwork you need to file to be covered for your visit.

Procedures that require pre-approval should also be factored in. Depending on how restrictive or permissive the plan is with these approvals, it may be worth signing up or opting for another insurer.

Finally, consider the physicians, specialists, and facilities within the plan’s network to ensure it includes your preferred providers and services.