How a Point-of-Service Plan (POS) Works

A POS plan is a type of health insurance that offers lower-priced treatment options when you work with pre-selected doctors, hospitals, and other health care providers. This works just like a preferred provider organization plan (PPO), where in-network providers offer services at a discounted rate.

The difference is that a POS plan requires you to select a primary care physician like you would with a health maintenance organization (HMO) plan. You can choose your preferred provider from the list of participating doctors, who will also be responsible for giving you a referral when you need a specialist.

However, you’re not limited to working only with your preferred provider. Just like an HMO plan, a POS plan lets you seek care from out-of-network providers, but your discounts and benefits are reduced. This is because in-network providers offer discounted treatment as part of the agreement, while external doctors charge their regular fees.1

Pros and Cons of a Point-of-Service Plan

Pros Explained

• Lower in-network prices: A POS plan gives you cheaper treatment options when you work with in-network providers. This is highly beneficial if you don’t need to see a wide range of doctors.
• Out-of-network coverage: One of the biggest advantages of using a POS plan is that you get coverage for out-of-network providers, even if it’s at a reduced discount. Many other plans, such as HMOs, don’t offer coverage if you seek treatment from non-participating doctors and hospitals.1
• Coverage for emergency care: Another major advantage of using a POS plan is that you get complete coverage for any emergency care you seek, even if you use out-of-network providers.
• No in-network deductible: Most POS plans don’t have a deductible for in-network treatment, so your plan coverage begins from the first visit.

Cons Explained

• Need a primary care physician: POS plans require you to choose a primary care physician from a list of participating doctors. This doctor will give you a referral if you need to see a specialist. If you visit an out-of-network provider without this referral, you may have to bear more of the treatment costs out-of-pocket.
• Higher premiums: POS plans aren’t the cheapest insurance options on the market. The premiums for POS plans are cheaper than PPO plans, but are higher than HMO plans.
• Complicated paperwork: POS plans require you to manage all the paperwork yourself. Moreover, you need to request a referral for seeing a specialist and claim reimbursement after seeing out-of-network providers, which adds several extra steps to an already-complicated process.
• Out-of-network deductible: While POS plans offer some coverage for seeing out-of-network providers, you do have to meet a deductible before the benefits kick in.

Alternatives to a Point-of-Service Plan (POS)

If you feel the POS plan isn’t the best option for you, you can consider alternatives such as PPO, HMO, and EPO plans.

• Preferred provider organization (PPO): PPO plans are similar to POS plans, offering out-of-network care at an added cost. The downside is that PPOs often have higher premiums owing to their broader network of health care providers.
• Health maintenance organization (HMO): Like POS plans, HMOs require a primary care physician to give referrals. However, HMOs don't cover out-of-network treatment.
• Exclusive provider organization (EPO): EPOs work with an exclusive network of providers that you must use to claim benefits. Unlike POS and HMO plans, you don’t need to choose a primary care physician. However, like HMOs, EPO plans don’t cover out-of-network treatment.

Frequently Asked Questions (FAQs)