Point-of-Service (POS) Plan: Definition, Pros & Cons, Vs. HMO 

What Is a Point-of-Service (POS) Plan?

A point-of-service (POS) plan is a type of managed-care health insurance plan that provides different benefits depending on whether the policyholder uses in-network or out-of-network healthcare providers.

A POS plan combines features of the two most common health insurance plans: the health maintenance organization (HMO) and the preferred provider organization (PPO). POS plans represent a small share of the health insurance market. Most policyholders have either HMO or PPO plans.

How a Point-of-Service (POS) Works

A POS plan is similar to an HMO. It requires the policyholder to choose an in-network primary care doctor and obtain referrals from that doctor if they want the policy to cover a specialist’s services. And a POS plan is like a PPO in that it still provides coverage for out-of-network services, but the policyholder will have to pay more than if they used in-network services.

However, the POS plan will pay more toward an out-of-network service if the primary care physician makes a referral than if the policyholder goes outside the network without a referral. The premiums for a POS plan fall between the lower premiums offered by an HMO and the higher premiums of a PPO.

POS plans require the policyholder to make co-payments, but in-network co-payments are often just $10 to $25 per appointment. POS plans also do not have deductibles for in-network services, which is a significant advantage over PPOs.

POS plans offer nationwide coverage, which benefits patients who travel frequently. A disadvantage is that out-of-network deductibles tend to be high for POS plans. When a deductible is high, it means that patients who use out-of-network services will pay the full cost of care until they reach the plan’s deductible. A patient who never uses a POS plan’s out-of-network services probably would be better off with an HMO because of its lower premiums.

Disadvantages of POS Plans

Though POS plans combine the best features of HMOs and PPOs, they hold a relatively small market share. One reason may be that POS plans are marketed less aggressively than other plans. Pricing also might be an issue. Though POS plans can be up to 50% cheaper than PPO plans, premiums can cost as much as 50% more than for HMO premiums.

While POS plans are cheaper than PPO plans, plan details can be challenging, the policies can be confusing, and many consumers don’t understand how the associated costs work. Read the plan documents especially carefully—and compare them to other choices—before deciding whether this is the best option.

Special Considerations

A point-of-service (POS) plan is a type of health insurance plan that provides different benefits depending on whether the policyholder visits in-network or out-of-network healthcare providers.

POS plans generally offer lower costs than other types of plans, but they may also have a much more limited set of providers. It is possible to see out-of-network providers with a POS plan, but costs may be higher and the policyholder is responsible for filling out all the paperwork for the visit. Though POS plans can be up to 50% cheaper than preferred provider organization (PPO) plans, premiums can cost as much as 50% more than health maintenance organization (HMO) premiums.

In some ways, POS plans combine the best features of HMO and PPO plans, but you will need to check whether this type of plan works for you.