PPO vs. POS Health Insurance

by Amanda Banach
Evaluate the differences in coverage and out-of-pocket expenses when comparing insurance plans.

When it comes to health insurance, not all plans are created equally. Before you complete the enrollment process take time to do a side-by-side comparison of what each plan has to offer. Instead of simply opting for the plan that offers the cheapest premium, take some time to compare the benefits and drawbacks associated with PPO and POS plans to make sure you are selecting the option that is most suitable for your medical needs.

PPO Pros

A PPO, or preferred provider organization, is a health insurance plan that allows subscribers to seek medical treatment from any physician of their choosing. Individuals who participate in this type of plan, however, are encouraged to visit in-network providers as this results in lower rates and, therefore, less out-of-pocket expenses. The main advantage of using a PPO is the flexibility offered by not requiring a designated primary care physician to be selected or referrals to see specialists. Also, PPO plans generally designate a maximum dollar amount of out-of-pocket expenses each subscriber is responsible for each year, which is a huge advantage in the event that an unexpected or costly medical treatment is required.

PPO Cons

On the other hand, PPOs tend to come with higher premiums and co-payments than most other insurance plans and while covered individuals have the freedom to seek medical services from out-of-network providers, this typically results in less than favorable rates and higher out-of-pocket expenses. Although these plans do limit out-of-pocket expenses, they also require subscribers to satisfy their annual deductible before insurance coverage kicks in. For example, a patient with a $500 deductible who is receiving a $600 medical treatment would be responsible for paying $500 of the total bill.

POS Pros

A POS, or point of service plan, is essentially a hybrid of an HMO, or health management organization, and PPO offering the freedom to visit out-of-network physicians but also requiring that a primary care physician be designated. One advantage offered by a POS plan is that premiums and co-pays are typically less than those associated with PPO plans. These plans do not have annual deductible requirements for services received from in-network providers.

POS Cons

While POS plans allow individuals to visit out-of-network providers, this typically results in costly out-of-pocket expenses averaging between 30 and 40 percent of the bill. Also, subscribers who want to seek services from a specialist such as a dermatologist or allergist must obtain a referral from their primary care physician before doing so. Failure to do so may result in the service either not being covered or being only partially covered by your insurance.

About the Author

Based in Virginia, Amanda Banach has been a writer since 2009. Her professional work experience includes roles in media advertising, financial services and human resources. She holds a Bachelor of Arts in human resources management and is PHR-certified.

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