Point-of-service plan (POS)

Point-of-service plan, or POS, is an insurance term it pays to understand. Bankrate explains it.

What is a point-of-service plan?

A point-of-service plan is a health insurance plan for which policyholders pay less when they seek medical attention from health care providers who belong to the plan’s network. POS plans make up a small fraction of the health insurance market, with a majority of people covered by either HMO (health maintenance organization) or PPO (preferred provider organization) insurance plans.

Deeper definition

A POS plan combines the traits of both a PPO and an HMO. Its built on a managed care foundation in which customers enjoy lower medical expenses in exchange for a more limited choice of health care providers.

A POS plan is similar to an HMO in that it requires policyholders to choose primary care doctors from within the plan’s network and obtain referrals from those doctors to cover the services of different specialists.

The similarity between a POS and a PPO is that out-of-network services are covered, but policyholders pay more for them. The POS plan, however, pays more toward out-of-network care when policyholders have a referral from their primary care doctor. Policyholders also may be required to pay an annual deductible, co-insurance and co-payments.

In a POS plan, subscribers are allowed to visit any specialist. This can be beneficial for people who use outpatient services. The plan also offers greater flexibility, since traveling policyholders can visit health care providers anywhere. Additionally, the coverage can be good for people in rural areas with limited HMO choices.

Point-of-service plan example

Joe has a POS medical insurance plan that has an annual deductible, co-pays and an out-of-pocket limit. Joe’s plan covers 80 percent when he sees a health care provider who is in the plan’s network. But the plan pays only 70 percent if he receives medical care from a provider outside the network. The plan also allows him to seek health services outside the network after being referred by a specialist within the network. Joe’s insurance plan is a point-of-service plan.

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