PPOs vs POS Plans

Posted in Health Insurance , Point of Service Plans , PPO

July 17th, 2009

Navigating the world of health insurance can be a bit overwhelming as there are so many options available, and to the untrained insurance shopper, they all seem the same. However, there are some key differences that consumers should be aware of when researching their health care plans.

If you are looking for a managed health care plan that’s not as restrictive as an HMO (health maintenance organization) then a PPO (preferred provider organization) could be to your liking. PPOs only allow a selectgroup of doctors and/or hospitals into their network, and subsequently they provide medical service only to specific groups or associations such as a specificinsurance company or an employer plan. Members can take advantage of discounted rates and there may beutilization control programs to help reduce the cost of medical care within a PPO. In return, the organization sponsoring the PPO tries to increase their employee or members’ in-network participation. The costs for services are usually out of pocket for the members and reimbursement from the insurance provider should follow.

The Pros of PPOs:

• Although there is a strong financial incentive to choose providers within the PPO network, it is not mandatory to do so
• Out of pocket expenses are typically capped annually, limiting the total cost a member will have to pay

The Cons of PPOs:

• Premiums and co-payments are more costly than HMOs
• Services rendered need to be paid out of pocket and reimbursed later
• Participants will need to complete paperwork to get reimbursed
• Seeing doctors outside of the PPO network will be costly

Another option for health insurance is a POS plan (point of service plan). A POS plan combines many of the features of a PPO with those of an HMO. Policyholders will get the network and price benefits offered by the in-network service providers as well as the ability to choose doctors outside the network. These types of plans tend to be more a bit more flexible, allowing the policyholders to seek out doctors of their choosing. However, that may require meeting a deductible amount and paying a large portion of the bill for the out of network doctor.

The Pros of POS plans:

• No referral is needed for choosing an out of network doctor
• By choosing in network doctors, the costs will be minimal
• The amount of money a policy holder will have to pay themselves is limited and capped
• Customers can benefit from both the freedom of choosing their own doctors and in-network options

The Cons of POS are:

• Out of network treatment and services may be costly,ranging between 30-40% of the billed amount
• Meeting deductibles will be required
• Securing specialist referrals within the HMO system may be time consuming

For more information on your health care needs and free health insurance rate quotes, visit the Go Insurance Rates health care page.