POS Health Plans: Like HMOs, But More Choices

POS, or point-of-service, health insurance plans may not be as familiar as their cousins, health maintenance organizations, or HMOs. But they can give you more health care flexibility while still costing less than the most expensive plans out there.

POS plans are a form of managed care offering some out-of-network coverage. So you can cast a wider net for specialists and services.

Most Americans enroll instead in HMOs or PPOs, or preferred provider organizations. HMOs generally require patients to stay within a limited network of approved doctors and other health care providers, while PPOs tend to offer a broader network plus more flexibility to go outside of the plan for those willing to pay extra for the privilege.

POS plans are hybrids that occupy a middle ground. As with HMOs, you are encouraged to stay within the plan's network, and you choose an in-network primary care physician to coordinate your care. But the plans also offer some of the out-of-network ease of PPOs.

Few seem to know about POS plans

Though POS plans combine the best features of the other two options, they hold only a relatively small 9% share of the market, according to Consumer Reports.

One reason, say experts, is that POS plans are marketed less aggressively than other plans.

Also, price can be an issue. Though POS plans can be up to 50% cheaper than PPOs, premiums can cost as much as 50% more than for HMOs, says Rita Numerof, a St. Louis-based health care consultant. And POS out-of-network copays and deductibles can seem expensive. In-network, however, there are no deductibles for standard POS plans, and copayments are usually only $10 to $25, says Jeffrey Ingalls, president of Stratford Financial Group, an insurance consulting firm in Wayne, N.J.

On the other hand, POS plans can be up to 50% cheaper than PPOs, says Numerof, depending on the deductible. "However, the network is significantly smaller than for PPOs," she adds.

Costs aside, sorting through POS plan details can be challenging. Plans can be confusing, and many consumers don't understand what costs they're responsible for, says Numerof. Each plan has different deductibles, copays and even restrictions. "And, frequently, good information isn't available, so it's hard to compare apples to apples," she says.

But starting in 2014, when uninsured Americans will be required to buy health insurance or face a penalty under the Affordable Care Act's "individual mandate" provision, POS plans will become more transparent, Numerof says. They'll be sold on state insurance exchanges, where people will comparison-shop for insurance. Consumers will want to see detailed plan information to help them make informed choices.

Pluses and minuses of POS plans

Before buying a POS plan, consider these pros and cons.

Pros

You can go out of network with relative ease. Because a POS plan is an HMO with out-of-network benefits, you can see any specialist, says Ingalls. POS plans also suit people who might use lots of outpatient medical services, such as counseling.
You can enjoy more geographic flexibility. Travelers can visit doctors nearly anywhere and still have some medical coverage, says Brandon Beavers, vice president of group benefits provider CPActuaries in Norfolk, Va. "So when you have the flu, for example, you can walk into a care center," he says.
If you live in a rural area or small town, you can benefit because your choices can be less limited than with an HMO, says Gregg Pajak, president of WizdomTree Benefit Solutions Inc. in Hauppauge, N.Y.

Cons

Deductibles can be costly. When you stay within the POS network, you must fork over just a small copay to see a doctor. But, when you want to use out-of-network providers, you may first have to satisfy a high annual deductible that you may not even reach. "So avoid choosing POS plans with yearly deductibles over $750," says Numerof.
You can waste your premium money if you sign up for POS coverage and never use out-of-network specialists. So do the math for each plan -- considering the costs you're likely to incur and the benefits you're likely to get in return -- before going the POS route.
Expect paperwork hassles. Like PPOs, POS plans have lots of paperwork for out-of-network care. Doctor fees may have to be paid in full, upfront, Numerof says, and you must file your own insurance claims. Reimbursements can take three to six months, she adds. Keeping track of receipts also is necessary.
Many POS plans require doctor referrals. Despite the higher premiums, your POS may require referrals to see out-of-network specialists. "Referrals could be difficult to get and time-consuming," Numerof warns.

Health insurance POS plans can offer some peace of mind, adds Beavers, given their wider coverage. But don't forget to look at plan fees, plan details, out-of-pocket costs, deductibles and copays, he concludes.