Point-of-Service Plan in Health Insurance

A point of service (POS) plan is essentially a combination of a health maintenance organization (HMO) and a preferred provider organization (PPO).

This article will explain how POS plans generally work and what you need to know before enrolling in or using a POS plan.

These plans are known as point-of-service plans because each time you need health care (the time or “point” of service), you can decide to stay in-network and allow your primary care physician to manage your care, or you can decide to go outside of the network and seek care from a doctor of your choosing.

Your coverage and costs will vary depending on where and how you receive your medical services, including whether the medical provider is in-network with your plan, and whether you have a referral from your primary care physician.

Like most HMOs, a point of service plan will:

• require you to pick a primary care doctor
• generally require you to have a referral from your primary care doctor in order to see a specialist, but not all POS plans have this requirement—it depends on the specifics of your plan.

But like PPOs, a point-of-service plan will:

• allow you to use a provider who is not in the plan's provider network, albeit with higher out-of-pocket costs (sometimes much higher, depending on the plan details). Referrals are generally not required in order to see out-of-network specialists, but you may have lower costs if you do have a referral.

You'll get the lowest costs if you stay within the point of service plan's provider network. And some POS plans have multiple tiers of in-network providers, with the lowest costs (i.e., deductibles, copays, and coinsurance) if you use doctors and medical facilities in the plan's preferred tiers.

Point of service plans tend to be more expensive than HMOs but less expensive than PPOs. And POS plans are much less common than HMOs and PPOs. Among employer-sponsored plans, just 9% of covered workers were enrolled in POS plans in 2022.

And for people who buy their own coverage in the health insurance exchanges nationwide, most areas only have some combination of HMOs, PPOs, and EPOs, with POS plans not available in most parts of the country.

How a POS Is Like an HMO

A point-of-service plan has some characteristics of a health maintenance organization, or HMO. Most HMOs require their members to select a primary care physician, who is then responsible for managing the member's health care, making recommendations as far as courses of treatment, specialist visits, medications, and more.

The primary care physician also provides referrals for any other necessary services within the network. Many HMOs will only cover specialist care if the patient's primary care doctor has provided a referral, although this is not always the case—some modern HMOs allow members to self-refer to specialists within the network.

But HMOs do tend to be fairly strict about only covering in-network care, unless it's an emergency situation (exceptions can be granted on a case-by-case basis in situations where there is no in-network specialist available to meet the patient's needs).

If you have HMO coverage and decide to visit a doctor or healthcare facility outside of your health plan’s network (in a non-emergency situation), you will most likely have to pay all of the cost for that care, as it will not be covered by the HMO.

HMOs have historically had lower out-of-pocket costs than PPOs. But this is no longer always the case, especially in the individual market (i.e., plans that people buy on their own, through the health insurance exchange or outside the exchange).

It's common to see HMOs in the individual market with multi-thousand-dollar deductibles and out-of-pocket limits. In the employer-sponsored market, there are still plenty of HMOs with low out-of-pocket costs, although deductibles and out-of-pocket exposure have been increasing on all types of plans over the years.

Point-of-service plans can have a wide range of out-of-pocket costs, depending on the plan design. As a general rule, the out-of-pocket costs will be lower if you stay in-network and higher if you don't. And overall, for in-network services, POS plans will tend to have lower out-of-pocket costs than PPO plans, but higher out-of-pocket costs than HMO plans.

But that's generally only true if a single employer is allowing employees to choose from among all these options. On the open market, there's no set rule about this. POS plans can have deductibles and copays that are on the lower end of the spectrum or the higher end, depending on the plan (this is also true of EPOs, PPOs, and HMOs).

How a POS Is Like a PPO

A point-of-service plan also shares some characteristics with preferred provider organizations or PPOs. A preferred provider organization is a health plan that has contracts with a wide network of "preferred" providers—seeing one of these providers will keep your out-of-pocket costs as low as possible.

But a PPO also gives you the option to seek care outside the network, and the health plan may pay part of the cost, depending on whether you've met your out-of-network deductible.

Your cost-sharing amounts (i.e., deductible, copays, and coinsurance) will generally be higher if you go out-of-network. Depending on the plan, they may be several times higher than the in-network amounts.

And an out-of-network provider has the option to balance bill you for the difference between what they bill and what your insurer pays. In-network providers can't do this, because they've agreed to a certain negotiated rate with the insurer, and have to write off anything above that amount. Out-of-network providers haven't signed any agreement with your health plan, and thus haven't agreed to accept your insurer's reasonable and customary amounts as payment in full.

If you have coverage under a point-of-service plan, you're free to see out-of-network providers, and the plan will reimburse a portion of the charges after you've met your out-of-network deductible. The amount the plan will pay will generally be based on reasonable and customary amounts, and the specifics of the plan in terms of the percentage of those amounts that it will pay.

One important note: Since 2022, the No Surprises Act has prohibited "surprise" balance bills stemming from emergency situations, as well as situations in which a person goes to an in-network medical facility but is treated by an out-of-network provider while at that facility (for example, an out-of-network radiologist, anesthesiologist, or assistance surgeon who works at a hospital that's in the patient's network). For those scenarios, the billing differences now have to be worked out between the health plan and the provider, without trapping the patient in the middle.

If you have a PPO, you can certainly choose a primary care physician, but you are not required to do so—you won't need referrals from a primary care doctor in order to see a specialist. POS plans can set their own rules regarding referrals from primary care providers. Some plans require them and others do not. So as is always the case with health insurance, you'll want to carefully consider the details before deciding on a plan or using your coverage.

Summary

A point-of-service (POS) health plan can be thought of as a combination of an HMO and a PPO. Like an HMO, the POS plan may require members to select a primary care provider and obtain referrals in order to see a specialist (although this is not a hard-and-fast rule; some POS plans do not require referrals). But like a PPO, a POS plan will generally allow members to seek care outside the plan's network, albeit with higher out-of-pocket costs.

In both the employer-sponsored market and the individual/family (self-purchased) market, POS plans tend to be fairly rare.

A Word From Verywell

Although there are general "rules" for POS plans, they are not set in stone. As is always the case with health insurance, the details will vary from one plan to another, and you don't want to assume anything about your coverage or any plans you're considering.

So you may find a POS plan that doesn't require referrals. And you may find that although it does "cover" out-of-network care, the out-of-network deductible might be so high that you'd need a truly catastrophic incident to reach it.

So you'll want to carefully read the plan details in order to understand what's covered and what isn't, what the health plan requires of you, and how much you're likely to spend on various medical procedures. The managed care design (HMO, PPO, EPO, or POS) will play some role in this, but the specifics will depend on the plan, and might differ greatly from another plan that falls under the same type of managed care.