The Advantages & Disadvantages of POS Insurance

The Point of Service (POS) health insurance plan is a managed health care plan that covers millions of people annually. This plan, which is one of three managed health care plans along with Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO), incorporates characteristics from HMO and PPO plans into its coverage, providing members with more medical choices. However, some POS plans limit members' control of medical decisions.

Network Care

• Every member of the three managed health care plans receives a list of a group of contracted doctors within their geographical areas whom they can visit for medical attention. When POS members use the health services of these doctors in their "provider network," members are keeping the costs low for themselves and their insurance companies. Physicians within the provider network provide services at rates negotiated with the insurer in exchange for clients. As an incentive to stay in the network for care, insurers provide higher insurance benefits, which lowers the out-of-pocket expenses of the POS members.

Primary Care Physicians

• Some POS plans require members to choose a primary care physician (PCP) from the provider network. The PCP handles a member's medical decisions, according to American Health Association. A PCP is a doctor who acts as a gatekeeper, facilitating a patient's care by referring her to specialists and other physicians. A PCP also has the authority to deny medical services that he deems unnecessary. By receiving a referral, POS members typically pay little or no deductibles and small co-payments. This is an advantage for those who want to receive the highest amount of insurance benefits when they visit non-network doctors or specialists.

Freedom of Choice

• Another advantage of the POS plan is members have the choice of using their provider network for medical care to save money or seeking other options out of the network while still receiving insurance benefits. This feature of the POS plan puts more control in the hands of members concerning their health decisions. Also POS members who have PCPs may go out of the network for care without a referral yet maintain insurance coverage. However, the flexibility to choose out of network decreases insurance benefits out of network because the insurer doesn't negotiate prices with non-network doctors, which results in higher out-of-pocket expenses.

Gaining Popularity

• Although POS plans are becoming a popular choice, according to the American Heart Association, there aren't many people in the U.S. who are covered by these plans. In 2010 only 8 million people had a POS plan, according to the Kaiser Family Foundation. In comparison to the other two managed health care plans, HMO and PPO plans covered 66 and 53 million people respectively during the same year.

Costs for Non-Network Care

• POS members who decide to go out of the network for health care services pay more out of pocket in the form of higher deductible and coinsurance amounts. According to AgencyInfo, POS members receiving non-network care can be responsible for up to 40 percent of their medical bill. Insurers, however, typically limit the out-of-pocket costs for individuals and families covered under POS plans. Individuals out-of-pocket costs are limited to about $2,400 per year and approximately $4,000 annually for families.