Difference Between PPO & POS Insurance

Choosing the right health insurance plan is difficult, but understanding the differences between the types of available policies can make your decision easier. The most common confusion surrounds the differences between preferred provider organizations (PPO) and point of service (POS) plans. Many subtle similarities exist that make it difficult to differentiate between the two types of insurance and identify the most appropriate choice for your family.

The Network

• POS and PPO plans both use groups of physicians and facilities that have contracts with the insurance companies to provide services at negotiated rates. When you receive treatment from an in-network provider, your costs are typically limited to a modest fee called a co-pay. Both POS and PPO plans also permit you to seek treatment from a non-network doctor at an increased cost. However, the main difference regarding POS and PPO plans is that the networks are separate. Even though an insurance company may offer both POS and PPO policies, the network of providers for each type of plan may not include the same facilities. A particular doctor or hospital may be in-network if you are a POS member, but non-network if you are a PPO member.

Deductibles

• When you visit a non-network provider, your treatment costs will be higher because the insurance company has not negotiated rates with that doctor. POS and PPO plans both require you to pay an up-front deductible before the carrier will contribute money towards the bill. The difference between POS and PPO plan deductibles is that POS deductibles are usually higher. Since POS plans are merely hybrid policies that attempt to bridge the gap between HMOs and PPOs, insurance companies strongly encourage you to seek treatment from in-network providers and only offer non-network benefits as a safeguard and comfort. PPO plans, on the other hand, are usually sold to people out of necessity who have no choice but to use non-network facilities, so carriers expect frequent visits of this type.

Co-Insurance

• Non-network treatment costs are never paid entirely by insurance companies, even after you fulfill your deductible. POS and PPO plans are structured with co-insurance benefits that obligate you to pay an additional percentage of your remaining bill. The term "co-insurance" refers to the percentage of your bill that the insurance company will pay. POS plans have much lower co-insurance percentages than PPO plans. The average POS co-insurance ranges from 50 to 70 percent, leaving you to pay between 30 and 50 percent of your medical bill, while PPO co-insurance ranges from 70 to 90 percent, leaving you with 10 to 30 percent.

Referrals

• POS and PPO plans both allow you to seek treatment without the need to first obtain a referral. POS plans require you to choose a primary doctor and PPO plans do not. If you have a PPO plan, you can visit any physician without a referral and pay your deductible and co-insurance. However, if you have a POS plan, you can visit any in-network provider without a referral but will need one for non-network treatment. Insurance carriers will not pay for treatment you receive outside the network unless you received a referral from your primary physician first.

Premiums

• POS and PPO plans are very similar, and both provide you with access to large groups of physicians and facilities while also allowing you to receive treatment from any doctor. However, POS plans are more restrictive than PPO plans, and the non-network benefits you receive are much less attractive. PPO policies offer the easiest and least restrictive health care, but also have a much higher price. You will pay less for POS plans because your non-network benefits are intended to be utilized only if there is no other alternative, whereas PPO policyholders are expected to make frequent visits outside the group.