Health Insurance: PPO vs. POC

The health insurance industry is filled with acronyms, and most consumers find them difficult to understand. PPO and POC are two acronyms for health insurance structures. Because these are very similar, choosing between the two requires an understanding the benefits and drawbacks of each in order to choose the one that is the best fit.

PPO Defined

• PPO stands for "Preferred Provider Organization," and this is a type of insurance that utilizes a special arrangement between health care providers and the insurance company. The health care providers agree to be part of the PPO and offer discounted services to participating patients in hopes of getting more business from patients on the plan. PPO members pay for services they receive, and then typically are reimbursed for the cost minus any co-pays or deductibles outlined in the plan. Some PPO structures allow the doctor to send the bill to the insurance provider, who then bills the patient for any co-pay or deductible amount.

Benefits of PPO

• PPO insurance gives the insured the choice of health care provider. Members are not restricted to using doctors within the PPO, although doing so is far more affordable because members receive a greater percent of reimbursement for care they get from network physicians than care from out-of-network doctors. Most PPO structures limit out-of-pocket expenses, including both deductibles and co-payments, to a set amount every year. Finally, referrals are not needed to see specialists under most PPO plans.

Drawbacks of PPO

• The main drawback of a PPO is the limited coverage when using non-network providers. If the PPO is too small, this may significantly limit the number of specialists the patient can see without paying a lot out-of-pocket. Also, patients may find that their favorite provider is not on the plan, and will be forced to choose a new one in order to keep their health care affordable. Most PPOs require the insured to file the paperwork necessary for reimbursement, which creates more work than other insurance structures.

POC Defined

• POC stands for "point-of-care," but this is more commonly referred to as POS (point-of-service). This plan typically has no deductible and a small co-payment, provided you use a provider included in the plan's network. With a POS plan, you must choose a primary care physician, and that doctor will handle any referrals you need to see specialists. You are allowed to see doctors who are not in the network, but you will then be responsible for a deductible and higher co-pay.

Benefits of POS

• A POS plan also allows you the choice of physicians, although seeing providers in the network is more affordable and your primary care physician must be in network. If you do choose to see a specialist who is out-of-network, you will not need a referral in most POS structures. The total out-of-pocket cost of a POS is typically less than a PPO if you stay in network. The co-pay is low, and most POS plans have no deductible for in-network care. You will also likely have a limit for yearly out-of pocket expenses.

Drawbacks of POS

• The main drawback of POS is the high cost of seeing someone out of the network. This can be as high as 40 percent of the cost of treatment, compared to a low co-payment when seeing an in-network doctor. This can limit care options if the network is small. Coverage for out-of-network care will not kick in until you reach a deductible amount. If you wish to see an in-network specialist, you must first get a referral from your primary care provider, which can become frustrating if the doctor does not give you the referral you feel you need.