 Personal Finance PowerPoint Presentation. Point of Service POS Plan. Prepare to get financially fit by practicing personal finance. Remember that insurance is part of our comprehensive risk mitigation strategy where we use the adage of measure twice cut once. We're gonna put a plan in place, formal plan looking something like, set the insurance goals, develop a plan to reach those goals, put your plan in action, review the results and then we will repeat the process periodically. We're now looking at the point of service to POS plans. Most of this information can be found at Investopedia, point of service POS plans, which you can find online. Take a look at the references, resources, continue your research from there. This is by Julia Kagan, updated March 10th, 2022. What is a point of service plan, a POS plan? Note, we've been talking about different kinds of insurance here when we're looking at the health insurance. It could be a bit more complex because of the nature of the health insurance industry and the regulations around it, as well as the insurance. We could think about insurance from a classical kind of sense, comparing it to other kinds of insurance, such as property insurance, for example, where we often insure against an event that might happen in the future, but which we will hope will not happen, which might have a low risk of happening, such as a house burning down. If it were to happen, it would be a financial hardship for us, and therefore we might want to insure against something like that happening with the health insurance. We have a similar situation where we could come up down with a disease, which would be very financially devastating that we would want to insure against, but we also have the insurance that could be expanded to cover more routine type of maintenance kind of things that could be expanded as well. So we have these different kind of reasons for the insurance on the medical side and different laws and regulations related to them. We're going through some of the different kind of categories of insurance so that we can better wrap our minds around some of our decision-making options. So what is a point of service POS plan? A point of service POS plan is a type of managed care health insurance plan that provides different benefits depending on whether the policy holders uses in-network or out-of-network health care providers. So we've got the HMOs and the PPOs which you might be most familiar with. Those are the two kind of you could think of them if you're looking at a spectrum, you might think of them at the end of the spectrums and then you could think about the other plans which might not be as familiar, but are possibly you can think of them in some area along the spectrum in terms of the benefits versus and the flexibilities versus the cost between the PPO and HMO. So a POS plan combines features of the two most common health insurance plans, those being the health maintenance organization, that's the HMO and we have the preferred provider organization, the PPO. The POS plans represent a small share of the health insurance market. So notice when you're looking at the most common kinds of plans you're usually looking at the PPO which is kind of I think the one that's been around the longest and then the HMO which has more restrictions and then the POS is an attempt to be kind of a hybrid so it might not be the most as many of them on the market and you might take that into consideration and think about well, can it really do that? Can it really take the best of both worlds? Has it been, has its test record been proven that it's a viable or good kind of middle option that might be one thing that you kind of consider? So most policy holders have either HMO or PPO plans. So how a point of service plan POS works. A POS plan is similar to an HMO. It requires the policy holder to choose an in-network primary care doctor and obtain referrals from that doctor if they want the policy to cover a specialist's services. So the HMO you'll recall is a bit more restrictive but sometimes that restrictions can actually be good because they actually point you or force you and basically to use the primary care physician which is your point person that directs you then to other people such as the specialist. So you have a similar kind of thing with the POS point of service situation although you have a bit more flexibility with it. And a POS plan is like a PPO in that it still provides coverage for out-of-network services but the policy holder will have to pay more than if they used in-network services. So you got a bit more flexibility than the HMOs to go out-of-network. However, the POS plan will pay more toward an out-of-network service if the primary care physician makes a referral than if the policy holder goes outside network without a referral. So now you've got, okay, does the point person, my primary care physician have to direct me somewhere? Well, I'd still like you to. They're trying to incentivize them to do so by lowering in essence the cost but not particularly required although you might pay more if you go out-of-network without being directed to do so by the primary care physician. So the premiums for a POS plan fall between the lower premiums offered by the HMO and the higher premiums of the PPO. That's what we would expect because the PPO traditionally is thought to have more flexibility with what you could do. HMOs being more restrictive, the more restrictions helps to minimize the costs which lowers the premiums on the HMO versus the PPO. And if we have a POS then that's somewhere in the middle with regards to its restrictions and its flexibility, you would expect the premiums to be somewhere in the middle. So the POS plans require the policy holder to make co-payments but in-network co-payments are often just 10 or 25 per appointment. So they're gonna set the co-payment at the dollar amount here and they look reasonable. POS plans also do not have deductibles for in-network services which is a significant advantage over the PPO's. So those deductibles being the hurdle that you gotta pay sometimes. And if you go over that amount that's when the insurance kind of kicks in that's more the classical kind of insurance model oftentimes. So the POS plans offer nationwide coverage which benefits patients who travel frequently. So it's nice that if you're on vacation and you have a problem that you can visit someone even though you're not in your current local network and you have more flexibility possibly under the POS than the HMO. A disadvantage is that out-of-network deductibles tend to be high for the POS plans. When a deductible is high, it means that the patients who use out-of-network services will pay the full cost of care until they reach the plans deductible. A patient who never uses a POS plans out-of-network services probably would be better off with an HMO because of its lower premiums. So if you're using the out-of-network if you're traveling a lot then the ability to have the POS with a more flexibility might be useful but you'll still have the higher deductibles possibly so it still might cost more if you're able to use your local network that would be assigned to you and you don't have this problem of needing more flexibility then the HMO might be better because it would be cheaper. So disadvantages of the POS plans. Though the POS plans combine the best features of the HMOs and the PPOs, they hold a relatively small market share. So this could be concerning. I mean, you might say, like if you talk to someone about an HMO and a PPO and they have medical knowledge, they're gonna say, ah, yeah, I recognize that. If you talk to the normal person about a POS then that might not totally register and that could be kind of a problem because especially if you're having medical conditions it'd be nice to be able to talk and it also just hasn't been as time tested as the other two. So, but it's a hybrid of the two so maybe the things that they're doing have kind of been tested. So in any case, one reason may be that POS plans are marketed less aggressively than the other plans. Pricing also might be an issue though POS plans can be up to 50% cheaper than the PPO plans, premiums can cost as much as 50% more for the HMO premiums. So that might be one of the reasons you might be saying, well, if someone really, truly wants flexibility and the cost isn't as much of a problem, an obstacle, they might just go, I'm just going PPO on that one. That's what my desire is. If people are saying I want the low cost here and still have a network and whatnot, they're gonna go for the HMO. Maybe you don't have as many people that are kind of in the middle. But I still think that that might be because it hasn't really taken hold yet because when you look at normal pricing conditions, if you were to look at, say, I was gonna purchase something online, people usually pick the one that costs in the middle because that's the one that they would think would be, you know, giving them the reasonable price. So it's kind of interesting the way it plays out. So while the POS plans are cheaper than the PPO plans, plan details can be challenging, the policies can be confusing and many consumers don't understand how the associated costs work. So when you go from obviously an HMO, it can actually be a benefit, the fact that they have the restrictions to some people because then you're just gonna say, I know what to do, I go to my primary care physician and then they direct me on where I'm going to go. That's pretty straightforward. And if you're going to the PPO, you're basically saying I'm gonna do more, have more flexibility to do what I want. If you try to combine those rules together, it gets a little bit confusing. You know, you got more rules and stuff or what's gonna be my deductible if I'm here versus there. So that might be a bit more confusing. Read the plan documents especially carefully and compare them to other choices before deciding whether this is the best option. So special consideration at point of service, a POS plan is a type of health insurance plan that provides different benefits depending on whether the policy holder visits in network or out of network healthcare providers. The POS plans generally offer lower costs than other types of plans, but they may also have a much more limited set of providers. It is possible to see out of network providers with a POS plan, but costs may be higher and the policy holder is responsible for filing, filling out all the paperwork for the visit. The POS plans can be up to 50% cheaper than preferred provider organization as the PPO plans. Premiums can cost as much as 50% more than health maintenance organization plans. So it's somewhere in the middle you can think about the line here and you've got the PPO's, the PPO's and the HMO's. I'll just put an H and then we're talking somewhere in the middle with regards to the cost and the flexibility. So in some ways the POS plans combine the best features of HMO and PPO plans, but you will need to check whether this type of plan works for you. So we might be able to just visualize this as a spectrum where we have the traditional PPO's versus the HMO's, the PPO's typically being more flexible but also being more costly, the HMO's being less costly, less flexible and then you got the POS attempting to get the best of both worlds in the middle and obviously our question would be are they actually getting the best of both worlds? Might be one way to kind of generalize how you're thinking of it and then of course we need to think about our own individual needs just to think about which of these categories would be where we want to narrow our focus.