Under the Affordable Care Act (ACA), your business is legally required to provide health insurance if you have 50 or more full-time employees – or the equivalent in part-time staff. Smaller companies may not necessarily be required to provide health insurance to their teams, but many choose to do so anyway.
This often means selecting between offering a PPO vs. POS insurance plan. Understanding the difference between PPO and POS is essential for making the right decision for your team, as each has pros and cons that you’ll need to consider from both employer and employee perspectives.
PPO vs. POS Plans: What’s the Difference?
With so many acronyms for various types of health insurance plans, it can get confusing. And health insurance is not something you want to be making uninformed decisions about. So what is the difference between a PPO and a POS plan?
POS is an abbreviation for Point of Service, and PPO stands for Preferred Provider Organization. The difference between POS and PPO plans can be summarized by considering four primary factors:
- Primary Care Provider (PCP) requirement
- Cost
- In-network requirement
- Referrals to other providers
Let’s take a look at each of these in a little more detail.
PPO vs. POS: PCP Requirements
The role of a primary care provider is to serve as an employee’s first point of contact for healthcare. They get to know each individual’s needs and take responsibility for coordinating with other specialists if the need arises.
As the name suggests, POS plans require employees to have a dedicated PCP to act as the initial point of service. If an employee needs to see a specialist or receive additional care, the PCP will coordinate appointments. The only exception is with OB-GYN doctors. In this case, employees may bypass the PCP and make their own arrangements when enrolled in a POS. PPO plans, on the other hand, do not require a PCP for initial contact or referrals for any type of specialty.
PPO vs. POS: Costs
All health insurance plans, including PPO, POS, EPO (Exclusive Provider Organization), and HMO (Health Maintenance Organization) use specialized terms to describe cost breakdowns. Here’s how they stack up for PPO vs. POS health insurance plans.
- Premiums – The monthly cost of the plan. POS premiums are typically lower as there are fewer options, and PPO plans are higher because there are more options.
- Deductibles – The amount an employee pays for health services out-of-pocket before the insurance plan kicks in. POS plans don’t usually have a deductible, provided the correct PCP, network, and referral procedures are followed. PPO plans generally do come with a deductible. The average deductible for a single-coverage PPO is just over $1,204.
- Copays – A fixed amount paid towards a covered health care service like a doctor’s appointment or prescription medication after the deductible has been reached. PPO and POS can both be subject to copayments.
- Coinsurance – With either a PPO or POS plan, some shared costs are to be expected. With a PPO, coinsurance costs begin once the deductible amount is reached. On POS plans, coinsurance costs typically only apply when seeking out-of-network care or referrals.
PPO vs. POS: In-Network Requirement
A network in the healthcare insurance world is a group of doctors and medical facilities that contract with the same insurance provider. Providers within the same network usually agree to offer reduced rates to their shared customers, making staying in-network cheaper.
PPO plans do not require employees to see an in-network PCP, whereas POS plans do require an in-network PCP to be the first point of contact.
PPO vs. POS: Referrals
As you may have gathered from the previous section, PPO plans do not require your employees to seek a referral from a PCP, whereas POS plans do. Some POS plans don’t authorize out-of-network healthcare at all, whereas others may, depending on the situation. In either case, any out-of-network care a patient receives is likely to be more costly because the coverage is lower.
Should You Choose a PPO or POS Plan?
Both PPO and POS plans can vary significantly between insurance providers, so reading and reviewing the details thoroughly is always recommended. The most significant factor in deciding between POS vs. PPO is the level of flexibility your employees will have to make their own decisions about their healthcare. Let’s summarize the main pros and cons of each type of plan.
PPO Pros and Cons
A PPO may be the better option if you want to provide a plan with plenty of choice and flexibility. However, they are more expensive and can end up being more stressful for your employees to navigate.
Pros
- Employees don’t need to consult a PCP, so they have more options when choosing their healthcare providers.
- Employees can choose to go out-of-network – albeit at a higher cost.
- PPOs are easy to set up and require minimal paperwork from either employer or employee.
Cons
- PPOs cost more than POS plans. That doesn’t necessarily mean a higher cost for your business once employee copays and coinsurance have been taken into account, but it is a possibility.
- It is often the employee’s own responsibility to seek pre-authorization for certain types of care.
- Employee costs can mount up quickly if they move out-of-network.
POS Pros and Cons
POS plans cost less but offer less flexibility than PPOs. They still allow for some degree of employee choice, but involve more complex processes.
Pros
- Employees can choose their own PCP, who will coordinate appointments and referrals for additional healthcare needs.
- Lower premiums, copays, and coinsurance costs for employees.
- Staying in-network means there are no annual deductible requirements for employees.
Cons
- Going out-of-network is costly. However, at the same time, if employees never go out-of-network, then part of their premiums may end up being wasted.
- Selecting a plan that has an annual deductible for out-of-network care can be confusing and complicated for employers.
- POS plans are paperwork-heavy – particularly when dealing with reimbursement for out-of-network services.
Partner with Eden Health
Whether you choose POS vs. PPO, HMO vs PPO, and EPO vs. EMO, the health insurance you offer your team is a serious decision. If you’d like more information about insurance plans and guidance on employee wellness, head to The Central. You can find resources on our blog for health, safety, and wellness tips for your workforce.
At Eden Health, we specialize in providing full-spectrum primary care, mental health care, and insurance benefit advisory services that you and your employees will love. Contact us or request a demo today to learn more about our healthcare solutions for employers.
