The ACA (Affordable Care Act) mandates employers to offer health insurance to their workers if they have more than 50 full-time employees or FTEs (Full-Time Equivalents). With all the different types of insurance types available, employers face a tough choice between POS (Point of Service) vs PPO (Preferred Provider Organization) plans.
These plans have a significant impact on both the costs employers face and the level of employee satisfaction they will achieve. So, choosing between PPO vs POS plans is central to structuring employee health benefits in the US.
As of 2023, PPO plans are the most popular choice with 47% of workers being covered under it. On the other hand, only 10% of employers cover their workers with POS plans.
Nevertheless, PPOs have lost their popularity over the past decade by 10% with employers moving towards POS and HDHP/SOs.
So, what is the difference between a PPO and a POS plan?
In this guide, we will talk about everything that makes PPO and POS plans different from each other. We will also explore their pros and cons, and give you tips to help you choose the right plan for your workforce as an employer. Let’s get started.
What Is the Difference Between PPO And POS?
Although PPO plans are more popular, learning about the difference between PPO and POS is important for employers. They have significant benefits for various types of businesses. So, let’s understand each plan, and then compare the 4 main factors that differentiate them.
What is a PPO (Preferred Provider Organization) Plan?
PPO plans are designed to give employees a lot of flexibility. Employees covered under this plan can access healthcare providers both in and out of their insurer’s network. There is no need for referrals to see specialists.
In general, PPOs are a great choice for workers who prioritize convenience and autonomy in their healthcare. Nevertheless, this flexibility has a higher price tag when comparing PPO vs POS plans.
PPO plans have higher premiums, deductibles, and out-of-pocket expenses for services that are out of the network. In fact, the average deductible for PPOs is $1,204.
Although these plans have more added expenses, they are still the most popular thanks to their convenience and huge network access.
What is a POS (Point of Service) Plan?
POS plans are based on a referral model with care coordination through a PCP (Primary Care Provider). Employees have to choose a PCP who will be the central point for all of their healthcare needs. This way, there will be minimal unnecessary treatments and ensured continuity of care.
In terms of costs, POS plans usually have lower premiums and promote in-network care. For both employers and employees, this is a cost-effective option.
However, the requirement to stay within the referral network can slow down access to specialists, which can pose inconveniences for some employees.
As an employer, you are required to provide a safe workplace for your employees under the duty of care. So, what is the difference between PPO and POS plans? Let’s talk about their differentiators.
PPO vs. POS: Provider Flexibility
One of the main things making POS vs PPO plans different is their flexibility. With PPOs, employees can see providers who are out-of-network without referrals. On the other hand, POS has a structured system where care is primarily coordinated through PCPs.
If flexibility is a priority for you when offering employee health benefits, PPO plans will be a better fit for you. However, if you’re looking for a more affordable version with a coordinated, streamlined, and managed approach, POS plans might be the one for you.
PPO vs. POS: Costs
Price is another one of the biggest differentiators between PPO vs POS plans. Generally, PPO plans have higher premiums in exchange for the greater level of provider flexibility they offer. POS plans, on the other hand, offer lower premiums and cost savings with in-network services.
There are 4 main pricing differences between PPO vs POS, including:
- Deductibles
PPO plans usually have deductibles, whereby you pay for your care until a certain deductible is met. Afterward, your plan will start to share costs with you.
POS plans generally don’t have a deductible if you choose a PCP within your plan’s networks and referrals.
- Copays
Both PPO and POS plans can have copays, which is a fee you pay to your doctor when you have a visit or get prescribed medication.
- Coinsurance
With both PPO and POS plans, coinsurance might require you to share some of your healthcare costs. With PPO plans, this starts when you meet your deductible. With a POS plan, coinsurance kicks in whenever you need out-of-network care or can’t get any referrals to other providers.
- Premiums
Lastly, let’s talk about premiums. This is the cost you pay every month for your plan. It is usually higher with PPO and lower with POS.
Ultimately, POS is more budget-friendly for both employers and employees.
PPO vs. POS: PCP Requirements
Another difference between POS and PPO is the requirement on the person being covered. With a POS plan, your employees will need to choose a PCP who will coordinate all their referrals to specialists. In contrast to this managed care approach, PPO plans don’t have this requirement, meaning your workers can get direct access to specialists.
PPO vs. POS: Referrals
The last difference between PPO vs POS is the requirements regarding referrals. PPO doesn’t require doctor referrals for specialist visits, so it is a more flexible option for your employees. For POS plans, your workers need to get referrals through a PCP.
If your employees value a coordinated care pathway, POS plans can be the way to go. However, they can feel less restrictive with a PPO plan.
Considering Pros and Cons
Every plan has its advantages and disadvantages. Since employers are required to offer health insurance to their workers, the choice must be made. Consider the following pros and cons when choosing between POS plans vs PPO plans to make your decision easier.
Pros of PPO Plans
- Flexibility for employees
With a PPO plan, your workers will have more flexibility in choosing providers, which can increase employee satisfaction and freedom.
- Higher convenience without referrals
Without the need for referrals, your employees can access care in a simpler way, making it way more convenient for them.
Cons of PPO Plans
- Higher premiums and costs for employers
Premiums are lower with a POS plan vs a PPO plan. This can be a big deciding factor for employers who face issues with budgets.
- More out-of-network expenses
If your employees choose providers outside of the network often, it can push the costs of PPO plans up.
Pros of POS Plans
- Lower premiums and cost efficiency
As you remember, costs are one of the biggest differences between POS vs PPO plans. With a POS plan, you pay lower premiums and save on insurance costs
- Coordinated care approach
POS plans work through PCPs who coordinate care and organize referrals. This system promotes consistent care, which makes it easier for employees who prioritize guided healthcare. Executive health programs also utilize this referral-based network model.
Cons of POS Plans
- Less flexibility
With a POS plan, your employees can only access in-network care and referrals, which can be very restrictive.
- Longer wait times for referrals
By relying on one point of care, your employees might experience delayed specialist visits. Referral processes take time, which means your employee satisfaction is at risk.
Choosing the Right Plan for Your Workforce
Now that you know what the difference between PPO and POS is, let’s understand how you can choose the right plan for you and your business. To select the best health plan, you’ll need to evaluate the preferences, healthcare needs, and budget constraints of your employees. Here are some steps and tips to help you out.
1. Understand Your Workforce Demographics
The types of specialists your workforce needs can influence your choice between PPOs and POS plans. If your workers usually prefer more flexibility in their access to healthcare, a PPO plan might be the better choice.
However, if your employees are more cost-conscious and value structured care, POS plans can meet their needs better by being more affordable and reliable.
2. Offer Both Options for Diverse Needs
If you have a diverse workforce with a huge age range and different types of health problems, you will most likely benefit from giving them both PPO and POS plan options.
This approach will allow your workers to choose their preferred option based on their healthcare needs. At the end of the day, you make sure to get higher satisfaction across the board.
3. Enhance Plans with Telemedicine
Telemedicine solutions let patients contact their doctors through email, phone, and other digital platforms for immediate care. This 24/7 access to healthcare is of utmost convenience and reduces in-person visit costs. Whenever you’re choosing between POS vs PPO, consider the availability of telemedicine as well.
4. Evaluate Costs Against Employee Satisfaction
While PPO plans come at a higher cost, they add flexibility which can help your employees stay healthier and happier. Employee satisfaction will help you retain top talent.
On the other hand, POS plans can save you lots of costs, so it can be a great choice for both employers and employees.
While concierge medicine insurance isn’t available, you can still consider offering executive healthcare plans to your workers for mitigating key man risk.
Conclusion
As an employer, if you want to balance costs and employee satisfaction regarding the health benefits you offer, you simply need to understand how different POS vs PPO plans are.
While PPO plans give unparalleled flexibility and direct access to specialists, POS plans are more affordable and give a more structured coordination of care. Both plans have their merits.
You can choose to stay flexible and offer your workers both options to choose from. This way, you can create a healthier, more productive workforce. You can also couple them up with executive healthcare and telemedicine solutions we offer here at WorldClinic to give your workers high-quality healthcare anytime, anywhere.
To find your match, you should weigh the preferences of your employees and budget constraints. If you have a hard time making a concrete choice, we recommend getting in touch with our experts who can guide you in this process.
Want to know how our telemedicine and concierge services can complement your health insurance offerings? Explore our employer concierge medicine membership plans to learn more.
PPO vs POS FAQs
Which is more restrictive, POS or PPO?
POS plans are more restrictive because they require employees to only get in-network PCP referrals. On the other hand, PPOs give employees more freedom by allowing them to access out-of-network providers and specialists without referrals.
Why do doctors prefer PPO?
Doctors might prefer PPO plans because they usually have higher premiums, meaning that doctors will get higher reimbursement rates. Additionally, this model eliminates the need for approvals on referrals, creating a generally smoother specialist care experience.
Are PPOs worth it?
Since PPOs have higher premiums and deductibles than POS plans, choosing between them can be hard. From the perspective of employers, PPOs are worth the higher price tag if their employees value more flexibility, access to out-of-network providers, and need more specialist visits.
To understand whether PPOs are a good match for your workforce, you’ll need to assess their needs and compare them to your budgetary goals. A cost-benefit analysis will come in handy here.
Is a PPO the same as a POS?
No, PPOs and POS plans are very different in their costs, flexibility, requirements, etc. PPOs are way more flexible and do not have a PCP or referral requirement. On the other hand, POS plans focus on coordinated care through a PCP, which allows them to offer lower premiums but less flexibility.
How to see if your insurance is PPO or POS?
If you want to know if your insurance is PPO or POS, you’ll need to check your insurance card or get in touch with your provider. PPO plans highlight out-of-network coverage, while POS plans emphasize PCP selection and the requirement to stay in-network care.
