What’s the difference between an HMO and a POS?

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One common phrase we hear when meeting with a new prospect is, “I only want POS options.” Granted we always provide our clients what they are looking for, but we have also come to realize the only reason they want POS options is because they have the misconception that they are just better. While there are differences between a POS and HMO, what truly makes a good plan are the in-network benefits. Below are a few main takeaways from Jorge’s and David’s video, where they go over the differences between HMO and POS health insurance plans.

  • HMO plans and POS plans typically have the same in-network providers.
  • POS‘ give you the flexibility of leaving the network, if necessary.
  • When you leave the network, you have an Out Of Network deductible you need to meet before the insurance kicks in. (Out of Network Deductible is higher than that of the in network benefits).
  • In network you are protected by contracted rates. However, when you leave the network, you are responsible for charges above the contracted rate. There is no control over what the provider can charge you. The insurance company will only apply the contracted rate towards the deductible. See example below:

Jane goes to an out of network provider to have an MRI done.

  • Out of Network Deductible: $5,000
  • Provider bills: $2,000
  • Contracted rate: $1,000
  • Jane pays: $2,000. Only $1,000 is applied towards the deductible since that is the contracted rate. The additional $1,000 is paid out of pocket by Jane.
  • POS premiuns are always higher than an HMO with similar benefits.
  • Almost all HMO’s are now open access, so you do not need a referral from your primary care physician to see a specialist

The questions to ask yourself are, will I be leaving the network often and would I want to pay a higher premium for the flexibility to leave the network if need be?

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