Point of Service (POS)

Definition

The term point of service, or POS, is used to describe a managed health care plan that allows participants greater flexibility to seek out-of-network medical services.  In-network medical assistance includes both general care as well as wellness programs.

Explanation

A point of service plan includes many of the features of health maintenance organizations (HMOs) as well as the flexibility of more-traditional indemnity (pay for service) plans.

In a point of service plan, the employee chooses a primary care physician; who is responsible for providing general medical care, administering preventative programs, and referrals to specialists. This care typically requires a relatively small copayment at the time of service.

The insured employee also has the option of seeking help outside of the POS network; however, this added flexibility comes at a cost to plan participants.  When going out-of-network, the insured is usually responsible for paying both a deductible and a larger percentage of the medical services referred to as a coinsurance payment.

The added flexibility of the point of service plan means premiums would be higher than a health maintenance organization, but sill less than most preferred provider organizations.

Example

Linda participates in a point of service medical plan through her employer.  The terms of that agreement call for copayments of $20 at the time of service.  If Linda seeks medical care out-of-network, she must first satisfy a $1,000 deductible.  Her insurance company will then pay 70% of fees, leaving Linda with a 30% coinsurance payment.

Earlier in the year, Linda went to her primary care physician for a routine examination.  While that examination resulted in a $20 copayment, the examination also discovered a problem.

Linda decided she wanted to seek medical care out-of-network.  The cost of that care was $5,000.  Linda's out-of-pocket costs would be calculated as:

$5,000 Total Invoice
-$1,000 Less:  Deductible
$4,000 Amount Subject to Coinsurance
-$1,200 Less: Linda’s Obligation at 30%
-$2,800 Less:  Insurance Company’s Obligation
$0 Remaining Balance

In the above example, Linda's total out-of-pocket expense would be the $1,000 deductible plus the $1,200 coinsurance payment or $2,200.

Related Terms

health maintenance organization, preferred provider organization, coinsurance, copayment, accountable care organization