Traditional, PPO, HMO & POS Insurance Plans: What is the difference?
With Traditional coverage, members coordinate their own health care. Members have the freedom to see any recognized doctor or specialist for covered services. No primary care physician or referrals are required. With Traditional coverage, members will have to spend a certain amount on medical bills each year before their insurance starts to pay. This is called a deductible. After an individual has met their deductible, they will only have to pay a percentage of each charge, called coinsurance. The insurance company will pay the balance of the charge based on what it considers reasonable. Members are responsible for paying a provider directly and submitting claims for reimbursement. Many insurance plans protect members from large medical expenses by limiting the total number of expenses in any given year, called out-of-pocket expenses.
With PPO coverage, members have the option to go directly to any in-network provider, including specialists, for covered services and out-of-pocket costs will be low. No referrals are required. An advantage of the PPO plan is built-in preventive care and wellness benefits. Members have the freedom to choose non-PPO network providers and still receive benefits. If members choose a physician or hospital outside the network, out-of-pocket costs will be higher.
With HMO coverage, member care is coordinated through a primary care physician. When choosing a primary care physician in-network, the member’s out-of-pocket costs are low. Out-of-network services are not usually covered. Most HMOs will require members to obtain a referral from their primary care physician before seeing any type of specialist. Approval must be received from the HMO before entering a hospital or receiving some other kinds of non-emergency care. HMO plans do offer dual-choice for females to select both a primary care physician and OB-GYN physician.
With POS coverage, members can choose to receive care from any recognized provider and still receive benefits. A POS plan is a type of managed care plan that is a hybrid of HMO and PPO plans. Similar to an HMO plan, members can select an in-network physician to be their primary care provider. But like a PPO plan, members can choose to go outside of the network for services, but will have to pay most of the cost unless the primary care physician has made a referral to the out-of-network provider. POS plans do offer dual-choice for females to select both a primary care physician and OB-GYN physician.
Download a PDF version of our Benefits Glossary (162KB), a 36 page comprehensive reference of all benefit related terms.