Texas General Lines — Life, Accident, Health and HMOHealth InsuranceMedium
A small business with 15 employees is considering offering health insurance. They are interested in a plan that allows employees to choose their own doctors and hospitals without requiring referrals, and where the insurance company pays a set percentage of the charges for covered services. Which type of plan best fits this description?
- APoint of Service (POS)
- BHealth Maintenance Organization (HMO)
- CExclusive Provider Organization (EPO)
- DPreferred Provider Organization (PPO)
Show answer & explanationAnswer & explanation
Correct answer: D. Preferred Provider Organization (PPO)
A PPO plan offers flexibility in choosing providers without referrals and typically covers a percentage of charges, often with higher coverage for in-network providers but still providing some coverage for out-of-network care.
Why the other options are wrong
- A. POS plans combine elements of HMOs and PPOs, often requiring a PCP and referrals for in-network care but allowing out-of-network care at a higher cost.
- B. HMOs require members to choose a primary care physician (PCP) and get referrals for specialists.
- C. EPOs are similar to PPOs but typically do not cover out-of-network care, except in emergencies.
Preferred Provider Organization (PPO)
A type of managed care health plan that offers a network of providers, but allows members to use out-of-network providers for a higher cost.
- No primary care physician (PCP) required
- No referrals needed for specialists
- Greater flexibility in choosing doctors/hospitals
Memory trick: PPO gives you the 'P'ower to 'P'ick your 'O'wn path.