HMO stands for health maintenance organization. HMOs have their own network of doctors, hospitals and other healthcare providers who have agreed to accept payment at a certain level for any services they provide. This allows the HMO to keep costs in check for its members.

There are 2 features that set HMOs apart from other types of healthcare plans: cost and choice.

Less expensive cost

HMOs usually have lower premiums than other types of insurance plans because of the agreed-upon payment level. They also tend to have less expensive copays and coinsurance. This makes them more affordable to most people. HMOs are a great option for people who don’t usually need anything more than basic medical care like annual checkups or immunizations.

However, even though costs are generally lower with an HMO, they don’t cover any out-of-network care, except in a true emergency.

Choosing a provider

With an HMO, you must choose a primary care physician (PCP) from a network of local healthcare providers. This is the doctor who will manage your medical care. Your PCP will control the best overall picture of your health and will be the one to coordinate any additional care you might need.

If you were to need the care of a specialist, you would first see your PCP. Then, if needed, he or she would provide a referral to a specialist within the HMO’s network.

For example, if you suffer from a neck pain you would first go to your PCP. If he/she determines you need a specialist, they will refer you to an in-network specialist for care. Since the specialist is in your network, those services would be covered by your insurance after making any copays or coinsurance and meeting your deductible.

If you already have a doctor that you would like to keep and he or she does not belong to an HMO network, you might consider switching to a  preferred provider organization (PPO) plan instead.

Should I choose an HMO plan?

There are several factors to take into account when choosing whether an HMO plan is the right option for you and your family. The main things to consider are:

  • Cost of monthly premiums
  • Out-of-pocket costs
  • Using a PCP vs. choosing your own healthcare providers
  • The current health of the people you want to cover

If you don't need a lot of specialist care and don’t mind having your care coordinated through a PCP, you can save money with an HMO plan.

When you’re ready to purchase an HMO plan, you can visit to see which plans are available in your area. Eligible for Medicare? Take a look at  Medicare Advantage HMO plans.

And remember, dental care is not covered under medical insurance; it requires a sepa rate dental plan. Just like medical insurance, dental insurance comes in HMO and PPO plans.


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