What is an HMO health plan?

There are a few different kinds of health plans on the market. A health maintenance organization (HMO) plan is 1 common type of health insurance that typically comes with a specific network of providers you can use to get care. With an HMO plan, you have to stay in the HMO network in order to use your plan’s benefits. And, you need a referral from your doctor before seeing specialists or getting medical equipment (like a wheelchair).

The out-of-pocket costs of an HMO plan are usually lower than other types of health insurance. An HMO plan may be a good fit for someone who doesn’t travel much and typically doesn’t see specialists.

What does HMO stand for?

HMO stands for “health maintenance organization.” Its name comes from the overall goal of this kind of plan — which is to help maintain your health. As a way to keep costs low, HMO plans focus on preventive care to help you get and stay healthy. (The healthier you are, the less care you’re likely to need.)

How does an HMO work?

HMO plans contract with a group of local providers to offer certain health care services. Members of an HMO plan are limited to this local network for their care needs. Some HMO plans require you to live or work in its service area in order to sign up for coverage. Think of HMO providers as your local care team. (Remember, your HMO plan won’t cover visits with out-of-network providers.)

HMO plans require that you choose a primary care provider

With HMO insurance, you’re required to choose a primary care provider (PCP) as your main doctor. Some people enjoy having a PCP because they value building a relationship with their doctor. You’ll see your PCP for all your care needs and pay your plan’s cost-share, like a copay or coinsurance.

There’s no out-of-network coverage with HMO plans

It’s important to know which providers are in your plan’s HMO network. If you get care from any out-of-network provider (like a doctor, surgeon or lab for bloodwork), you’ll be required to pay the full cost of that service. The only time an HMO plan will cover out-of-network services is if it’s emergency care.

What’s the advantage of an HMO plan?

Each type of health insurance plan has its list of pros and cons. The main advantages of an HMO health plan include:

  • Usually lower premiums, deductibles and cost-shares compared to other types of health plans
  • A PCP to help coordinate your care
  • No need to file health insurance claims

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

A point of service (POS) plan is another type of health insurance you may read about. Unlike HMO plans, POS health plans offer some coverage for certain out-of-network care. It’s important to understand the differences between HMO and POS plans when deciding which to buy.

HMO vs. POS plans

Do I need referrals? Yes Yes
Is there coverage for out-of-network care? No Yes
Am I required to choose a primary care provider? Yes Yes

Do I need a referral with an HMO?

One big difference between HMO plans and some other types of health insurance is that you need a referral from your PCP before you can see a specialist or get certain medical equipment. This can be an important consideration when deciding which plan to buy.

HMO plans require referrals

If you need additional care or treatment, you’ll have to get your PCP’s referral first. For example, if you visit your PCP for back pain, they’ll have to submit a referral for you to see a physical therapist before you can make that appointment. For some, this extra step can feel like a burden, and it may cost time and money.

What’s a Medicare HMO plan?

If you’re 65 or older, you may be interested in a Medicare HMO plan, called a Medicare Advantage plan. These work just like individual and family HMO plans — but with 1 important difference. Your Medicare HMO plan has coverage for out-of-network services, as long as those providers accept Medicare.

What’s a dental HMO plan (DHMO)?

Dental HMO insurance is similar to an HMO health plan. It focuses on preventive care and encourages regular visits to the dentist. This helps keep out-of-pocket costs lower than other types of dental plans. To take advantage of these low costs, you must see a network dental provider. Otherwise, you’ll have to cover the cost of your out-of-network dental care. And just like with an HMO health plan, you’ll need a referral from your primary dentist for any specialty dental work.

HMO plans are just one of many types of health plans

Keep in mind, there’s a variety of health plans available for individuals and families — HMO plans are just one of them. Be sure to compare plans before signing up for coverage. You’ll want to pick a plan with a provider network, coverage and pricing that fits your needs.