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Understanding HMO Plans

With the many insurance options available to you, it can be difficult to know which health insurance plan to choose. While researching your health insurance options, you will very likely come across what’s known as a Health Management Organization (HMO) plan.

 

What is an HMO Insurance Plan?

An HMO insurance plan is a health care plan that offers managed health care coverage. Of the different types of plans available, an HMO is usually the most affordable. 

Under an HMO plan, the goal is to keep patients healthy and to manage their health care before more serious health problems arise. HMO health care plan providers prefer to stop illness or disease from occurring in the first place instead of having to treat it indefinitely. 

Tens of millions of Americans are covered under HMO plans each year through the health care marketplace, under Medicare Advantage plans, and in plans sponsored by their employers.

 

How HMO Plans Work

In an HMO medical plan, a network of doctors and specialists works together to provide patients with care. The health care that plan members receive under this type of health care plan is both basic and supplemental. 

Subscribers to an HMO plan pay a premium that gives them access to doctors and providers in the network. This premium can be paid monthly or annually, depending on the plan. 

When covered under an HMO, you are required to have a primary care physician (PCP). This physician will be your main health care provider, and all of your health care decisions will be coordinated through him or her. You should ensure that you are comfortable with your PCP as it is the most important relationship you will have when it comes to your health care in an HMO. You can choose your own PCP as long as he or she is within the HMO’s network of providers. Generally, the only way an out-of-network provider will be covered is in case of an emergency. 

If you need to see a specialist for any special treatment, your PCP must refer you for care. For example, if you have an injury and require physical therapy as part of your treatment, the HMO plan will only cover your treatment if your PCP determines it to be necessary. You must also obtain a referral for any necessary medical equipment. If you do not get a referral from your PCP, your HMO plan will not cover the costs associated with the care or supplies.

 

HMO Medical Plans Offer Lower Costs

Under an HMO plan, you can often expect to pay less out-of-pocket than if you were covered under a preferred provider organization (PPO) or a point of service (POS) plan. 

Out-of-pocket costs can include copayments for appointments and insurance deductibles that must be met before insurance begins to pay for your treatment.

 

Should You Get An HMO Plan?

Different people will have different expectations when it comes to health care and the coverage it provides as well as how much it costs to get that coverage. 

To determine whether a Medicare Advantage HMO plan is the best fit for you, there are a few factors you should consider.

  1. How much can you afford for monthly or annual premiums? These premiums can range from $0 to more than $100 a month depending on the plan, so take the time to explore your options. Many Medicare Advantage HMO plans have $0 premiums, but that is because the Medicare beneficiary is already paying a premium for Part B. With Original Medicare, Medicare beneficiaries receive Part A (hospital coverage) for free and pay for Part B (doctor and other medical service coverage), which is usually paid through their Social Security.
  2. What out-of-pocket costs are required as a part of this HMO? Is there an annual deductible, and will you ever get close to meeting it? A deductible is the amount you have to pay for health care or prescriptions before your insurance provider will begin to pay. Some people have chronic health conditions and meet their deductible early in the year, while others are incredibly healthy and never meet their deductible at all. Also, you need to think about copay costs. Copays vary by plan.
  3. Would you rather choose your own health care provider for any health issue that arises, or prefer to rely on your primary care physician to make that determination for you? In an HMO, your PCP coordinates your care team to make sure you receive the right care in the right place at the right time. 
  4. What is the health situation of those being covered by your HMO plan? Are you relatively healthy or do you have special needs? If your health is generally good and you don’t require treatment by specialists, you can often make substantial savings using an HMO health care plan. 
 

Choosing A Provider

Under an HMO, you must have a PCP to manage your care. While you have the right to choose your own PCP, you must make sure that the specific provider you want to use is part of your HMO’s network. 

Health care providers often accept insurance from a variety of insurance companies and plans, but to ensure your care is covered, you must verify the physician you want to see is in the network of physicians your HMO uses. Otherwise, your care will not be reimbursed. 

You cannot see a specialist or any other provider without being referred by your primary care physician. If you do this and your HMO is billed for the care, then they will not pay for it, and you will be liable for the full cost of treatment.
If you can’t decide between providers or don’t have a preference regarding who you use for your health care, your HMO can assign a PCP to you.