What is a HMO Plan?

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With so many health insurance plan types out there, you may be wondering what exactly is an HMO plan? A Health Maintenance Organization – or HMO – is an insurance plan that offers services centered around a network of providers. In essence, the consumer can only obtain services from this specific network, unless it’s for emergency-related treatment. 

Basic Understanding of an HMO

Well, how does an HMO insurance plan work, exactly? In this type of plan, the insuree is obligated to choose a primary care physician (PCP), and only with a referral from a PCP are they able to see a specialist. In addition, within the HMO network, the fees will generally be lower with any provider you see, than by resorting to an out-of-network provider. Several of the benefits you enjoy by utilizing HMO services include lower premium costs, little or no payment of a deductible prior to the beginning of your coverage, and even paying the minimum on co-payment costs. 

In the event that you had to resort to services outside of the network, there are some HMO plans that allow for out-of-network coverage. However, it is important to note that in most cases the individual does end up paying the full cost of healthcare coverage outside of the HMO. For the most part, it is more convenient to resort to utilizing the network’s own providers given the lesser costs.

Costs of an HMO Plan

The costs of an HMO plan will be dependent on the specific plan chosen. For instance, plans are able to dictate the costs of their co-payments, deductibles, and any other services offered in the program. HMO plans have the option of charging you an additional monthly premium coupled with your Medicare Part B premiums, or they can simply pay some of your Part B premium costs. At the same time, insurance providers in this network will charge more based on what Medicare Part you may have. For example, anyone that has Part D coverage will pay higher premiums in their HMO plan. 

So how do HMO costs compare to those of Original Medicare? The costs of both programs tend to be the same, and only deviate on certain treatment options such as dialysis and chemotherapy. On the other hand, services like home health, inpatient hospital care, and durable medical equipment are charged with higher co-payment costs in an HMO in contrast to Original Medicare. At the end of the day, the consumer would only pay out-of-pocket costs if they resorted to services outside of the HMO network. Those subsequent costs are dependent on the type of treatment option being sought out. 

How Referrals Work in an HMO 

In this type of network, the referral system works around the role of the primary care physician you choose in the beginning. Your PCP is in charge of providing a referral in order to see a specialist. While most services or treatment options require a referral, other services that require immediate medical attention, or that serve as an annual check-up (like a mammogram) do not require a referral. 

Is a Primary Care Provider Required in an HMO?

The primary care provider is the main physician that you seek out when pertaining to a health-related issue or a referral to see a specialist. In an HMO plan, a PCP will refer you to a specialist within the network, so you can retain the low premium cost benefits of the HMO. Furthermore, you could use the referral provided by your PCP for an outside provider, but you’d have to pay out-of-pocket for those services. 

Similarly, within the HMO network, you are required to choose a PCP no matter the circumstances. In the event that your PCP leaves the HMO network, the HMO network providers will inform you of the situation immediately and you will be required to choose another PCP.

How HMOs Compare To Other Insurance Plans

Although an HMO is a generally well-rounded medical plan, there are many other options to look into. Given that there are too many options to discuss, we’ll be focusing on the three other main health insurance plans that dominate the market alongside the HMO plans. These plans include the following:


A Point-of-Service, or POS, is a medical insurance plan similar to that of an HMO. In a POS plan, not only is the policyholder required to choose a PCP, but also must utilize referrals for specialists within the network. The individual can make use of out-of-network service but will do so by paying out-of-pocket costs. Nevertheless, the policyholder could pay less for any out-of-network treatment if they receive a referral from their PCP. 


Whereas a POS obligates the policyholder to choose a PCP, PPO plans do things differently. A Preferred Provider Organization, or PPO, plans are the simplest and oldest insurance plans available in the market. In this type of insurance plan, there is a network of medical facilities and professionals engaged in a contract with the insurance provider in order to provide their services at a discounted rate. 

Individuals are able to seek treatment with any provider in the network, whilst being able to seek out-of-network coverage (which costs more). The costs of a PPO will tend to consist of high premiums because of the maintenance fees associated with these insurance plans coupled with the size and amount of providers available to the consumer.  


Finally, we have an Exclusive Provider Organization or EPO. An EPO provides the ability for policyholders to reach out to any service provider within its network. However, in contrast to the other service providers stated above, EPOs will not allow you to seek any outside care, and typically it lacks out-of-network benefits. Despite this limitation, an EPO does not obligate you to obtain a referral from a PCP to seek specialist treatment. They also tend to have lower premium costs. 

Why Should You Choose an HMO Plan?

With so many insurance plans available to you, why should you choose an HMO plan? An HMO may be right for you depending on several factors. The benefits of having an HMO is that you don’t have to pay a deductible at the start of your plan. Likewise, the policyholder will on average pay lower premium costs in comparison to other plans in addition to being able to access out-of-network care.

If you’re looking for a plan in which you pay low premium costs, no deductibles, and don’t mind paying a bit out-of-pocket for out-of-network treatment, then this is the right plan for you. 

Finding The HMO Plan Ideal For You

Before settling on an HMO plan, you have to keep in mind that there are numerous HMO plans to choose from. Depending on where you live, HMO plans will vary according to the region and state in which you reside. As a result, the service fees and premiums costs are likely to vary. 

Just follow our form to find the ideal HMO plan for you. Not only will you be able to browse plenty of plans, but also compare the cost and rates of each individual plan.

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