What is an HMO plan?

A Health Maintenance Organization plan, or HMO, is a health insurance plan that covers medical care only when provided by doctors who belong to their network.

Danielle R.

Published December 20, 2020.

When you subscribe to a Health Maintenance Organization (HMO) insurance plan, you are covered for health and medical care only when provided by doctors, specialists and facilities who belong to their network. The in-network doctors work for or contract with the HMO, offering medical services at agreed upon fees.

This means that costs are generally kept down by the HMO, to the benefit of you, the patient. This includes monthly premiums, lower copays, and lower deductible. Out-of-network care is generally not covered, expect in case of emergency.

Primary Care Physician (PCP)

Typically, when you enroll in an HMO, you will have to choose – or be assigned – a primary care physician (PCP). Your PCP, also sometimes called family physician or general practitioner (GP), is you first point of contact for all your medical needs. Your PCP is a doctor that has a contract within your HMO’s agreements on services and prices.

To see a specialist or another doctor, you will need a referral from your PCP. Keep in mind they will mostly likely refer you to another doctor within the HMO’s network of providers. Referrals out of network drive up costs, which is bad for the HMO and bad for the consumer.

Emergency care with an HMO

In case of emergency, you might not have the time to find the closest in-network hospital. But thanks to the Affordable Care Act, health insurance providers are not allowed to charge more for out-of-network emergency services.

The issue here is the definition of emergency care: after review of your case, your insurance might classify the services received as non-emergency and charge you the out-of-network medical care fees, which would be very costly.

For example, if you have the flu and would like to receive urgent care for a more expedient relief to your illness, finding the closest in-network urgent care center is a better option than visiting the ER.

Cost of a Health Maintenance Organization plan

HMO plans are often the cheapest option for people who do not need much specialized care and rely on routine care, like checkups or immunizations. This is because HMOs usually have a strong focus on prevention and wellness care.

However, you might not be able to choose your own PCP or use out-of-network doctors. This can be a big deal for people who want highly personalized service or need to visit specific doctors, for the sake of treatment continuity for example. ​

Is an HMO plan right for you?

If you believe you are an ideal candidate for an HMO, think about your past five years of health history. How often do you visit the doctor, and for which reasons? Are you accident-prone? Do you often find yourself needing emergency services or other specialized care services?

When deciding if a Health Maintenance Organization is the right choice for you and your family, do not just think about your own health. The health of the other people you are covering will affect how your plan is working for you. If you and your family members do not need highly specialized care, are okay with less personalized choice, and want lower costs, an HMO might be the right choice for you.

Different types of health insurance plans

The most common alternative to HMO is PPO, Preferred Provider Organization. Contrary to an HMO, a PPO lets you visit out-of-network specialists without referral, but at a higher cost. You will pay less if you use in-network doctors, hospitals, or providers.

An EPO, Exclusive Provider Organization, offers a little bit of both HMO and PPO. An EPO is a managed care plan that covers medical care only if provided by an in-network doctor or facility. It will not cover any out-of-network medical care, only in an emergency. But you will not be required to get a referral to see a specialist.

If you have more questions, reach out to an agent to decide how you will proceed toward a health insurance plan. Healthcare is a big decision for you and your family!