What is an HMO?

Because of the agreed-upon payment level, an HMO usually offers lower monthly premiums than other types of insurance plans. They also tend to have lower copays and coinsurance, which helps make them more affordable. HMOs are an affordable 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.

With an HMO, you must choose a primary care physician (PCP) from a network of local healthcare providers when you join. This is the doctor you will see whenever you need medical care. Your PCP will be the provider with 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 back pain you would first be examined by your PCP. If your doctor determined you needed the services of a specialist, he or she would 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’d like to keep your current doctor and he or she does not belong to an HMO network, you might want to consider a preferred provider organization (PPO) plan instead.

Is an HMO plan right for me?

There are several factors to take into account when choosing whether an HMO plan is the right option for you and your family. Some key 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 are someone who doesn’t need a lot of specialist care or don’t mind having your care coordinated through a PCP, you can save money with an HMO plan.

Eligible for Medicare? Take a look at Humana’s Medicare Advantage HMO plans.

Still not sure an HMO is the way to go? You can get more information about the differences between HMOs and PPOs from our HMO vs. PPO comparison chart.