HMOs Explained

You’re looking for the right health insurance plan. And you’ve got your budget in mind. Turns out, one of the most common healthcare plans is also one of the most affordable: Health Maintenance Organizations, or HMOs.

HMOs were created to lower your healthcare costs. Their large risk pools and pre-negotiated fees make it possible to offer you substantial savings. By joining an HMO, you’ll get to use the services of their doctors, specialists, hospitals and clinics at a relatively low cost.

What HMO Plans Have in Common

HMOs are a type of managed care. All HMOs require you to use doctors and hospitals that are members of their “networks.” HMO plans require you to select a Primary Care Physician who is in charge of referring you to specialists.

HMOs don’t require you to pay for your health care up-front, and there aren’t any claim forms to fill out or long waiting periods for reimbursement. And the majority of HMO plans require relatively small co-payments for office visits, hospital stays, or prescriptions.

Things to Consider

In an HMO, you have to use the doctors, hospitals, and other care providers that are members of your HMO network.

An HMO receives a flat monthly fee for everyone they cover. That tends to lead to more restrictions on care, including requiring pre-approval for service, and sometimes long waiting period to see specialists.

Also, it can take time to get the required approval from your Primary Care Physician, something anyone with a pre-existing health condition should be aware of. Some HMOs will let you designate a specialist as your Primary Care Physician.

Selecting your Primary Care Physician will be your most important HMO decision. Your primary doctor will be your first point of contact with the healthcare system. You will always have the option of changing doctors, but establishing a good relationship early is important in an HMO plan.

Making the Decision

If you think an HMO plan might your best option, you can work with an insurance agent to compare plans and prices. Our free health insurance quote service will match you with up to 5 agents licensed in your area. Compare their offers, ask about their plans, and choose the one that's the best fit for your needs.