What is an HMO Health Insurance plan? How do Health Maintenance Organizations work? If you are looking for answers to these questions, you have come to the right place. In this blog post, we will discuss what an HMO plan is and how it works. We will also define Health Maintenance Organization and explain the benefits of having this type of insurance policy.
What is HMO Insurance?
HMO insurance refers to the types of insurance plans that allow you to visit a select network of doctors. This also includes specialists who work with your health insurance provider. Generally, there are no exceptions to this rule unless a medical emergency occurs.
These plans may be helpful for families looking to maintain their health care expenses. However, it’s important to know they may not be valid in every state.
Why do People Choose HMO?
The main reasons people choose HMOs are for the convenience and predictability. This gives them more control of lower premium and deductible rates. Health Maintenance Organizations typically have low out-of-pocket costs when you do need to see a doctor or specialist.
How does an HMO Work?
If you have an HMO plan, you will be required to select a primary care physician (PCP). They will oversee your medical care. You will need to visit this doctor for all of your routine check-ups and vaccinations. In most cases, you will need to get a referral from your PCP to see a specialist.
Here Are Some Features
HMO features include a variety of services, however, you’re required to use the physicians and hospitals involved with the HMO. Generally, with HMO plans, it’s important to stay within your provider’s network of doctors to keep your out-of-pocket expenses low. Your selected primary care physician can refer you to specialists who are within your HMO’s network to ensure you stay covered under your plan.
HMO plans usually only offer in-network health coverage. Networks affiliate with certain providers to negotiate prices that can be lower for plan members than for someone without insurance. Seeking coverage outside of an HMO’s network may result in paying the full bill out-of-pocket for the benefits and services you receive, except in a medical emergency.
Carefully examine your health insurance plan’s provider network list to determine if it is right for your needs. You’ll want to verify that your current doctors and pharmacies are included in-network, as well as your preferred hospital.
What is the Cost?
According to the Kaiser Family Foundation, the average Medicare Advantage Prescription Drug (MA-PD) HMO plan can have a monthly premium of $18—averaging about $216 annually. This is less than the average monthly rate for other types of health plans, including local and regional PPOs.
Despite how restrictive HMO plans can be when it comes to choosing your health care provider, they are often the least expensive types of insurance plans available. When you do receive care from an in-network provider, you may be responsible for a copay—or the amount you pay for your doctor visits—each time you receive care. This regular amount can help you better manage your out-of-pocket costs rather than paying towards an annual deductible or coinsurance.
Differences Between HMO & PPO
As you learn about HMO insurance plans, you may also see the comparison between another common type of health plan: PPO. Short for Preferred Provider Organization, PPOs and HMOs are the two plan types that are more often compared and contrasted with one another. While both provide health coverage to families and individuals, the difference between HMO and PPO can be as distinct as night and day.
HMOs restrict your ability to visit out-of-network providers at the risk of not having coverage, but PPOs allow you to select doctors, hospitals, and providers at your discretion. However, if you do see a doctor or specialist who is out of network, you can expect to pay a higher out-of-pocket expense and fill out more paperwork for your health insurance provider to help with the cost. The freedom to choose multiple doctors and responsibility for the cost of care are other key differences between these two popular plans.
When you’re enrolled in a PPO, there’s no limit to just one primary care provider, and you can pursue care from a specialist without a referral. If you decide to go outside of your network for treatment, your PPO provider may cover some of the expense, but it’s generally less expensive to stay within your network.
This freedom to choose plans does come at a price. As mentioned previously, the average cost of a PPO plan is more expensive, both per month and year, than an HMO plan. Medicare Advantage Prescription Drug (MA-PD) PPO plans average from $25-48 per month and can total $300-576 annually.
Other Types of Plans Available
POS, EPO, HSA, and HDHP are a few other types of plans that are available in most areas. HMO and PPO plans are just some of the many types of plans you may come across in your search for health insurance.
POS, or Point-of-Service, is a blend of HMO and PPO plans. Similar to an HMO plan, you are required to choose one in-network primary care physician; yet similar to a PPO, you can visit providers out of network with less coverage than you would receive in-network.
If you decide to use an out-of-network provider, it may cost you more, and you may have to pay higher deductibles and coinsurances. However, if you receive a referral from your primary care provider, the POS plan may provide coverage.
EPO, or Exclusive Provider Organization, is similar to HMO plans, without the need for your primary care physician to decide which specialists you can visit. These plans do require you to stay within your health insurance provider’s network to receive coverage for your health care. EPOs and HMOs are comparable as both generally restrict you to in-network providers unless an emergency occurs. Copayments with EPOs can be smaller, like HMOs.
HSA, or Health Savings Account, can be considered more like a bank account than an insurance plan. These are tax-deductible plans that cover the healthcare expenses your health insurance provider doesn’t. HSAs are often combined with high-deductible health plans (HDHPs). Your HSA balance will roll over each year, and they’re tax-free.
HDHPs, or High Deductible Health Plans
These are types of insurance that provide a higher deductible than most other plans. Qualified HDHPs are typically paired with HSA accounts, where pre-taxed money can be set aside to help cover the deductible when you receive health care.
HDHP prices are the result of negotiation between your insurance company and medical providers. With an HDHP, you may pay less than an uninsured person. You pay any of your healthcare expenses towards your deductible. Once you achieve that amount, the health insurance company will begin its payment.
Which One is Right For You?
With the many pros and cons of these types of health plans, it can require careful research and understanding of your own needs to choose the right plan. It’s important to understand your and your family’s unique medical and financial situation before beginning your search for health insurance.
Does your family require more medical attention that goes beyond annual exams and checkups? Do you need help paying out-of-pocket costs for chronic diseases or physical therapy treatments?
- An HMO plan may be helpful if you don’t see your primary care provider that often and want healthcare services at a lower cost.
- A PPO plan may be useful if you’re interested in a wider selection of providers, especially if you reside in a rural region and require visiting a specialist for care.
- An EPO plan may be ideal if you’re looking for lower premiums and dislike referrals to specialists.
- An HSA may be the right plan for you if you want more flexibility and want to carefully monitor your expenses.
With the restrictions and flexibility, some of these plans offer, it’s important to consider both the monthly premium rates as well as the deductible, copayments, and coinsurance you may be responsible for with each type of plan.
In Closing
No matter what plan you are looking for, we are here to help. Please give us a call so we can go over your options. Thanks for reading.