If you have an HMO and get care out-of-network without getting a referral from your primary care provider, you won't receive coverage unless it's a medical emergency or another exception that's been approved by the HMO. Your HMO would rather spend a small amount of money up front to prevent an illness than a lot of money later to treat it.
If you already have a chronic condition, your HMO will try to manage that condition to keep you as healthy as possible. There are three main types of HMOs. HMOs focus on preventive care and managing chronic conditions.
The in-network healthcare providers you see may be employed by the HMO or they may be part of a group that has contracts with the HMO to offer you care at set costs.
An HMO is a type of managed care health insurance, which means that the health insurance company has agreements with providers for the cost of care. Managed care includes virtually all private coverage in the U. The type of options you're likely to have will depend on where you live and how you get your health insurance. For example, if you are selecting health insurance through your employer, there may only be one or two options, or there may be multiple.
If you are purchasing insurance on your own, the options vary by state. Other types of managed care health insurance include:. HMOs and EPOs only cover out-of-network medical costs in emergencies or other exceptions that vary by plan, and they may require that you get referrals from a primary care physician. Premiums , or the amount you pay each month to have the plan, tend to be lower with HMOs than other health insurance options.
In addition, cost-sharing requirements such as deductibles , copayments , and coinsurance are usually low with an HMO—but not always. In the individual market—that is, health plans that people buy themselves instead of through an employer—HMOs and EPOs have become more common, so PPOs work to contain costs. In some states, the only plans available in the individual market are HMOs, with deductibles as high as several thousand dollars.
HMOs are considered one of the more affordable health insurance choices, yet costs vary based on the plan, region, and whether you enroll through your employer or as an individual. HMOs only cover in-network services. Care is typically managed by a primary care provider. Enrolling in an HMO can be a great option to help minimize your healthcare costs so long as you stay within the network. Become familiar with the plan to see if it makes sense for your individual health situation.
For example, if you have a medical condition that requires you to see many specialists or your favorite doctor is not in the network, you may be better off with another option. If you have an HMO, always ask questions to confirm that all healthcare professionals you see are in the HMO network and you've received any needed referrals so that services are covered.
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I Accept Show Purposes. Table of Contents View All. Table of Contents. How HMOs Work. What Is an HMO? Copay vs. Need for Referrals Referrals have long been a feature of HMOs, but some HMOs may drop this requirement and allow you to see certain in-network specialists without one.
Recap If you have an HMO and get care out-of-network without getting a referral from your primary care provider, you won't receive coverage unless it's a medical emergency or another exception that's been approved by the HMO.
Recap HMOs focus on preventive care and managing chronic conditions. Was this page helpful? Thanks for your feedback! Sign Up. What are your concerns?
PPO participants are free to use the services of any provider within their network. Out-of-network care is available, but it costs more to the insured. Both programs allow for specialist services.
However, the designated primary care physician must provide a referral to a specialist under an HMO plan. PPO plans are the oldest and—due to their flexibility and relatively low out-of-pocket costs—have been the most popular managed healthcare plans. That has been changing, however, as plans have reduced the size of their provider networks and taken other steps to control costs.
A point-of-service plan is also like a PPO in that it still provides coverage for out-of-network services, but the policyholder has to pay more for those services than if they used in-network providers.
However, a POS plan will pay more toward an out-of-network service if the policyholder gets a referral from their primary care physician than if they don't secure a referral. POS plans also do not have deductibles for in-network services, which is a significant advantage over PPOs.
Also, POS plans offer nationwide coverage, which benefits patients who travel frequently. If you don't travel frequently, you'll be better off with an HMO rather than a point-of-service plan because of the lower costs.
It's important to weigh the advantages and disadvantages of HMOs before you choose a plan, just as you would with any other option. We've listed some of the most common pros and cons of the program below. The first and most obvious advantage of participating in an HMO is the low cost. You'll pay fixed premiums on a monthly or annual basis that are lower than traditional forms of health insurance. These plans tend to come with low or no deductibles and your co-pays are generally lower than other plans.
Your out-of-pocket costs will also be lower for your prescription. Billing also tends to be less complicated for those with an HMO. There's also a very good likelihood that you'll have to deal with the insurer itself. That's because you have a primary care doctor you must choose from who is responsible to manage your treatment and care. This professional will also advocate for services on your behalf.
This includes making referrals for specialty services for you. The quality of care is generally higher with an HMO. The reason is that patients are encouraged to get annual physicals and to seek out treatment early.
If you're paying for an HMO, you're restricted on how you can use the plan. You'll have to designate a doctor, who will be responsible for your healthcare needs, including your primary care and referrals. This doctor, though, must be part of the network. This means you are responsible for any costs incurred if you see someone out of the network, even if there's no contracted doctor in your area. You'll need referrals for any specialists if you want your HMO to pay for any visits.
So if you need to visit a rheumatologist or a dermatologist, your primary doctor must make a referral before you can see one for the plan to pay for your visit. If not, you're responsible for the entire cost. There are very specific conditions that you must meet for certain medical claims, such as emergencies. For instance, there are usually very strict definitions of what constitutes an emergency. If your condition doesn't fit the criteria, then the HMO plan won't pay.
HMO or health maintenance organization insurance provides covered individuals with health insurance in exchange for monthly or annual fees. People pay lower premiums than those with other forms of health insurance when they visit doctors and other providers who are part of the HMO's network.
Almost every major insurance company provides an HMO plan. The main benefits are cost and quality of care. People who purchase HMO plans benefit from lower premiums than traditional forms of health insurance.
This allows insured parties to get a higher quality of care from providers who are contracted with the organization. HMOs typically come with low or no deductibles and only charge relatively low co-pays. HMO participants also don't need referrals to get specialty services such as mammograms. Coverage under an HMO is generally pretty restrictive and comes at a lower cost to insured parties. Traditional health insurance, on the other hand, charges higher premiums, higher deductibles, and higher co-pays.
But health insurance plans are much more flexible. People with health insurance don't need to have a primary care physician to outline treatment. Health insurance also pays some of the costs for out-of-network providers. There are several restrictions for those covered under HMOs, which is why these plans have such a bad reputation.
For instance, HMOs only allow insured parties to see individuals in their own network, which means they are responsible for the full amount of a visit to any doctor or specialist outside this group. The plan may also require individuals to live in a certain area, This means someone who receives medical service out of the HMO's network must pay for it themselves.
The plans also require individuals to choose a primary doctor who determines the kind of treatment patients need. Health insurance is an important consideration for every individual. Choosing the right plan depends on your personal situation, including your health, finances, and quality of life. You can choose from traditional health insurance, such as the preferred provider organization, or the HMO, also known as the health maintenance organization.
The HMO provides insured individuals with lower out-of-pocket costs, but more restrictive conditions, including the doctor you see. Make sure you weigh out the benefits and disadvantages of the plan, regardless of what you choose. Medical Mutual. PPO Insurance Plans. Kaiser Permanente. PPO Plans - what are the differences? Health Insurance. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page.
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