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What is an HMO Insurance Plan?

A health maintenance organization, or HMO, is a type of insurance plan in which all your medical care must come from approved providers. In some plans, doctors work for the HMO itself.

  1. Structure

    • In a typical HMO, your premiums pay for most of your medical care, so long as you see only approved providers. For each doctor visit, you pay an additional fee, called a co-pay, that might be $10 to $25. You usually have to choose a primary care physician, a doctor who coordinates your coverage and refers you to approved specialists when necessary.

    Advantages

    • The chief advantages of an HMO are savings and simplicity. As long as you use approved providers, your out-of-pocket costs are low and there is minimal paperwork to deal with. HMOs also tend to cover more preventive medicine, to avoid more expensive care down the road.

    Disadvantages

    • What you don't get in an HMO is flexibility. You usually can't see a specialist without a referral, and you may have a long wait for approval for certain procedures. If you go to unapproved doctors or labs, you may have to pay the entire bill yourself.

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