An HMO (“Health Maintenance Organization”) is a health insurance plan that is designed to care for members health within a specific network of medical providers.
In a typical HMO, you specify a primary care doctor who is your first call for medical care. Visiting a specialist typically requires a referral from this primary care doctor, and care outside of the plan’s medical network is not covered.
One trend in individual health insurance plans is the increase of HMO options, such as Kaiser in Atlanta and Bright Health Plan in Greenville. As we look forward to Open Enrollment, we thought it would be good to briefly summarize the main advantage and disadvantage of enrolling in an HMO.
The Primary Advantage of an HMO Plan
Typically an HMO plan will be less expensive than other health insurance plans. You often save money not only on the monthly price, but also in the form of lower copays and other out-of-pocket expenses.
The Primary Disadvantage of an HMO Plan
HMO plans do not give you the flexibility of the PPO plans that many people have become accustomed to using. You are limited to a smaller (typically local) network of providers – usually a particular hospital system. Additionally, visiting a specialist typically requires a referral from your primary care doctor.
Should You Choose an HMO Health Insurance Plan?
As always, the details matter and the particulars of your own needs and situation will dictate what you should do when it’s time to choose a health insurance plan.
If you’re content with getting your medical care from the same hospital system (i.e. the network being provided), then the HMO will almost certainly give you more value for your dollars in terms of both the monthly cost and your out-of-pocket expenses for healthcare.
If, however, you want more options for providers, or you’re already established with a doctor(s) outside of the HMO network, then you might be best to avoid the HMO carrier and choose a plan with a PPO network.
As always, AC Forrest can help you think through the options and get some specific numbers on costs and benefits.