Health Maintenance Organization (HMO Plans)
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A health maintenance organization (HMO) provides “managed care” in return for a monthly or quarterly premium. You pay a fee, the amount depending on the specifics of your coverage, and are offered a range of health benefits that cover the entire spectrum from preventive care and education to physician care, surgery and hospitalization. An HMO is a one-stop shop for all your healthcare needs. Your healthcare is “managed” by your primary care physician, usually a general practitioner.
Health Insurance Coverage Within HMO Networks
Typically, you must receive a referral from your physician before visiting a specialist outside the provider network. With rare exceptions, such as when you are away traveling, you are limited to seeking care completely within the network of providers, doctors, hospitals and labs with whom your HMO has negotiated a fee schedule. Since contracting discounts from a network of providers is one of the primary ways a HMO maintains cost effectiveness, the plan only works when you stay within the network. In addition to your premium, an HMO generally charges a co-payment (a way of sharing per visit costs between the consumer and the plan). One of the unique features of an HMO is that they typically deliver care directly to patients. Patients visit an HMO’s medical facility to see the physicians. Most HMOs own their own hospitals and clinics and directly hire physicians who work only for them. A quintessential example is the Kaiser Permanente System.
While an HMO is more restrictive than other plans, it can be a convenient and cost effective solution for an insurance consumer that does not have ties to a doctor or medical facility outside of the HMOs network. If the organization is well run, doctor visits and healthcare can be simple, hassle-free and reliable. If the need arises for you to see a specialist, your doctor will handle the research for you, all you will need to do is show up for your scheduled appointment.
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Read more about other types of plans:
Health Savings Accounts (HSA)
Self-Directed Health Plans (SDHP)