Health Maintenance Organization (HMO) plans provide a network of healthcare providers at a lower cost than other Advantage (Part C) plans. It is one of 4 Medicare Advantage plans (the others being SNP, PPO, and PFFS plans).
You’re eligible for an HMO plan as long as you’re enrolled in Original Medicare (Parts A and B) first. And, like the other Advantage plans, HMO plans include all of the benefits of Original Medicare. Most plans will also include prescription drug coverage, and various other additions depending on the insurance provider.
The Structure of HMO Plans
The main draw of Advantage plans is not, however, these additional benefits. Part C aims to lower your out-of-pocket costs for consistent healthcare under Original Medicare. In other words, it covers things like doctors visits and checkups.
All Advantage plans function on a network of healthcare providers, but HMO plans rely on it more than the others. This network is limited, but likely more than suitable depending on the range of care you are looking for.
You won’t have to worry about this network for emergency out-of-network care. However, for doctor’s visits for a specific issue or checkup, you are required to see a primary care physician and get a specialist referral for further treatment.
This means that you will only have one option for immediate treatment (unless it’s an emergency). However, most people don’t see this as an issue, especially in light of the cost. HMO plans are incredibly inexpensive, with little to no monthly premiums.
HMO, then, is a great Advantage plan, perfect for those who want some extra help with out-of-pocket costs without breaking the bank.
Medicare Advantage Plan Comparison
The most common Advantage plans are HMO and Preferred Provider Organization (PPO). Special Needs Plans (SNPs) are reserved for those eligible—if you do qualify for one, you will more than likely want to choose it over any of the other options, including HMO.
Private-Fee-for-Service (PFFS) plans are a great option for those who frequently travel. However, coverage is subject to change, and it can be a difficult plan for the average person to navigate on their own. It is significantly more expensive than an HMO plan.
That leaves us with HMO and PPO plans. Your choice will mostly depend on your budget and need for flexibility. HMO plans are cheaper, but with a more limited network and required primary physician and referrals.
PPO plans have a wider network and no required primary physician or referrals, but at a higher cost than an HMO plan. Both are excellent options, and you will reduce your out-of-pocket costs no matter which you choose.
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