HMO stands for Health Maintenance Organization. This form of insurance is often provided by employers. It is quite different from other types of insurance, such as Traditional Plans or Preferred Provider Organizations. It is important to know the pros and cons of an HMO before deciding to carry this type of health insurance coverage.
How Does an HMO Work
An HMO health plan provides coverage to doctors on the plans referral list. With most plans, the patient chooses a primary care doctor, and all health care is managed by this doctor. Most plans require a referral from the primary care doctor before a patient can see a specialist. If a patient decides to see a doctor not on his plan's list, there is no insurance coverage. There are two types of HMO plans. The first is a closed access plan. This means that you must be assigned to a specific doctor. Recently, HMO companies have added a second type of plan called an open access plan. With this plan, you are still assigned to a primary care doctor, but no referral is needed before seeing a specialist.
Pros of an HMO
There are many positives to having an HMO plan. With most insurance companies, preexisting conditions are not covered. HMOs do not have a preexisting condition clause. Traditional insurance plans have a deductible that must be met before coverage begins. With a Traditional plan, after this deductible has been met, the plan covers a percentage and the patient picks up the rest. There are no deductibles with an HMO. A patient is provided with a list of co-pay charges. The patient's coverage is 100 percent after the co-pay. This co-pay applies to primary care doctors, specialists and hospitals. In addition, there are no caps on yearly or lifetime coverages on an HMO plan. All HMO plans provide medication coverage that picks up at the beginning of the plan, as HMOs have no deductible to be met. The co-pays differ depending on the HMO's set fees for prescription coverage.
Cons of an HMO
With all HMO plans, you are limited to the doctors on your list. If your doctor of choice is not on your HMO's list, you will see that doctor at your own expense. Specialists also must be on the HMO's list. Hospitals also participate with certain insurance plans, so your hospital of choice may not carry your HMO insurance. Most HMO plans require a referral before seeing a specialist. A patient can also find that difficult or unusual medical needs or procedures may not be covered on her HMO. Prescription coverages are limited to medications on the HMO's list. Most HMOs provide a higher co-pay if the medication is not allowed on its plan, but these co-pays can be rather expensive.
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