HMO members must see an in-network doctor to receive benefits.
Buying health insurance requires a personal assessment of health-care goals, preferences and finances. A health insurance plan that is right for one person may not be a good fit for another. Health maintenance organizations (HMOs) manage the health-care services received by their members. Often compared with preferred provider organizations (PPOs), which can be more expensive but allow increased health coverage choices, HMOs have both pros and cons you should weigh before making an insurance decision.
Premium
HMOs are usually cost effective because the monthly premium is lower than that of a PPO and typically remains fixed. While a PPO requires the insured to fulfill a deductible before coverage kicks in, an HMO reduces an insured's out-of-pocket expenses by requiring a co-payment per visit (for example, $30) which represents a nominal amount of the overall expense of treatment. The premium only remains fixed so long as the member stays within the HMO's network of doctors, however. If a member obtains medical care outside of the network, the HMO will not pay for such services.
Lifetime Benefits
Unlike a PPO, which caps the amount of money it will provide for health care during your lifetime, an HMO will continue to pay benefits for the duration of your life --- an attractive feature for people who are concerned about loved ones becoming financially responsible for their health care in later years.
Referral
The cost advantage of an HMO becomes offset by the fact that in an HMO you must consult with your primary care physician and obtain a referral before you can see a specialist. Obtaining a referral can be time-consuming, and your request can be denied if the HMO or doctor thinks it is unwarranted. In this regard, you have limited control over your own health-care options unless you are willing to pay out-of-pocket to see a doctor outside the HMO network. However, if you are in relatively good health and do not require the care of a specialist, this disadvantage may not have a significant impact on you.
Prevention
For those who take a preventative approach to their health care, becoming a part of an HMO is a plus. The HMO philosophy is to prevent, and not simply treat, disease. By making it easier and less costly to attain access to health care, HMOs encourage members to see their primary care physician frequently before expensive and invasive medical treatment becomes the only option to address a health problem. HMOs also focus on teaching members protect their health and often award discounts to gyms and classes as ways to promote and encourage prevention.
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