What is a HMO Plan? Health Insurance Explained

by Zencare team

The sibling to PPO insurance plans (Preferred Provider Organization), a HMO is a type of insurance plan that impacts which providers you see, how much you pay for services, and what type of medical care is available to you. Read on to learn more about HMO insurance plans and what they mean for your therapy costs.

What does HMO mean?

HMO stands for “Health Maintenance Organization.” HMO insurance plans create networks of providers who receive a specified amount of reimbursement per service.

HMO plans allow their members to receive services from any provider within the group. This is an insurance plan that centers your medical care around a primary care physician or primary care provider (PCP), which means that you will need a referral to see a specialist or therapist. HMO insurance plans place a heavy emphasis on prevention and wellness to increase their members’ health and decrease risk of needing emergency services.

How do I know if I have a HMO?

First, check out the name of your insurance plan — this will likely show up on your insurance card. Sometimes, the names of HMO plans have the letters “HMO” in the name. If you don’t see it there, locate your Summary and Benefits, the standardized masterlist of service coverage.

Your Summary and Benefits should have information about the plan near the top, detailing whether your plan is a HMO or another type of insurance. If you still cannot find the answer, give the customer service number on the back of your insurance card a call and ask what type of plan you have.

What are the benefits of a HMO plan?

There are many benefits to having a HMO plan. Here are a few reasons why a HMO plan might be a good fit for you:

  • Lower premiums (the amount you have to pay each month to have the insurance). This plan is often more economic than other types of plans (PPOs, POSs) which makes a huge difference in your budget!
  • Having a point-person. With your PCP acting as quarterback, your PCP will know what services you receive and be able to follow up with you on your medical care.
  • Having a robust network of providers. HMO plans engage providers across your community and cover their services.

What are the downsides of a HMO plan?

As with any insurance plan, there are downsides that need your consideration. Here are a few to keep in mind:

  • Higher out-of-pocket costs. Because the premiums are low, you may have to pay higher copayments (costs per visit) or coinsurance (the amount of the fee for which you’re responsible).
  • Needing a referral. With the PCP in charge of what services you need, you may need to visit your PCP more often in order to get specialized medical care — this sometimes includes therapy!
  • Not being able to choose your provider. While there are many providers within each HMO network, with needing a referral comes the risk that your PCP might refer you to a specific provider (and not the person you want to see).
  • High costs for out-of-network providers. If you would like to see a provider that’s not in-network with your HMO plan, you will likely have to cover a large portion of the fee yourself.

Should I choose a HMO plan for my health insurance?

HMO plans have plenty of pros and cons — so it’s really up to you and what you’re looking for! A few considerations:

  • Your budget. For HMOs, you will have less monthly costs but potentially more out-of-pocket costs per visit.
  • How many visits you expect to make. If you plan on seeing various specialists or see a therapist consistently, you may be responsible for a per-visit cost (copay) which could add up. However, if you don’t plan on seeing a provider too often, it might be a more affordable option!
  • If you need specialized care. If you plan on seeing a specialist, keep in mind that you will first have to see your PCP in order to get a referral, even if they are an in-network specialist. When you get a referral, you might not be able to pick the provider (however this provider will be in your network).

Thinking through the pros and cons of this type of insurance is most effective when you have a Summary and Benefits and a provider directory to reference for each of your service types. For example, if you plan to see a therapist, you would want to see how much each session costs to you and whether or not the therapist for you is within the HMO network.

Zencare makes it easy to find a therapist in your network so you can make sure you’re seeing a high-quality provider at the lowest cost possible. Leave it to us to filter out the right insurance networks, your job is to connect with a great, vetted therapist in your area!