Is HMO Insurance the Right Choice For You?

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HMO (health maintenance organization) is a type of insurance plan that contracts with doctors and facilities so policyholders can receive care without incurring a deductible. HMOs are typically cheaper than PPOs and EPOs. The drawback is that out-of-network care is not covered. Also, HMO members will need a primary care physician and obtain authorization before seeing a specialist.

Keep reading to see how you can get an HMO and how they differ from a preferred provider organization (PPO), an exclusive provider organization (EPO) and a point of service (POS) plan.

How Does an HMO Plan Work?

An HMO plan contracts with a network of doctors and medical facilities that policyholders can use for their medical needs. Members can see providers within this network usually without being charged a deductible.

HMO plans will restrict the medical providers that members can see. Costs incurred when receiving a medical service outside the plan network is not covered unless it's an emergency.

If it’s not emergency care, HMO members will have to pay for out-of-network services out of pocket. Due to this inflexibility, HMOs are relatively cheaper than other plans that provide some coverage for out-of-network care.

HMO Rules for Subscribers

As stated above, HMOs do not allow users to get healthcare out of their plan’s network unless it is an emergency. Therefore, consumers should double-check if their preferred doctor and facilities are in-network before buying an HMO plan. Deductibles are usually waived with in-network medical care but copays will still apply for care considered non-preventative visits.

Primary Care Physician

Those with an HMO will need a primary care physician (PCP) in order to see a specialist. Once your PCP has deemed it necessary for you to seek extra medical assistance, they will give you a referral and send you to a specialist. While this may seem time-consuming, having a long-term PCP can be a massive benefit to your well-being because they will become familiar with your medical history and healthcare needs. This can contribute to more well-informed decisions on how to treat medical conditions that surface throughout your life.

Is an HMO Plan Right for Me?

You’re going to be the best judge as to what type of insurance plan is right for you and your family. Cost is an attractive feature of HMOs because HMOs provide lower-cost health insurance, typically with no deductible. However, consumers will also need to weigh this against medical provider inflexibility — HMOs will not extend coverage to out-of-network care.



Typically cheaper than other health insurance types

Fewer options for seeking healthcare.

Low or zero deductible

Referral is necessary for seeing a specialist

Primary care physicians can coordinate care.

Preferred doctors and facilities may leave your network


  • The premium is usually lower than other insurance types. HMOs will only cover healthcare obtained by specific doctors, other physicians and facilities the plan contracts with unless there is a medical emergency. HMO premiums are typically cheaper than PPOs, EPOs and POS to help offset this inconvenience.
  • There is often a low deductible or no deductible. However, there will usually be a copay for non-preventative visits.
  • Your primary care physician can coordinate care. Your PCP will also give you referrals to specialists.


  • There are fewer options for seeking healthcare. HMOs will only cover healthcare costs if you get services in-network except for emergencies. Any care received out-of-network will be paid out-of-pocket.
  • You will need a referral from your primary care physician in order to see a specialist. You won’t have the option to see a specialist otherwise.
  • Doctors or facilities may leave your network. Your preferred medical provider may choose to end their contract with your HMO network. Unfortunately, this may force HMO users to seek a new provider within the plan network.

How Much Is HMO Insurance?

HMO plans will generally have the lowest cost of any other insurance plan type due to their inflexible nature with coverage. The actual price will vary by person and will be influenced by several factors, such as:

  • Age
  • Deductible
  • Health history
  • Health plan
  • State

HMO insurance is offered in five tiers, similar to other healthcare plans: bronze, silver, gold, platinum and catastrophic. Whichever tier you select will determine the cost of your insurance. The health plans in the bronze tier will have the lowest monthly payments and the largest out-of-pocket expenses, while those in the platinum tier have some of the highest monthly premiums but significantly reduced out-of-pocket expenses. The level of care being provided is not gauged by these tiers.

Find a Health Insurance Plan That Works for You

What's the Difference Between HMO, PPO, EPO and POS?

An HMO is one of several insurance policy types customers can choose. Each type of coverage specifies how coverage works with in-network and out-of-network providers, whether you need a primary care physician and whether a specialist referral is necessary. We contrast HMOs with EPOs, POS’ and PPOs below.






Primary Care Physician Required?





Referral Required for Specialists





Out-of-Network Coverage?





Network Size






Lowest cost

Lower cost

Higher cost

Highest cost


Members of HMOs and EPOs must use their provider network for medical services. The cost of out-of-network care must be borne by the patient (except for emergency treatments). People with HMO plans must have a primary care physician, unlike those with EPOs. And before you can consult a specialist under an HMO, you must also have a referral. This need is absent from EPOs, which provide their policyholders with an additional level of independence. Due to their broader network coverage than HMOs, EPOs typically have higher costs.


Unlike HMOs, PPO plans do not demand that members have a primary care physician. Additionally, PPOs permit members to receive care from out-of-network doctors and often exceed HMO networks in size. Due to the flexibility and vastness of the PPO's network, PPOs are more expensive than HMOs.


Both HMOs and POS’ require users to get referrals before seeing a specialist. Having an HMO, however, means you need to get care from an in-network provider unless it’s an emergency. A POS, on the other hand, allows users to get care out-of-network.

How To Get HMO Insurance

You can purchase an HMO policy when you enroll in a new plan through the health insurance marketplace, a Medicare Advantage plan or if you are eligible for health coverage through your employer. Every health insurance plan will state whether it’s an HMO, PPO, EPO or POS.

If you already have a non-HMO plan and want to switch, you may need to wait until open enrollment. Open enrollment usually runs from November 1 to January 15 but this can vary by state. Medicare Advantage has a different enrollment window, typically from January 1 to March 31. Buying a new plan or switching may also be possible during a special enrollment period, such as after a change in marital status or switching jobs.


What are the benefits of an HMO insurance plan?

HMOs are usually cheaper than other insurance plan types and may not charge a deductible when seeing in-network providers. HMOs also require a primary care physician, which can be useful because they may give consumers the comfort of having someone in their corner who understands their health history.

What are the differences between HMO and PPO insurance plans?

An HMO requires users to have a primary care physician who can make referrals to see specialists while PPOs do not. HMOs also don’t provide coverage for out-of-network care while a PPO does.

Can I switch from a PPO to an HMO at any time?

You can switch from a PPO to an HMO when it's time to enroll in a new medical care plan, when you enroll in a Medicare Advantage plan or if you have health insurance available through your employer. For those enrolling through the healthcare marketplace, you may need to wait for open enrollment in order to change plans unless you have a qualifying event that makes you eligible for special enrollment.

Why would someone choose an HMO?

HMOs can be more cost-effective than other insurance types and usually don’t come with a deductible. That means you can have lower out-of-pocket costs. 

What does HMO mean?

HMO stands for health maintenance organization.

Key Takeaways

  • HMO is a type of insurance that contracts with doctors and facilities that users can then get coverage from.
  • HMOs usually either have a low deductible or no deductible when seeing an in-network provider.
  • You will need a primary care physician in order to see a specialist.
  • An HMO insurance plan can be purchased through the health insurance marketplace, when you sign up for a Medicare Advantage plan or when you get health insurance through an employer.

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