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HMO is an insurance term you need to understand. Here’s how it works.

What is an HMO?

Many people use a health maintenance organization (HMO) for their health insurance. An HMO is a network of medical providers and specialists that a health insurance company allows its members to use.

Deeper definition

Your primary physician is in charge of your care, whether it’s preventive care or treating pre-existing conditions. If you need to see a specialist, your primary care physician will refer you to one within the HMO’s network.

Many HMOs require the payment of a copay when you see your primary care physician or a specialist. Those copay amounts can vary. If you see a provider outside of your HMO, your insurance will not pay for the services.

The main benefit of an HMO is cost savings. Generally, HMO plans have lower monthly premiums and other out-of-pocket expenses. HMOs work great if you do not need to see a lot of specialists for your routine medical care. Since your primary care physician coordinates all of your medical care, it saves you the hassle of having to find a specialist.

If you don’t use an HMO, your medical insurance might use a preferred provider organization, or PPO, or an exclusive provider organization, or EPO. It is important that you understand the differences among the three when choosing an insurance plan for you and your family.

Example of an HMO

An HMO plan requires you to pick a primary physician to coordinate all of your care. While this type of plan can save you money, you do have to use a medical provider within the network of providers listed, except in the case of an emergency. In addition, you always need a referral from your primary care doctor to see a specialist. An exception to this is an obstetrician/gynecologist for women who are seeing the specialist for routine services.

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