Advantages and Disadvantages of an HMO Plan

HMO plans can provide a cost-efficient way to manage your health care, but is an HMO plan right for you?

Health Maintenance Organization (HMO) plans offer you a specific list of doctors and hospitals to choose from which means all your medical care must come from these approved providers. HMO health plans cover the cost of most health care expenses and are usually the most affordable way to get coverage for your medical needs.

One disadvantage is that HMOs offer you less freedom of choice than do other types of insurance. Only doctors in the HMO's network are fully covered by this type of plan. If you want to see a doctor or a specialist outside of the network you will need a referral from your PCP (primary care physician) and usually the approval of the HMO. This can be an inconvenience and time consuming especially if you need a consultation as quickly as possible. Another disadvantage is there is no guarantee that the HMO will approve the referral, and even if you are approved, you may have to pay substantially more.

Most of the time, your main out-of-pocket costs with HMO insurance plans will consist of co-payments for prescription medications and doctor visits; these must be paid at the time of service.

HMO plans can be very useful for basic general health care, family health care and preventive healthcare and are great for those who anticipate minimum medical expenses in the near future. But when it comes to specialized problems, emergency care and other specific services such as ambulance use or X-rays, some patients experience gaps in their coverage.