What is an HMO? Health Maintenance Organization Explained

An HMO, or Health Maintenance Organization, is a type of health insurance plan that provides comprehensive medical care through a network of healthcare providers. In an HMO, you typically choose a primary care physician (PCP) who coordinates your care and refers you to specialists within the network when needed.

In this guide, you'll learn:

  • How HMOs work
  • The pros and cons of HMO plans
  • Key factors to consider when choosing an HMO

Table of Content

Diagram showing how patients access healthcare services within an HMO network, starting with their primary care physician (PCP) who coordinates referrals to specialists.

Key Takeaways:

  • HMOs provide affordable, comprehensive healthcare through a network of providers.
  • They emphasize preventive care and coordinated services through a primary care physician.
  • HMOs offer lower costs but have limitations on provider choice and require referrals for specialists.

How HMOs Work

HMOs operate on a prepaid basis, meaning you pay a fixed monthly premium for coverage. In return, you receive access to a wide range of medical services, including preventive care, doctor visits, hospital stays, and prescription drugs.

Pros of HMOs

  • Lower Costs: HMO premiums are generally lower than other types of health insurance plans due to the focus on preventive care and the network's negotiated rates with healthcare providers.
  • Coordinated Care: Your PCP serves as your central point of contact, coordinating your care and ensuring you receive the right services at the right time.
  • Emphasis on Preventive Care: HMOs encourage preventive care, such as annual checkups and screenings, to help you stay healthy and avoid costly medical issues.

Cons of HMOs

  • Limited Network: You are generally restricted to seeing healthcare providers within the HMO's network, except in emergencies.
  • Referrals Required: You typically need a referral from your PCP to see a specialist, which can sometimes be inconvenient.
  • Less Flexibility: HMOs offer less flexibility than other types of plans, such as Preferred Provider Organizations (PPOs), which allow you to see out-of-network providers at a higher cost.

Key Factors to Consider When Choosing an HMO

  • Network: Ensure the HMO's network includes your preferred doctors and hospitals.
  • Cost: Compare premiums, deductibles, and copayments of different HMO plans.
  • Coverage: Review the plan's coverage details to ensure it meets your specific healthcare needs.
  • Customer Service: Research the HMO's reputation for customer service and claims processing.

For those concerned about cost, our licensed insurance agency can help find insurance options to lower the cost or to cover the procedure.

If seeking a licensed professional, consider our services. Our insurance advisors and client support team are here to assist you with your insurance needs.


This guide has offered a comprehensive overview of HMOs. For those seeking to deepen their understanding, we recommend exploring our guide on Preferred Provider Organizations (PPO), which dives into another popular type of health insurance plan and its implications for patients in greater depth.


What is the difference between an HMO and a PPO?

HMOs offer lower costs but limit you to a network of providers and require referrals to see specialists. PPOs have higher costs but provide more flexibility to see out-of-network providers without referrals.

Do HMOs cover pre-existing conditions?

Yes, under the Affordable Care Act (ACA), all health insurance plans, including HMOs, must cover pre-existing conditions without charging higher premiums.

Can I see a specialist without a referral in an HMO?

Generally, you need a referral from your primary care physician (PCP) to see a specialist within an HMO network. However, exceptions may exist for certain services or emergencies.

How do I choose the right HMO for me?

Consider factors like the network of providers, monthly premiums, deductibles, copayments, coverage details, and the HMO's customer service reputation when choosing an HMO plan.