Medicare Advantage HMO Plans

Medicare Advantage Plans offer consumers more flexibility when choosing Medicare coverage. Medicare Advantage Plans come in six different varieties. A Health Maintenance Organization (HMO) is one such option. An HMO offers a lower short-term price but also less flexibility.

HMO Overview

An HMO has specific doctors, hospitals, and other healthcare providers that have agreed to provide care for a certain fixed amount. In an HMO, you must get your health care from a provider or hospital that is in-network to receive coverage. If you have an HMO plan, your insurance company will only cover you if you receive care from these in-network providers.

Medicare Advantage Plans are required to abide by the rules of Medicare. This means that they must cover Parts A and B of Medicare. Many Advantage Plans also offer additional benefits. The specifics of a Medicare Advantage HMO depend on the exact plan and insurer. Typically, however, people with HMO plans may receive additional benefits for a similar or lower cost, but have less flexibility when it comes to providers.

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Pros and Cons of HMO

One of the main reasons that consumers choose HMO plans is the lower cost. Because your insurer has an agreed-upon payment with your provider, you as the consumer pay lower costs. Specifically, HMOs often offer lower monthly premiums and lower copays and coinsurance. This makes HMOs a good option for people who only anticipate basic health needs and do not anticipate care while traveling in the U.S.

The major drawback of HMO plans is the lack of flexibility. Your choice of providers is significantly limited. You must choose a primary care physician from a local network. If you need specialist care, you will need a referral from your PCP. If your healthcare provider leaves the network, you will need to find a new provider. Additionally, you may need prior authorization for certain services. Lastly, if you receive care, even emergent care, outside of the network, you may be liable for the full cost of services. This can be present significant long-term financial hardships. 

An HMO is a good option for someone who anticipates only needing basic medical coverage and care in their network. While it has lower short-term costs, its higher long-term costs may be prohibitive, especially if you require emergent care out-of-network. Make sure to understand the benefits of a specific plan to make the right choice for your needs.