HMOs
Medicare Advantage Health Maintenance Organizations
A health maintenance organization (HMO) is a network or organization that provides health insurance coverage for a monthly or annual fee and is made up of a group of medical insurance providers that limit coverage to medical care provided through doctors and other providers who are under contract with the specific HMO. These insurance plans are one of the 4 Medicare Advantage plans, the others being SNP, PPO, and PFFS plans. HMO plans are among the more popular ones since they typically have one of the lowest monthly premiums – sometimes as low as $0 per month. The low monthly premium means they also have more restrictions on which providers and facilities their members can receive care from.
In HMO Plans, you generally must get your care and services from doctors, other health care providers, and hospitals in the plan’s network, except when you need:
- Emergency care
- Out-of-area urgent care
- Temporary out-of-area dialysis
Medicare Advantage Plans
Medicare Advantage Plans provide all of the Original Medicare benefits, excluding clinical trials, hospice services, and, some new benefits that come from legislation or national coverage determinations. Most of these plans generally don’t cover medical care outside of the U.S. but some plans may offer a supplemental benefit that covers emergency and urgently needed services when traveling outside of the country. There are many benefits to a Medicare Advantage plan. With a Part C plan, you may have coverage for things Original Medicare doesn’t cover such as fitness programs. Also, some vision, hearing, and dental services might be covered as well such as routine checkups or cleanings. In case you are diagnosed with a very specific condition, a Medicare Advantage plan can tailor their benefits to help you take care of your diagnosis in a way personalized to your needs.
Part C HMO Plans
One of the more common types of Medicare Advantage plans is the Health Maintenance Organization. These plans have their own network of providers and facilities who have agreed to be part of the plan’s network and provide services to HMO members.
HMO policyholders must designate a primary care physician within the network. That doctor will coordinate all care for the member and refer them to specialist providers if necessary.
If an HMO plan member receives care from an out-of-network provider or facility, there is typically no coverage from the plan. The member is left to pay 100% of the costs out-of-pocket. Coverage for out-of-network services is considered for emergency situations.
Even with the network restrictions, many Medicare beneficiaries choose an HMO plan because of the inexpensive premiums. Some HMO plans are even premium-free. However, beneficiaries enrolled in a Medicare Advantage plan do still have to pay the Medicare Part B premium.
All Medicare Advantage plans are sold by private insurance companies, so the features of each plan will be different. There may be different coverage levels, copays, coinsurance costs, and networks. Most of the HMO Part C plans include prescription drug coverage, but their drug formularies will vary.
Medicare Advantage HMO Eligibility
Any Medicare beneficiary who has already enrolled in Medicare Parts A and B is eligible to apply for a Medicare Advantage HMO plan, with one exception. Individuals who have already been diagnosed with End-Stage Renal Disease (ESRD) are not eligible for any Medicare Advantage plan. Otherwise, an individual can enroll in Medicare Advantage during their Initial Enrollment Period or during the Annual Enrollment Period. Some individuals may even qualify for a Special Enrollment Period.
Medicare Advantage HMO plans are not available in all areas. Work with a licensed agent to find out which plans are available in your area.
Differences Between HMO and PPO Advantage Plans
The most popular Advantage plans are HMO plans and Preferred Provider Organization (PPO) plans. Preferred Provider Organizations (PPOs) are another type of Part C plan. They work similarly to HMOs, but have a few notable differences. Special Needs Plans (SNPs) are reserved for those eligible—if you do qualify for one, you will more than likely want to choose it over any of the other options, including HMO
PPO plans also have a provider network. However, PPO plan members will still have benefits available if they choose to see an out-of-network provider. The plan will not cover as much if the individual chooses to receive care outside of the network and the member’s portion will be higher, but there is still coverage, unlike with HMO plans. If you purchase a PPO plan, it is highly advisable that you stay within your plan’s network to avoid additional costs. In case you don’t mind paying a larger out-of-pocket amount, this shouldn’t be a big concern.
PPO plans typically do not require their members to designate a primary care doctor and they can see a specialist without a referral. The opposite is true with HMOs.
With better benefits come higher premiums. Medicare Advantage PPO plans will have higher monthly premiums than HMO plans. Both HMOs and PPOs are excellent options, and you will reduce your out-of-pocket costs no matter which one you choose.
Comparing Medicare HMO Plans to Original Medicare
Medicare Advantage plans are alternatives to Original Medicare. They are the same benefits (at a minimum) but have major differences.
Original Medicare does not require beneficiaries to stay in a specific network. Individuals can choose to see any provider. If the provider accepts Medicare assignment (which most do), Original Medicare will cover the maximum benefits. If the individual chooses to see a provider who does not accept Medicare assignments, the individual may have to pay excess charges. As we’ve mentioned, HMO plans do not offer any benefits outside of the plan’s network.
Medicare Advantage plan members cannot purchase a Medigap (Medicare supplement) plan. They are only available to those enrolled in Original Medicare.
Most of the time, Medicare Advantage HMO plans will have lower monthly premiums than those associated with Original Medicare.
Original Medicare does not include prescription drug coverage. Individuals will need to purchase a stand-alone Part D plan. On the other hand, most Medicare Advantage HMO plans include prescription drug coverage.