Employers have many options when it comes to buying health insurance. As one of the most important components in your benefits package, you do not want to make a rash decision. When comparing options with your health insurance broker, you will likely be drawn to HMO insurance. HMO, which stands for “Health Maintenance Organization” is one of the most common types of health insurance plans offering a range of medical care services through a network of providers. Under an HMO, you will receive coverage for a broad range of preventive healthcare services as well as other favorable benefits.
Understanding HMO Insurance
With HMO insurance, you typically receive medical care from hospitals, doctors, and other healthcare providers within the plan’s network. To see a specialist, you may need to get a referral from your primary care physician (PCP). However, there are some exceptions to these rules. Under some HMO plans, you may be able to go out of network to receive certain services, such as emergency care, out-of-area dialysis, and out-of-area emergency care. Under some plans, you may also be able to use out of network providers by paying for some of the bill yourself. This is referred to as an HMO with a point-of-service (POS) option.
Like many types of health insurance plans, HMO typically covers prescription drugs. However, if you want this benefit you will want to make sure that the HMO plan you choose offers prescription drug coverage. Most HMO insurance plans require you to choose a primary care doctor. While you will need a referral to see a specialist, certain services do not require a referral, such as annual screening mammograms.
HMOs generally provide broader coverage than PPO health insurance, but may cost more due increased benefits. Unlike other types of insurance, HMO insurance does not require a deductible. However, co-pays may be charged by your doctor. With an HMO plan, members will typically have lower out-of-pocket medical costs. HMOs also provide coverage at an affordable price with minimal paperwork. Unfortunately, your choice of healthcare providers may be limited. The good news is that HMO insurance will cover most services, including health screenings, preventive care, laboratory tests, immunizations, X-rays, surgical treatments, and more. HMO insurance also covers most prenatal and well-baby care. As each plan can differ, it is important to consult with a health insurance broker about what each plan offers.
Who Should Consider HMO Insurance?
While HMO health insurance has many benefits, it is not right for everyone. Take the time to assess your business and employees before choosing health insurance to ensure that you are getting the best value for your money. For example, if you own a small business with just five healthy employees in their 20s or 30s, an HMO may be an optimal choice. When employees do not require regular doctor visits, there is little incentive to pay high monthly premiums. Fortunately, HMO plans generally have lower premiums that make them an optimal choice for many employers.
Along with lower premiums, HMO insurance usually requires minimal out-of-pocket costs. Under an HMO plan, in network providers have agreed to certain rates. When an employee sees a doctor in their network, they are left with little to no out-of-pocket expenses. While costs are lower, HMOs do require members to choose a PCP who will coordinate the majority of their care. If you are not comfortable choosing a PCP or do not like the idea of requesting referrals for specialists, HMO plans may not be for you.
Other Health Insurance Options
Not sure if HMO insurance is right for you? Take the time to compare it with other insurance options. Some of the most common health insurance plans include:
- Health Management Organization (HMO): HMOs are one of the most affordable types of healthcare plan. With an HMO, you will have access to a network of hospitals, doctors, and specialists who have agreed to provide care at a discounted rate. While you are free to see any in network doctor with a referral, out of network services are not covered. Paperwork is also minimal with HMOs.
- Preferred Provider Organization (PPO): Another common type of health insurance is PPO. Under a PPO, members have the freedom to visit specific healthcare providers and specialists without a referral from their PCP. While PCP plans tend to be more costly than HMOs, they offer more freedom as you can see doctors that are outside of your network. However, know that your insurance may not cover the entire price of out of network services. You may be responsible for some out-of-pocket costs, depending on the service and the cost. This type of insurance may be for you if you want to freedom to see any doctor both in and out of your network.
- Exclusive Provider Organization (EPO): Similar to a PPO, members with EPO insurance are able to see any healthcare provider both in and out of their network. In an emergency, an EPO plan will typically cover any services. However, non-emergency hospital stays need to be approved in advance. EPO insurance is typically more expensive than HMOs but less expensive than PPOs, making them a suitable option for some businesses.
- Point-of-Service (POS): POS health insurance combines features of both HMO and PPO plans. With this type of managed care plan, members choose an in network PCP but have the choice to see healthcare providers out of their network also. However, unless the member gets a referral from their PCP, they may be stuck paying the majority of the medical bill.
Contact a Health Insurance Broker
Choosing the right health insurance broker to handle your employee benefits plans is crucial for your long-term success. An experienced and knowledgeable health insurance broker can provide advice, guidance, and help you access your unique insurance needs. A broker can also help you compare your various options to determine which type of plan is best suited for employee retention. Contact your local health insurance broker to learn more about HMO insurance.