Define HMO

by Ben Bontekoe

Overview

A health maintenance organization (HMO) is a network of physicians and hospitals contracted to provide health care services to the HMO's customers. While an HMO generally offers low premiums, it can often be inflexible in terms of providing care.
Function

An HMO emphasizes preventive care, with the idea that regular doctor visits when you are well will reduce the likelihood of your getting sick and requiring additional care.

Features

An HMO requires you to select a primary care physician (PCP), who will be your main contact and will make most of the decisions regarding your health care needs.
Benefits

Most HMOs have a variety of doctors and hospitals to choose from, as well as small co-payments for each doctor visit and low or no deductibles.
Considerations

If you have to see a specialist, you will require a referral from your PCP. This can result in additional doctor visits if you need to see specialists frequently.
Warning

Except in extreme cases, you will have to pay the full cost of the visit if you go to a doctor or hospital outside of the HMO network.