HMO

What exactly is an HMO? HMO stands for Health Maintenance Organization. The concept behind the HMO started in the 1930s, but it was only during the last couple of decades that HMOs really hit their stride.

The basic concept behind an HMO is that the members of the organization pay a monthly premium, often a lower premium than most other health plans, which allows them to see doctors and be admitted to hospitals which are members of the HMO. Doctors, specialists, hospitals and other health providers which are members of the HMO have agreed to accept fees lower than their normal fees in exchange for being guaranteed a certain number of HMO members as their patients.

This helps keep costs in line for the insurer and allows the insurer to pass the savings to its members in the form of lower monthly premiums than they might pay elsewhere. Many businesses only offer HMO medical coverage to their employees.

While lower premiums are a benefit to many people, there are trade-offs. The main trade-off is that members of the HMO may not see doctors or other health providers who are not members of the HMO, except in emergency situations.

This means that if you become a member of an HMO and your long-time family physician is not a member then you will be forced to choose another doctor who is a member of the HMO. There is rarely an exception to this rule.

With most HMOs you will be required to make a small co-payment each time you visit your doctor (typical co-pays are between $5 and $25, depending on the plan you are a part of) or other health provider.

Most HMO plans have a drug benefits provision. Often there is a co-payment for each prescription; the co-payment may vary considerably depending on whether you purchase generic or name-brand drugs.

Most everything we do in life involves trade-offs of one sort or another. With an HMO medical plan the major trade-off is lower premiums in exchange for only seeing doctors who are members of the HMO.