The Advantages and Disadvantages of HMO Insurance

In exchange for a monthly premium, HMO insurance provides you with coverage for health care within a network of medical services. You can pick a primary care physician and visit a certain number of medical facilities in your area. If you are shopping for health insurance, consider the advantages and disadvantages that come with an HMO, or health maintenance organization.


  • When an HMO contracts with a network, the policyholders get special advantages. The biggest one is keeping health-care costs under control. When unchecked, health-care providers can charge unreasonable prices for any treatments or services. An HMO, however, tells the health-care providers in its network what they can and cannot charge. This helps to protect your pocketbook.
  • You get to choose from a variety of networks when shopping for an HMO. Just make sure that you choose the HMO that contracts with the network of physicians and medical facilities you like the best.


  • You are restricted to a certain network of providers. If you decide to go out of network, you may incur huge medical bills and will have to pay for everything out of pocket. Therefore, you have to be careful where you go for medical care. The only exception is when you have a medical emergency. However, you still have to be careful because the HMO might not agree with you about what constitutes an emergency.
  • Most HMOs require you to make a co-payment with each visit. If you develop a nagging condition, you may have to pay several co-payments to get everything taken care of. These costs can add up quickly.
  • Specialist coverage can be a hassle with HMOs. If you have a condition that requires the care of a specialist, you will need to obtain a referral to see the specialist. Otherwise, the visit will not be covered by your HMO. In addition, you have to make sure that the specialist you are going to see is within your network. If your condition is rare enough,  this could be tricky. If you get a referral out of network and go for the treatment anyway, you will be hit with the entire bill.

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