HMO Insurance: The Basics?>

Weighing the pros and cons of your health care options can help you choose the best plan for your needs. As an individual seeking private coverage for yourself or your family, your needs typically differ from those of an employer looking for a group insurance plan.

Health insurance is usually structured in one of three ways:

• HMO (Health Maintenance Organization)
• PPO (Preferred Provider Organization)
• POS (Point of Service).

The best thing about HMO insurance is that it tends to be the least expensive of the three.

However, cost isn't the only important consideration when choosing an insurance plan. Before automatically selecting an HMO as your insurance of choice, consider all of its advantages and disadvantages.

The Advantages of HMO Insurance

As you do some research and read about HMO insurance, you'll find that it has a number of advantages over other plans:

• Affordability. With rising costs of health insurance, this is perhaps the most attractive thing about HMO insurance. HMOs are affordable for patients as well as for employers. Patients contribute a small co-pay each time they visit a doctor in the HMO network, and employers pay a low predetermined fee for each employee who opts for health insurance.
• Convenience. Members of an HMO receive services merely by submitting their insurance card and the co-pay. No paperwork is involved.
• Good prescription coverage. HMOs cover a large number of prescriptions, including generic drugs. Prescription coverage also involves a small co-pay and no paperwork.
• Broad coverage. An HMO covers a broad range of basic health care issues. While plans differ, they typically cover emergency room visits, physician care and outpatient health care. Many offer other services such as inoculations and well baby care.

Disadvantages of HMO Insurance

The next step is to weigh those advantages against these limitations:

• Limited selection of doctors. An HMO offers members a network of physicians. Patients who want to see doctors or specialists who aren't in the network must pay the costs out of pocket.
• Mandatory use of a primary care physician. Members of an HMO must identify a primary care physician who decides whether a visit to a specialist is warranted. If that doctor is dropped from the HMO provider list, patients must find a new doctor.
• Less freedom for those who need specialists. If you have health problems that require a specialist, you must make an appointment to obtain a referral from your primary care physician.
• Limited Tests. The medical administrator representing the insurance company keeps a strict eye on the number of tests physicians perform in order to keep costs down and drops physicians who order too many tests. This can be a disadvantage if a patient's condition requires extensive testing.

Whether you choose an HMO, PPO or other type of insurance plan, carefully examining the pros and cons of each helps you make the best decision for your needs.

Resources

Cochran, S. (2009). Pros and cons of HMOs. Retrieved June 27, 2010, from http://www.edubook.com/pros-and-cons-of-hmos/20190/.

Insure.com. (2010). Health insurance basics. Retrieved June 27, 2010, from http://www.insure.com/articles/healthinsurance/basics.html.