How they work: An HMO delivers services exclusively through a network of doctors, nurses and hospitals. You are required to have a primary care physician ("PCP") who coordinates all of your care. To keep down costs, a referral from your primary care physician is required if you ever need to see a specialists in your HMO network. For this reason, primary care physicians in HMOs are sometimes called "gatekeepers." What if you see a doctor outside of your HMO's network? You will likely pay the full cost of care.
What you pay: HMOs are often less expensive than other plan types. In some cases, they will not have a deductible, which means your insurance will begin paying most of your costs immediately.
Is an HMO right for you? HMOs can be great if you are healthy, not too picky about what doctors you see, and don't have any specific health conditions that require frequent, specialized care from a variety of doctors. You will have the least flexibility when choosing your health care providers since you can only see providers in your network and you cannot see specialists without a referral. In other cases, some HMOs are great solutions for individuals dealing with a chronic condition like Diabetes, since you and your insurance company have the same incentive: to get you healthier!