Medicare health maintenance organization (HMO) plans are a type of Medicare Advantage plan. The plans are offered by private insurance companies, with varied coverage and costs.
There are various types of Medicare Advantage plans a person can choose from. Each one has varying costs and guidelines in place.
This article discusses Medicare Advantage, looks at the HMO plans, and examines how they compare with Original Medicare. It also looks at eligibility, enrollment, and costs.
Glossary of Medicare terms
- Out-of-pocket cost: This is the amount a person must pay for care when Medicare does not pay the total amount or offer coverage. Costs can include deductibles, coinsurance, copayments, and premiums.
- Premium: This is the amount of money someone pays each month for Medicare coverage.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before Medicare starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, coinsurance is 20%.
- Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
One type of Medicare Advantage healthcare plan is the health maintenance organization (HMO) plan. It limits healthcare to providers within the plan’s network.
The focus of HMO plans is on prevention and wellness. They provide coordinated care, often using care managers within the company or a primary care doctor.
Usually, the doctors and other service providers must either contract with or work for the company offering the HMO plan.
Specifics
HMO plans have certain limitations and conditions:
- Most HMOs do not cover out-of-network care except in an emergency. If a person uses the services of a provider who is not in the network, they are responsible for the out-of-pocket costs.
- A person may need a referral from their doctor to see a specialist or to get certain tests.
- To be eligible for an HMO a person must live or work in the plan’s service area. HMO networks are usually smaller than an HMO with a point-of-service (POS) option that can cover a wider area.
This online tool can help a person compare HMO plans in their area.
To access the plan a person uses the benefit card from the HMO and not their Medicare card.
The list of healthcare providers in an HMO plan’s network may be limited in number and specialty. A person may wish to consider an HMO plan with point-of-service (POS) options.
A POS plan is a hybrid of an HMO and a preferred provider organization (PPO) plan, with these differences:
- In an HMO plan, a person chooses an in-network doctor as a primary healthcare professional.
- With an HMO-POS plan, a person can choose to use a healthcare professional outside the plan’s network.
- An HMO-POS does not usually have a deductible for in-network providers and the copays may be low.
When a person takes the HMO-POS option, they may have higher out-of-pocket costs. They may also have to pay most of the cost unless they have a referral from a doctor to the out-of-network provider. If a person has been referred, the HMO-POS plan will cover the services.
In addition, if a person goes to an out-of-network healthcare professional they have to file the paperwork with their HMO-POS company. A person has to pay the provider, and then wait for reimbursement for the allowable charges.
Find out about HMO plans vs. PPO plans.
Medicare Advantage plans combine the benefits of Original Medicare (Part A and Part B).
Medicare Part A is hospital insurance and provides coverage for hospital, skilled nursing, and hospice care.
Medicare Part B is medical insurance and provides coverage for the diagnosis and treatment of medical conditions, and some preventive services such as flu shots or cancer screening.
Medicare Advantage plans must provide coverage for the same benefits offered through Original Medicare. However, Advantage HMOs may offer additional benefits, such as:
- eye care
- dental care
- hearing
- health and wellness programs
In addition, if a person wants prescription drug coverage, Medicare Part D, they can get it through the HMO plan. However, a person cannot have Medicare Part D and an Advantage HMO plan at the same time.
Read about Original Medicare vs. Medicare Advantage.
A person must be enrolled in Original Medicare to be eligible for a Medicare Advantage plan. For the HMO plan, a person must also live in the plan’s service area.
In addition, there are other eligibility requirements for a person with end stage renal disease (ESRD).
In 2020, people with ESRD are only eligible for an HMO Advantage plan if they enroll in a special needs plan (SNP), or previously enrolled in an HMO before the ESRD diagnosis.
Changes in the regulations began on January 1, 2021, and meant that a person with ESRD could enroll in an Advantage plan during any valid enrollment period.
People can enroll in a Medicare Advantage plan, including an HMO plan, during several enrollment periods:
- The initial enrollment period (IEP) begins 3 months before the month a person turns 65, includes their birthday month, and ends 3 months after their birthday month.
- The open enrollment period (OEP)is from October 15 to January 7 every year during which a person can enroll in an Advantage plan if they have enrolled in Original Medicare.
- During the Medicare Advantage open enrollment period (OEP) from January 1 to March 31, a person can join, switch, or drop an Advantage plan.
Read more about Medicare enrollment periods.
A person enrolled in a Medicare Advantage HMO plan must generally pay the Medicare Part B premium and a plan premium. However, some HMO plans help pay a percentage of the Medicare Part B premium.
HMOs usually have the lowest out-of-pocket costs. These can include premiums, deductibles, coinsurance, and copays.
- Advantage HMO plans may offer premium-free plans, or a person may have to pay the premium.
- A person has to pay the Medicare Part B monthly premium, which is $185 in 2025. Some plans cover the premium.
- The deductible for the HMO plan may be as low as zero, depending on the plan.
All HMO plans have an out-of-pocket maximum, although the amounts vary among plans. This online tool allows users to check plan costs and other details.
Medicare resources
For more resources to help guide you through the complex world of medical insurance, visit our Medicare hub.
Medicare Advantage plans combine the benefits of Original Medicare (Part A and Part B) and may offer prescription drug coverage.
Among several other Advantage plans, an HMO plan generally has lower out-of-pocket expenses. Healthcare is provided by in-network providers, although emergency services can be covered out-of-network.
