Health Maintenance Organization (HMO) Plans

Medicare Advantage HMO plans are run by private insurers who contract with the U.S. Centers for Medicare & Medicaid Services to administer Medicare benefits. These private insurers contract with health care providers to pay a certain level of fees for various medical care and services.

HMO plans are a type of Medicare Advantage coordinated care plans that may give you more flexibility on coverage and out-of-pocket health care costs.

If you join a Medicare HMO, you have to use the health care providers in the HMO’s network to be covered. You can still use doctors, hospitals or other health care providers outside the HMO network, but you will have to pay extra for their services.

Other types of coordinated care plans include Medicare PPO and Medicare POS plans.

People with End-Stage Renal Disease (ESRD) have been able to join a Medicare HMO or any other Medicare Advantage plan since 2021. Previously, they could only purchase a Medicare Advantage plan if they met specific conditions.

Medicare HMO plans are part of Medicare Part C, also known as Medicare Advantage plans. All Part C plans, including HMOs, must cover everything that Original Medicare covers.

Many Medicare HMOs also offer vision, hearing and prescription drug coverage. You should ask which of these and other additional services are covered by a plan before purchasing it.

Rules, restrictions and costs of Medicare HMO plans may vary from plan to plan and from one provider to another.

While Medicare HMO plans generally require you to use doctors, hospitals and other health care providers in its network, there are a few exceptions in which you can use providers outside of the network.

While Original Medicare does not cover hearing, vision and most prescription drugs, Medicare HMO plans may offer these benefits. Ask about this coverage when considering a Medicare HMO or any other Medicare Advantage plan.

The big advantage of HMO plans is that you will likely pay less than with other types of insurance as long as you only see doctors or use facilities within the plan’s network. If you want to see a doctor or have to use a hospital outside that network, you may be responsible for the full cost.

In some cases, you will not have to pay Medicare Part B premiums. But some Medicare HMO plans still require you to pay a reduced Part B premium.

And while you can seek emergency care at facilities outside of your network, if the emergency department admits you to a hospital outside the network, you’ll be on the hook for all hospitalization costs.

HMO Point-of-Service (POS) plans are specific types of Medicare HMO plans that may let you receive services out of network in exchange for a higher copayment or coinsurance. You still need to follow the plan’s rules carefully. These may require you to get approval from the insurance company before seeking the service.

You’ll have a separate deductible for a POS portion of a Medicare HMO plan.

Prescription drug coverage is usually included in Medicare HMO plans, but insurers are not required to offer drug coverage. It’s up to you to make sure a plan provides drug coverage before purchasing it.

If you join a Medicare HMO plan that does not cover prescription drug costs, you will not be able to get a separate Medicare Part D prescription drug coverage plan.

It’s also important to remember that if you don’t sign up for prescription drug coverage during your Medicare enrollment, you will most likely have to pay a late enrollment penalty when you do sign up for prescription drug coverage later on.