HMO (Health Maintenance Organization) is a type of Medicare Advantage plan. It allows you to pick a primary care doctor from the official HMO list that is a part of their network. You’ll get the best coverage and prices only when you see this doctor.

However, if your well-being demands the need for a specialist, your primary care doctor will first need to issue a referral. You can’t go to other professionals without a referral. If you attempt to do so, the Medicare HMO plan will not offer financial benefits for the service availed. 

The only exception to this is when you need emergency care, out-of-area urgent care, or temporary out-of-area dialysis. 

In simple terms, a Medicare HMO is like a healthcare club. You pick a captain (your primary care doctor) and stay within their team (the network) to get your healthcare services. 

What are the benefits of Medicare HMO?

Medicare HMOs limit your flexibility to see any doctor or specialist you want without a referral. If you go outside the network, you will have to pay the full costs. This might make you wonder why you should apply for it.

Well, while the HMO plan restricts you to a network, it offers plenty of attractive  benefits:

Low costs

One of the biggest benefits of a Medicare HMO is that the costs are often lower than regular Medicare. You usually pay a monthly premium for your HMO plan and Medicare Part B premium (which is $174.70 as of 2024).

But most Medicare HMO providers waive off their monthly charges or help pay some percentage of your Part B premium. They may also reduce your copayment shares, deductibles, and other costs. 

Plus, your maximum out-of-pocket limit will be low to protect you from any financial stress. In 2024, all Medicare Advantage HMO plans can set a limit of no more than $8,850. Some plans may offer you limits as low as $500 per year!

Prescription drug coverage

Most Medicare HMOs include prescription drug coverage (Part D). This helps you pay for your medications. You’ll need to use the plan’s pharmacy network to get the best prices on your drugs.

Please note that you can’t enroll in an HMO and a stand-alone Medicare Part D at the same time. So, make sure your insurance provider covers prescription drugs in the plan.

Holistic care

Being part of the Medicare system, the HMO plans are bound to provide all preventative services at 100% coverage as in Original Medicare. You won’t have to pay anything for annual physical examinations, screenings, and vaccinations. 

On top of that, most HMO plans also offer dental, hearing, and eye care. All of these services will be covered at low cost with little out-of-pocket costs. 

Who is eligible for Medicare HMO?

Typically, all adults aged 65+ who are enrolled in Original Medicare Part A and Part B can apply for Medicare Advantage HMO. There are no special conditions to apply. You can also enroll for it earlier than at 65 if you have certain disabilities like end-stage renal disease or Lou Gehrig’s disease.

Please note that once you have Medicare Advantage, you typically can’t apply for Medicare Part D. So, make sure to go through different HMO plans in your area and select the best one. 

HMO vs PPO: What’s the difference?

PPO (Preferred Provider Organization) is another type of Medicare Advantage plan. With PPO, you will get similar coverage and benefits to Medicare HMO plans. 

Except that with PPO, you have the flexibility to see any doctor without referrals. You won’t be bound to your PPO network, and the plan will cover some percentage of your out-of-network service cost. But you will have to pay higher monthly premiums. 

It’s basically a trade-off between cost and choice of doctors.

Should you get a Medicare HMO plan?

For many people, Medicare HMO coverage is a better option than Original Medicare because it offers coverage for all medical services offered by Medicare Part A and Part B as well as prescription drug coverage and extra benefits such as dental, vision, and hearing care, as long as you see doctors and providers within the network. 

The premiums tend to be zero on top of your Part B and some plans even offer rebates for the monthly Part B premium. So many think of these plans as a cheaper way to get more coverage than what traditional Medicare offers. This explains the steady growth in the number of enrollees who choose these plans. 

Article updated on January 11, 2024.