Medicare Health Maintenance Organizations (HMO’s) are private plans that offer health insurance benefits to those 65 and above or those eligible for early Medicare coverage due to disability. HMO plans are offered only through Medicare Advantage (Medicare Part C) but all HMO plans offer the same benefits as Original Medicare (Part A and Part B). Enrollment in Medicare Advantage plans is voluntary. Beneficiaries can stay with Original Medicare coverage if they don’t want to enroll in an HMO or PPO plan through Medicare Advantage.
Your Medicare Coverage Options
You have a few options when enrolling in a Medicare plan:
- Enroll in Original Medicare: You will receive all benefits offered by Original Medicare. You may also enroll in Medicare Part D, considering Original Medicare does not typically include drug coverage.
- Enroll in Medicare Advantage: These plans are offered by private insurance companies and are guaranteed to provide all Original Medicare coverage. Most plans also offer added benefits like coverage for prescription drugs, vision, dental, and/or hearing services.
- Enroll in a Medicare Supplement Plan (Medigap): These plans are designed to work with Original Medicare as a supplementary source to help pay for remaining healthcare costs like copayments, coinsurance, and deductibles. The plans are sold through private insurance companies and are standardized by the federal government, so each lettered plan offers the same benefits. Insurers cannot add benefits to these plans, so they compete through their rates.
What Do Medicare Advantage HMO Plans Cover?
The federal government ensures all beneficiaries receive at least the basic coverage offered through Medicare Part A and Medicare Part B. Once you’re eligible for Medicare, you enroll in these two parts. You then have the option to enroll in Medicare Advantage plans.
Medicare Advantage plans all offer the basic benefits covered by Parts A and B. Each insurance company then has the freedom to add benefits that aren’t included in Original Medicare. The goal is to give beneficiaries the option to secure more comprehensive benefits than they would receive through Medicare Parts A and B alone.
The most common additional coverage options you may receive when enrolling in Medicare Advantage include:
- Prescription drug coverage
- Meal delivery services
- Fitness program memberships
Once you enroll in an Advantage plan, the insurer will send you a new insurance card. You show that card to your medical provider when seeking care. While you won’t use your red, white, and blue Original Medicare card, you should keep it in a safe place for later use. For more detailed information visit Medicare ID Card.
You’re guaranteed Original Medicare benefits plus additional coverage regardless of what type of Advantage plan you select. The complete benefits package offered in each plan varies by location as do premiums.
HMO vs PPO Medicare Plans
There are three types of Medicare Advantage plans available:
- Health Maintenance Organization (HMO) Plans: are often the most affordable plan options. They require all members to see medical providers included in a narrow network. Those providers have agreed to charge limited prices as defined by the insurance company. Since the insurer gets a discount from the provider, out-of-pocket expenses for the beneficiary are limited.
- Preferred Provider Organization (PPO) Plans: typically have a much wider provider network. That gives beneficiaries a greater variety when selecting in-network providers. The compromise is that out-of-pocket expenses like copayments and deductibles are often a bit higher. That makes PPO Advantage plans a bit more expensive than Medicare HMO plans.
- Specialized Plans: are available to select categories of beneficiaries and are designed to meet the special healthcare needs of those groups. For instance, there are special plans for those diagnosed with specific medical conditions.
HMO and PPO plans are what most beneficiaries select from when enrolling in Medicare Advantage. It’s important to understand the difference before you select a plan because each choice can impact your overall out-of-pocket medical expense.
Can You Go Out of Network with a Medicare HMO Plan?
One of the biggest differences between Medicare HMO and PPO plans is the beneficiary’s ability to see medical providers outside the plan’s network. While PPO plans allow out-of-network visits with higher copayments, not all HMO plans will cover charges out of network unless they’re the result of an emergency.
Remember, the reason HMO plans are more affordable is that in-network providers have agreed in advance to charge the insurance company reduced rates. When you see a provider outside the network, they haven’t agreed to those reduced rates. They’re likely to charge the insurance company more, and that added cost is at least partially passed down to you.
If you want the benefits of an HMO plan with the option of going out of network, you should consider an HMO Point-of-Service plan, otherwise known as HMO-POS.
A Closer Look at the HMO-POS
What is the HMO-POS meaning? These plans follow the basic structure of a Medicare HMO plan while remaining more open to out-of-network medical providers. You will receive most of your healthcare from providers within the plan’s network while going out of network as needed for select services.
Most plans require you to get prior approval before seeing a medical provider out of the network. If you don’t follow those rules, your plan is likely to deny coverage for those services. The rules for this type of HMO are a bit more complicated, so it’s important to review them in depth before starting to book medical appointments.
HMO-POS vs PPO Plans
If HMO-POS plans allow you to see out-of-network providers, what makes them any different from PPO plans? The difference is in those complicated rules.
With a PPO plan, you’re not as likely to need prior approval to see a doctor outside the network. You will also have the option to go out-of-network for about any service as long as you’re willing to pay the higher copayments and deductibles.
If you select an HMO-POS plan, you will need to get approval before seeing any provider outside the network. That extra step could delay treatment in some cases, and the plan can always deny your request for out-of-network coverage. You will only get approved for select out-of-network services, so it’s far more restrictive than most PPO plans.
Should You Select a Medicare HMO Plan?
Medicare Advantage HMO plans attract beneficiaries who want affordable coverage that offers more than the basic Original Medicare benefits. The most attractive plans may include coverage for:
- Hearing services
- Prescription drug coverage
- You receive all your healthcare benefits in one package and don’t need to pay additional premiums for comprehensive coverage.
If you have preferred medical providers that you want to continue working with, it’s important to check the HMO networks carefully. You can also call the provider and ask if they participate in any available HMO plan. If not, you may need to go with a PPO plan and pay the extra expenses to see that provider.