What is a Medicare Advantage HMO?
Key Takeaways
- Health Maintenance Organizations (HMOs) are the most common type of of Medicare Advantage plan.
- HMOs tend to have lower monthly premiums and out-of-pocket costs than other plan types.
- Alternative plan types may offer more robust provider networks and greater flexibility.
A Medicare Advantage health maintenance organization (HMO) is one type of Medicare Advantage plan available from private insurance carriers. HMOs tend to be more affordable than other plans, but they do not cover out-of-network care.
Read on to learn more about Medicare HMO plans.
HMO: A Medicare Advantage Plan Type
Private insurance carriers offer Medicare Advantage plans (also called Medicare Part C) to substitute for the coverage from the federally administered Original Medicare (Medicare Part A and Part B) program. Medicare Advantage plans may include a variety of additional benefits, such as Medicare Part D prescription drug coverage, dental, vision, and hearing .
Medicare Advantage has surged in popularity since 2007, according to the health policy organization KFF. As of 2024, 54% of Medicare-eligible Americans were enrolled in Medicare Advantage plans, and HMOs accounted for more than half (56%) of all the plans available.
Enrollees tend to choose HMOs for lower monthly premiums. On the other hand, these plans only provide in-network coverage and have other restrictions, such as requiring referrals for specialty care and prior authorization for select procedures and medications.
Ready for a new Medicare Advantage plan?
Understanding the Medicare Advantage HMO
Depending on where they live, the average adult has access to more than 40 Medicare Advantage plan options. Each plan may have differences in costs and benefits, as well as provider networks.
To get the most out of your Medicare Advantage coverage, you have to visit doctors, hospitals, and pharmacies that are in your plan’s network. While other plan types may provide at least partial coverage for out-of-network care, HMOs don’t.
HMOs with a point of service (POS) option follow the same in-network guidelines for most healthcare services but allow beneficiaries to access out-of-network providers in some situations. In those cases, out-of-pocket costs are higher.
Key Features of Medicare Advantage HMO Plans
- Lower average monthly premium than other Medicare Advantage plans
- Requires you to select an in-network primary care physician
- Typically requires referrals for specialist care and prior authorization for certain services
- Network size varies by plan and location
- HMO-POS plans may cover out-of-network care, but at a higher cost
Costs For HMOs
There’s a range of costs associated with Medicare Advantage plans, including HMOs:
- Premiums: Beneficiaries must continue to pay their monthly Medicare Part B premium and a separate HMO premium to receive benefits; however, some HMOs offer discounted or $0 premiums. Others may even help beneficiaries pay their Part B premium.
- Deductibles: A deductible is the amount you must pay out-of-pocket before insurance kicks in. Some Medicare Advantage HMOs do not include deductibles.
- Copays: Medicare HMOs may charge a copay or set fee for approved care and services through in-network providers.
- Coinsurance: For other covered services, you are responsible for coinsurance, which is a percentage of the total approved cost.
- Out-of-network fees: HMOs generally do not cover out-of-network services except in an emergency that requires immediate, life-saving medical care.HMO-POS plans offer additional out-of-network coverage (at a higher cost) for urgent care or if an in-network provider cannot administer necessary care or services.
- Out-of-pocket maximums: Unlike Original Medicare, Medicare Advantage plans set an out-of-pocket maximum for your annual spending on covered services Each Medicare Advantage HMO plan can set its own limit on your expenses.
See It In Action
Let’s say you’ve enrolled in a Medicare HMO and chosen a primary care physician (PCP) in your network. Assuming your HMO offers $0 monthly premiums, you would need to pay your Part B premiums each month but would enjoy free or low-cost copays for preventive care and services through your PCP.
Seeing a specialist would require a referral from your PCP. For example, if your PCP finds a suspicious spot on your shoulder, they might refer you to an in-network dermatologist for care. If the specialist recommends a procedure or medication, they might need to obtain prior authorization from your HMO.
HMO Medicare Advantage Plans vs. Other Networks
| HMO | PPO | PFFS | HMO-POS | |
| Average premium | Low | High | High | Low |
| Average network size | Moderate | Large | Large | Large |
| Designated primary care physician | Required | Not required | Not required | Required |
| Referrals to seek specialist care | Required | Not required | Not required | Required |
| Out-of-network care coverage | Not covered | Partially covered | Covered | Partially covered |
Medicare Advantage HMO vs. PPO
Cost and network flexibility are the primary differences between HMOs and preferred provider organization (PPO) plans. Medicare Advantage HMOs tend to have lower monthly premium costs and out-of-pocket expenses since beneficiaries are limited to in-network care and services, whereas PPOs charge enrollees more for the flexibility of a larger provider network.
Additionally, most PPOs do not require beneficiaries to designate a primary care physician. Many plans will also cover some approved out-of-network care and services. Generally, HMOs are well-suited to beneficiaries looking to limit out-of-pocket expenses by staying in-network, while PPOs might suit an individual seeking more options. Consider which type of plan best aligns with your own budget and healthcare priorities.
Are Medicare Advantage HMO Plans Good For You?
The pros and cons of each Medicare Advantage plan depend on your individual needs.
Medicare HMOs are more likely to match the needs of beneficiaries who do not expect to require extensive specialized care (which would call for referrals from their primary care provider). For those willing and able to stay in-network for most healthcare services, HMOs can offer free or low-cost monthly premiums and savings on other out-of-pocket costs.
Ready for a new Medicare Advantage plan?
Enrolling In Medicare Advantage
When deciding whether to enroll in a Medicare Advantage HMO plan, you should compare factors like premiums, out-of-pocket costs, and provider network availability. Check whether your preferred doctors are in-network and how much you’ll pay for a regular supply of any medications you take regularly.
You must already be enrolled in Medicare Part A and Part B before you can switch to a Medicare Advantage plan. You can only join or switch Medicare Advantage plans at certain times, such as during your Initial Enrollment Period or the Annual Enrollment Period (October 15–December 7), unless you qualify for a Special Enrollment Period. Once enrolled, you can also make changes during the annual Medicare Advantage Open Enrollment Period (January 1–March 31).
Putting It All Together
On Medicare Advantage HMOs, private insurers offer health coverage with a limited provider network. Like all Medicare Advantage plans, HMOs may feature additional benefits such as Medicare Part D prescription drug coverage, vision, hearing, and dental benefits. Medicare HMOs typically do not cover out-of-network care and services, except in a medical emergency. HMOs remain the most common type of Medicare Advantage plan, with restrictions like limited networks and referral requirements enabling lower out-of-pocket costs.
H1 – Simple Interior Hero w/ Background Imagery
This variation is ideal for interior pages and can supports have a background image or solid color with an overlay, keep what you need and remove what you don’t to meet your content needs.