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What is an HMO?

What is a Health Maintenance Organization (HMO), and is it right for you?

HMO plans are designed to protect you and your family from the costs of the medical services you need when you’re sick or injured. They can also help protect your health and well-being by covering the cost of preventive care services.

When you enroll in an HMO plan, you agree to pay a specific rate, or premium, each month. You also agree to use an in-network primary care physician (PCP), or family doctor, to coordinate your care. Your PCP will treat you for general health needs and refer you to specialists as needed. In return, your insurer agrees to pay a portion of your covered health care costs when you use in-network providers. You will not be covered for the care you receive from out-of-network doctors or hospitals (except for urgent care and emergency services).

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What’s a referral

A referral is like an official doctor’s note. Your doctor notifies a specialist that you require services from them. After the referral is approved, you can make an appointment with the specialist. Most AmeriHealth referrals are done electronically, so you can get a referral simply by calling your PCP’s office.

What Are the Primary Features of an HMO?

Cost, deductibles, and copays

In addition to a monthly premium, HMO members may pay each time they receive medical care or have a prescription filled. These payments are often called cost-sharing or out-of-pocket costs and come in the following types:

Copay — A copay is the flat fee the member pays when they see a doctor or receive other covered services. For example, they might pay $20 when they visit their PCP.

Deductible — A deductible is the amount a member pays each year before the health plan starts to share the costs. For example, if the plan has a $1,000 deductible, the member pays the first $1,000 of the costs for the services received. Once the deductible has been met, the insurance will pay for some or all health care services, depending on the health plan.

Out-of-pocket maximum — An out-of-pocket maximum is the most a member will have to pay for health care expenses during a plan period (usually a year) for covered services received from providers that participate in the plan’s network. No matter what, a member will not pay more than this maximum amount in a given year. Any care received for covered services after the out-of-pocket maximum has been met will be covered 100 percent by the insurance company.

Who would benefit most from an HMO health plan?

An HMO plan may be right for you:

  • If you see the doctor often or have an ongoing medical condition
  • If you are looking for lower-cost coverage and are not worried about using network providers or getting referrals for specialist visits

What are the pros and cons of an HMO Plan?

Advantages of an HMO

  • Mid-range monthly premium
  • Depending on the plan, it may have lower out-of-pocket costs

Disadvantages of an HMO

  • HMO plans require you to get referrals to see most specialists.
  • Out-of-network care is not covered except for urgent and emergency care

How does an HMO compare to other health insurance plans?

HMO vs. EPO (Exclusive Provider Organization)

Like an HMO, an EPO plan requires you to use in-network providers (except for urgent and emergency care). EPO members may be required to select a PCP and should refer to their summary of benefits and coverage. But unlike an HMO, it does not require you to get referrals before seeing a specialist. Also, some EPO plans come with Health Saving Account (HSA) options. An HSA is a tax-free savings account where you can save money for qualified medical expenses (like copays and deductibles).

Want to learn more about EPOs? Take an in-depth look: What is an EPO?

HMO vs. PPO (Preferred Provider Organization)

Another popular plan option is a PPO. They offer members the most freedom to see providers in and out of the network without referrals. PPO plans, however, tend to have higher monthly premiums than other types of plans.

Currently, AmeriHealth does not offer PPO plans to individuals and families. They are only available through our employer groups. If your employer offers AmeriHealth coverage, talk to your benefits administrator to learn more about your plan options.

What HMOs are available from AmeriHealth?

Currently, AmeriHealth only offers off-exchange HMO plans to individuals and families. If your employer offers AmeriHealth coverage, talk to your benefits administrator to learn more about your plan options.

Know your options and find your plan

  • Compare all our NJ heath insurance plans and apply for coverage. Get started.
  • Depending on your income, age, and the number of people in your household, you may be eligible for financial assistance. Find out if you qualify.

If you have questions, please call one of our AmeriHealth representatives or refer to our Frequently Asked Questions (FAQ).