Health maintenance organizations or HMOs are health insurance plans that are prepaid. Members pay a premium every month to their HMO and in return they receive coverage for all medical costs. The caveats are two – fold:

• The doctor and medical facility must be included in the HMO approved networks.
• The procedures and services performed at the approved facility must fall within the scope of coverage as outlined by your HMO provider.

How Much are the Premiums?

All premiums or monthly rates are negotiated when the member signs up. These fees are meant to be lower than most health insurance plans. Beware of HMO premiums that are considerably lower than their competition, however. HMOs are all picky, but the low cost approved networks of medical doctors and facilities may not be practical for you.

How Do I Choose A Doctor?

From the approved network that the HMO generally outlines in an annual directory or online (or both), you choose your primary care doctor. Be careful when choosing this doctor. He or she is expected to plan all of your medical care and treatment services as well as choose referrals to any specialists you may need. Should you opt for a doctor or facility outside of the approved network, none of the bills will be applied to your deductible. In other words, you will have to pay all of the bills out of your own pocket.

How Does the HMO Afford To Offer Low Premiums?

HMOs are meant to provide low costs to their members. To do this, they cover preventative health care in the hopes that fewer members will become ill and require costly medical procedures or frequent visits to the doctor.

Another way that HMOs keep their premiums low is by providing coverage only for services provided by a pre-determined group of medical facilities and doctors. This group has agreed to charge the HMO a low fee for the services they give to that HMOs members.