Key takeaways:
A health maintenance organization (HMO) is a type of managed care insurance plan.
HMOs are usually more affordable than preferred provider organization (PPO) plans. But they offer enrollees less flexibility in choosing healthcare professionals and hospitals.
An HMO enrollee must choose an in-network primary care provider to coordinate their care.
When exploring your health insurance options, you may want to examine plans offered by health maintenance organizations (HMOs) if you’re looking for coverage that offers:
Centrally coordinated care
A defined network of healthcare professionals and covered facilities
Comparatively low premiums, deductibles, and copays
Here’s what you should know about HMO plans.
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What’s the meaning of HMO?
An HMO is a type of managed care health insurance. Other managed care plans include preferred provider organization (PPO) insurance and exclusive provider organization (EPO) insurance.
Each HMO has its own network of approved healthcare professionals and facilities. In-network providers have negotiated rates for services, which can reduce what the plan pays and your cost sharing. But HMO plans typically don’t cover care that you receive outside their networks, other than emergency services. Some HMOs are also point-of-service (POS) plans that let you go outside the network but with higher cost sharing.
HMOs are more affordable than PPO plans, but they’re more restrictive. Read on for more details on how HMOs work.
How does HMO insurance work?
After you enroll, you pay a monthly premium for coverage. According to the KFF 2025 Employer Health Benefits Survey, the average HMO premium is slightly lower than other plan types for individually covered workers. HMO enrollees may not have to face a deductible: According to the survey, 47% of employer-based HMO plans have no annual deductible for individual coverage. For certain services, you may be charged a small copay.
You’ll also pick a primary care provider (PCP) from your HMO’s list. Your PCP is the chief coordinator of your medical care. You’ll go to them first for treatment and referrals to specialists. This healthcare professional is typically a physician, a physician assistant, or an advanced practice nurse, such as a nurse practitioner.
One challenge with HMOs can be knowing which healthcare professionals and facilities are in the network — and remembering to stay in your network. Your plan should provide a list. Because participating professionals and facilities can join and drop anytime, it’s important to make sure your care is in network before your services begin.
Also, when choosing an HMO, consider whether its network is suitable for you. You can often search your plan website for the healthcare professionals you already use. Some plans have limited networks, which may not include the specialists you need or the facilities you prefer.
Who is eligible for HMO insurance?
Anyone can join an HMO if they live or work within its service area and qualify by employment or another eligibility requirement. Most people who enroll do so in one the following ways:
Through an employer: In 2025, nearly half of workers were enrolled in PPO plans, and 12% were covered by HMO plans, according to the KFF survey.
Through Medicare: Enrollees can choose a Medicare Advantage plan that’s an HMO. In 2026, more than half (57%) of Medicare Advantage plans offered to consumers were HMOs.
Through an Affordable Care Act marketplace: Many HMOs are available on the HealthCare.gov national marketplace and through state marketplaces.
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Which out-of-pocket costs should I be concerned about with an HMO?
Premiums aside, the out-of-pocket costs to consider as you shop for an HMO are:
Deductibles: A deductible is a set annual amount of healthcare costs you pay during a plan term, usually annually. You must reach this threshold before your insurance begins cost sharing.
Coinsurance: Coinsurance is the cost-sharing percentage you pay on covered healthcare expenses after meeting your deductible. For example, if an HMO has a coinsurance split of 80/20, the insurer pays 80% of covered services, and you pay 20%. After reaching your deductible, a $100 treatment would cost you $20 in coinsurance.
Copays: A copay is a fixed dollar amount that you pay when you access care. HMOs typically operate with copays. Your copay may differ for a PCP, a specialist, emergency care, and medication. The different amounts are sometimes printed on your insurance card. If the copay for a doctor visit is $25, that’s what you’ll pay, whether you’ve hit your deductible or not. Covered preventive care will not typically require a copay or for you to meet your deductible.
What is an HMO dental plan?
An HMO dental plan works like an HMO health plan. It’s managed care dental insurance focused on preventive care. HMO dental plans have lower premiums. But the trade-off is that they have a more limited network of covered healthcare professionals than PPO dental plans. You must see an in-network dental professional to benefit from lower costs for care.
As with an HMO health plan, you’ll need a referral from your primary dentist to see a specialty dentist. If you need care from an out-of-network dentist or practice, your out-of-pocket expenses will be similar to the cost-sharing requirements of an HMO health plan.
What are the advantages of HMOs?
More affordable premiums: According to the KFF survey of employer plans, HMO plans tended to have slightly lower annual premiums than PPOs. In 2025, the average annual premiums for HMOs were $9,229 for individuals and $27,277 for families. For PPO plans, the average annual premiums in 2025 were $9,818 for individuals and $28,272 for families. (A share of premium costs are often paid by the employer.)
Fewer plans with deductibles: KFF research also found that 47% of workers with HMOs didn’t have general annual deductibles in 2025, compared with 14% of those with PPOs. (Among workers whose plans had a general annual deductible, the average PPO deductible for an individual was $1,337 — less than the average HMO deductible of $1,649 for one covered person.)
Coordinated care: If you have an HMO plan, your PCP helps coordinate your care and must refer you to specialists.
No extra fees for care: Your plan covers in-network specialists. You may need to handle only the copay.
What are the disadvantages of HMOs?
Limited options: One reason HMOs tend to be more affordable is that they offer a smaller selection of in-network healthcare professionals and facilities. Also, to join a particular HMO, you may have to live in an eligible service area and have access through an employer.
Coverage does not travel: If you’re far from home, and you see an out-of-network doctor, that visit will be covered only if it’s a medical emergency, out-of-area urgent care, or temporary dialysis outside your area. Otherwise, you’ll have to pay the entire bill out of pocket.
Required referrals: You must be referred by your PCP to see any other healthcare professional. Adding this step to the process may cost you some time, and your options may be limited. If your PCP doesn’t provide a referral, you’ll have to cover the costs to see the other healthcare professional.
You may lose preferred doctors and facilities: If a healthcare professional or facility leaves your HMO, you’ll need to find a replacement within the HMO’s network.
What are the differences between HMOs, PPOs, and EPOs?
The main differences between PPOs, HMOs, and EPOs are how much autonomy you have in choosing healthcare professionals, how services are covered, and how much they cost.
Differences Between HMO, PPO, and EPO Insurance Plans
HMOs: health maintenance organizations | PPOs: preferred provider organizations | EPOs: exclusive provider organizations | |
|---|---|---|---|
Do the plans rely on a network of providers? | Yes | Yes | Yes |
Is a PCP required? | Yes | No | Depends on the plan, but often yes |
Do you need a referral to see a specialist? | Yes | No | Depends on the plan, but often no |
Do you need to file claims paperwork? | No | Yes, but only for out-of-network care | Depends on the plan |
Can you get coverage for out-of-network providers? | Only in a medical emergency | Yes | Only in a medical emergency |
What are the costs of seeing out-of-network providers? | You must pay all costs (except covered emergency fees) out of pocket. | You typically pay a higher rate of coinsurance than for in-network care. | You must pay all costs (except covered emergency fees) out of pocket. |
What’s the difference between an HMO and an HDHP?
An HMO restricts your access to doctors and facilities in return for lower premiums. In addition, specialist visits require a referral from your PCP. A high-deductible health plan (HDHP) offers enrollees very low premiums with a high deductible. This deductible must be met before insurance starts sharing costs for anything other than preventive care.
An HMO limits how you access health care and how that care is managed. An HDHP determines how much you must pay out of pocket before insurance starts cost sharing. Both can result in lower premiums. But you’ll receive care differently with an HMO and pay more out of pocket with an HDHP.
You can have an HMO health plan that’s also an HDHP. This can result in lower monthly premiums. But it can mean higher out-of-pocket costs if you need care before meeting your deductible.
Both HMOs and HDHPs typically cover preventive, in-network care in full before the deductible is met.
How is an HMO different from a point-of-service plan?
A POS health plan is similar to an HMO health plan with the added benefit of out-of-network coverage in certain situations. It’s a managed care health insurance plan combining elements of HMOs and PPOs.
Just like with an HMO, POS plans have a network of doctors and hospitals that will cost you less. But they require your PCP to refer you to specialists. Unlike HMOs, POS plans offer the option to see out-of-network providers and still have some coverage. If you visit an out-of-network provider, you will pay more money. You may also have to pay up front and then ask your insurance provider to reimburse you some or all of your expenses.
POS plan premiums are usually higher than HMOs’ but less than PPO plans’. They are a middle ground between lower-cost, more restrictive HMOs and higher-cost, less restrictive PPOs.
How do I know if an HMO is right for me?
Aside from costs, these are some reasons why an HMO may appeal to your needs and lifestyle.
Your PCP is in a particular network: If you like your PCP, you may want to sign on with their HMO. This keeps your doctor-patient relationship intact, and you get referrals from someone you already trust.
You need more coordinated care: Your PCP is your main point of contact, who will refer you to specialists and follow up on your care. With access to your test results and records, they can work with you on a comprehensive treatment plan.
You don’t need a lot of flexibility: Do you visit your doctor just for regular checkups without needing to see specialists or get referrals? An HMO may be all you need.
You rarely travel outside your network area: Staying within your HMO network, which will be close to home, helps keep your healthcare costs lower.
Frequently asked questions
Many Medicare Advantage plans are HMOs that require you to use a specific network of doctors and facilities and have a PCP coordinate your care.
Typically, you can choose from preferred professionals in the HMO plan’s network and select your own PCP. You may be able to choose a physician, a physician assistant, or a nurse practitioner.
Unlike PPOs, HMOs typically have a tighter network of healthcare professionals and facilities you must use to be covered. A PCP must coordinate your care and make referrals to specialists for your care to be covered. Out-of-network care is typically not covered. PPO plans offer more flexibility in choosing healthcare professionals and facilities, and you’re not required to have a PCP. PPOs often partially cover out-of-network care but with higher coinsurance or copays than in-network care.
Many Medicare Advantage plans are HMOs that require you to use a specific network of doctors and facilities and have a PCP coordinate your care.
Typically, you can choose from preferred professionals in the HMO plan’s network and select your own PCP. You may be able to choose a physician, a physician assistant, or a nurse practitioner.
Unlike PPOs, HMOs typically have a tighter network of healthcare professionals and facilities you must use to be covered. A PCP must coordinate your care and make referrals to specialists for your care to be covered. Out-of-network care is typically not covered. PPO plans offer more flexibility in choosing healthcare professionals and facilities, and you’re not required to have a PCP. PPOs often partially cover out-of-network care but with higher coinsurance or copays than in-network care.
The bottom line
Health maintenance organizations (HMOs) are a popular type of health insurance for a reason: They offer comparatively affordable coverage and focus on coordinated care. HMOs provide less flexibility than PPOs. But people who want to reduce their medical costs may be satisfied with the trade-off.
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References
Claxton, G., et al. (2025). Employer health benefits 2025 annual survey. KFF.
Freed, M., et al. (2025). Medicare Advantage 2026 spotlight: A first look at plan offerings. KFF.
HealthCare.gov. (n.d.). Health insurance plan & network types: HMOs, PPOs, and more. Centers for Medicare & Medicaid Services.
Humana. (2026). Dental HMO vs. PPO insurance plans: What’s the difference?
Medicare.gov. (n.d.). Health maintenance organizations (HMOs). Centers for Medicare & Medicaid Services.
UnitedHealthcare. (n.d.). What are HMO, PPO, EPO, POS and HDHP health insurance plans?
