What Is an HMO? How HMO Health Plans Work

If you're comparing health plans during open enrollment or looking at the coverage your employer offers, you've probably asked: what is an HMO? An HMO is a type of health insurance plan that covers care from a set network of doctors and hospitals, usually with one primary care doctor who coordinates your care. This guide explains how HMO plans work, their pros and cons, and how they compare with PPO and POS plans.

What does HMO stand for?

HMO stands for health maintenance organization. A health maintenance organization is a managed care plan, and HealthCare.gov defines an HMO plan as a type of health insurance plan that usually limits coverage to care from doctors who work for or contract with the HMO, and generally won't cover out-of-network care except in an emergency. An HMO may also require you to live or work in its service area to enroll.

You can get HMO insurance through an employer, buy an individual HMO health plan on the Health Insurance Marketplace, or choose an HMO as a Medicare Advantage plan. Among workers with employer coverage, about 12% are enrolled in an HMO, compared with 46% in a PPO, according to the KFF 2025 Employer Health Benefits Survey.

How does an HMO plan work?

An HMO plan contracts with health care providers, including doctors, specialists, hospitals, labs, and pharmacies, who agree to negotiated rates for the health care services they deliver. In everyday terms, here's how an HMO plan works:

• You pay monthly premiums for your health insurance coverage.
• You choose a primary care doctor from the plan's network.
• Your primary care physician (PCP) coordinates your care, from prescription drugs to specialist visits.
• Preventive care, like checkups, screenings, and vaccines, is covered, usually at no cost when you use in-network providers.
• For non-emergency care, you stay in network. Out-of-network costs generally aren't covered, so you pay out of pocket.

Your out-of-pocket costs still depend on the plan's deductible, copays, and coinsurance, and every plan has an annual cap on what you pay for covered in-network care. Our guide to the deductible vs. out-of-pocket maximum explains how those pieces fit together.

Key features of an HMO health plan

Three features set an HMO plan apart from other types of health insurance: the network, your PCP, and referrals.

The HMO network

The HMO network is the group of doctors, hospitals, and other healthcare providers your plan covers. Network size and geographic reach vary from plan to plan, so check the provider directory before you enroll, especially if you want to keep a current doctor or use a specific hospital.

Choose a primary care physician

Most HMO plans ask you to choose a primary care physician. That doctor is your main point of contact: your PCP coordinates your care, keeps track of your treatment, and can refer you to specialists when you need them. Some HMO dental plans work the same way with a primary dentist.

HMOs typically require referrals

HMOs typically require a referral from your PCP before you see a specialist or get certain services. Preventive services usually don't need one, and many plans let you see an in-network OB-GYN directly. Emergency care is covered even out of network.

Pros and cons of HMO insurance

An HMO trades flexibility for lower costs and coordinated care. Whether it's a good fit depends on how you use health care.

Pros

• Lower premiums than many PPO plans.
• Predictable copays for many in-network services.
• Little paperwork: in-network providers bill the plan directly, so you rarely file claims.
• One doctor coordinates your care, which can help avoid repeat tests.

Cons

• A limited choice of doctors and hospitals.
• No coverage for out-of-network services except emergencies.
• Referrals add a step before specialist visits.
• Coverage is tied to a service area, which can be hard for frequent travelers or people who split time between states.

HMO vs. PPO, EPO, and POS plans

HMOs are one of several plan types. Here's the main difference between an HMO plan and other types:

• PPO (preferred provider organization): You can see out-of-network providers and specialists without a referral, but PPO plans usually have higher premiums. See our full HMO vs. PPO comparison.
• EPO (exclusive provider organization): Like an HMO, coverage is in network only, but you usually don't need referrals. Learn more in EPO vs. PPO.
• POS (point of service): POS plans require a PCP and referrals like an HMO, but may pay part of the cost of out-of-network care.

Some plans also mix features, such as an HMO-POS or an open-access HMO that drops the referral requirement. Always read the plan's summary of benefits.

Can you pair an HMO with an HSA or FSA?

An HMO can also be a high-deductible health plan (HDHP). If it is, it's HSA-qualified and you can contribute to a health savings account (HSA). For 2026, an HDHP must have a deductible of at least $1,700 for self-only coverage or $3,400 for family coverage, and the HSA contribution limit is $4,400 self-only or $8,750 family (IRS Rev. Proc. 2025-19). Our PPO vs. HDHP guide covers how high-deductible plans compare.

A flexible spending account (FSA) works with any type of health plan your employer offers. You can use either account to pay deductibles, copays, and coinsurance. For the differences between them, see HSA vs. FSA.

Is an HMO plan a good fit for you?

An HMO health plan tends to suit people who get most of their care close to home, value an ongoing relationship with one doctor, and want lower costs in exchange for staying in network. It may be a harder fit if you travel often or have medical needs that involve several specialists. Before you choose, ask:

• Are my current doctors and hospitals in the HMO network?
• How often do I expect specialist visits?
• Am I comfortable getting referrals through a PCP?
• What will I pay in total, including premiums and out-of-pocket costs, not just the monthly premium?

For more open enrollment terms, see our open enrollment cheat sheet.