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Health Management Organizations (HMOs)

The main difference between an HMO and other health care plans is the way you, your covered employees, and their covered family members access care.

An HMO is a network of physicians, other health care professionals, and hospitals. When you purchase health care through an HMO, you make an agreement with a single network to provide all non-emergency care for yourself and all of your covered employees.

Each covered individual typically selects a primary care physician from within the network. The primary care physician coordinates for the individual's basic health care, from regular physical exams to routine illnesses, specialty care, and hospitalization.

As a small-business owner, you and your employees will pay a fixed monthly premium for membership in the HMO. In addition, the HMO will likely charge a small payment, called a "co-payment," for each doctor's visit and prescription.

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Membership in an HMO offers a number of advantages:

• Rather than filling out and submitting claim forms for office visits and hospital stays, HMO members simply present a membership card at the doctor's office or hospital.
  
  
• Because the HMO charges a fixed fee for health care, it is in the HMO's interest to make sure you and your employees receive preventative care to avoid medical problems before they become serious.
  
  
• Because the HMO has more control over each covered individual's health care, the cost will typically be lower and more predictable with an HMO than with fee-for-service insurance. Generally, you and your employees will have few fees other than monthly premiums.
  
  
• Unlike pay-for-service health care plans, there is typically no annual deductible that must be met before the HMO covers all health care expenses.

When considering the purchase of an HMO or when comparing an HMO to other plans, you will want to ask a number of questions, including:

• How many physicians will we be able to choose from?
  
  
• How easy is it to get an appointment?
  
  
• What arrangements are there for handling emergency care?
  
  
• If the HMO does not manage its own hospitals, which hospitals are part of the HMO's network?

Many small-business owners who handle their own employee benefits, without help of a human resources department, appreciate the initial simplicity of an HMO.  Contracting with an HMO often requires less research, paperwork, and decision-making than purchasing other kinds of employee health insurance products.

Request a Small Business HMO Quote from a carrier in your area >>