What Is a Medicare HMO Plan and How Does It Work?

A Medicare Health Maintenance Organization (HMO) plan is a type of Medicare Advantage (Part C) plan, offering an alternative way to receive Medicare benefits. Private insurance companies contract with Medicare to provide these plans, delivering Part A and Part B coverage. Opting for an HMO plan means an individual receives Medicare-covered services through the private plan rather than directly through Original Medicare.

Key Characteristics of Medicare HMO Plans

A defining feature of a Medicare HMO plan is the requirement to select a primary care provider (PCP) from the plan’s network. This PCP acts as the central point for managing an individual’s healthcare needs, overseeing overall health and coordinating care.

Most Medicare HMO plans require a referral from the PCP to see specialists or receive certain services. Without a referral, services from specialists may not be covered, except in specific situations. This referral process helps streamline care.

Medicare HMO plans use a network of doctors, hospitals, and other healthcare providers. Members must receive their care and services from providers within this network. If care is sought outside the network, the individual may be responsible for the full cost of those services, with limited exceptions.

Exceptions to the in-network rule include emergency care, urgent care received out-of-area, and temporary out-of-area dialysis. Some HMO plans, known as Point-of-Service (POS) options, offer more flexibility, allowing members to receive some out-of-network services, often at a higher cost. Medicare HMO plans also integrate benefits from Original Medicare, covering all services included in Part A and Part B. Many of these plans also bundle prescription drug coverage (Part D).

Understanding Costs and Covered Services

Medicare HMO plans involve various costs, including monthly premiums, deductibles, copayments, and coinsurance. Many HMO plans offer low or even $0 monthly premiums, but individuals remain responsible for their Medicare Part B premium. Some plans might cover a portion of the Part B premium.

Deductibles are the amount an individual pays for covered services before the plan begins to pay. Many HMO plans feature low or $0 deductibles. Copayments are fixed amounts paid for specific services, such as doctor visits, while coinsurance is a percentage of the cost after any deductible has been met.

Medicare HMO plans include an annual out-of-pocket maximum. This limit caps the amount an individual pays for covered Part A and Part B services in a calendar year. Once this maximum is reached, the plan pays 100% of the costs for covered services for the remainder of the year. For 2025, the federal cap for in-network out-of-pocket costs for Medicare Advantage plans is $9,350, though plans can set lower limits.

Medicare HMO plans cover all services provided by Original Medicare, including inpatient hospital care (Part A) and doctor visits, outpatient care, and preventive services (Part B). Most HMO plans also include prescription drug coverage (Part D). Beyond core Medicare benefits, many HMO plans offer additional benefits not covered by Original Medicare, such as routine dental, vision, and hearing care, fitness programs, and other wellness initiatives.

Eligibility and Enrollment

To be eligible for a Medicare HMO plan, individuals must be enrolled in both Medicare Part A and Part B. They must also reside within the specific service area of the Medicare HMO plan they wish to join. These plans are offered by private companies, and availability can vary by geographic location.

Enrollment in Medicare HMO plans occurs during specific periods. The Initial Enrollment Period (IEP) is a seven-month window around an individual’s 65th birthday, beginning three months before, including the birth month, and extending three months after. Newly eligible individuals can enroll in a Medicare Advantage plan during this time.

The Annual Enrollment Period (AEP) runs annually from October 15 to December 7. During this time, individuals can join a Medicare Advantage plan, switch between plans, or return to Original Medicare. Changes made during the AEP take effect on January 1 of the following year.

The Medicare Advantage Open Enrollment Period (MA OEP) occurs from January 1 to March 31 each year. During this period, individuals already enrolled in a Medicare Advantage plan can switch to a different Medicare Advantage plan or disenroll and return to Original Medicare. Special Enrollment Periods (SEPs) also allow enrollment or changes outside of these standard periods due to specific life events, such as moving to a new service area or losing other coverage.

Individuals can use online tools, contact plans directly, or call Medicare to find available plans in their service area. Once a plan is selected, the sign-up process involves providing Medicare information and completing the plan’s application. Confirm the plan’s network and benefits before finalizing enrollment to ensure it aligns with individual healthcare needs.