HMO healthcare plans are some of the most common in the U.S. These plans are classified under managed care and take into consideration the number of family members that will be under coverage. In a managed care policy, there is one primary holder and all other family members are known as dependents. The primary holder is referred to as the subscriber and is responsible for all payments and obligations made to an insurance company. HMO plans are primarily offered by employers of full-time workers but can also be purchased by private parties.

When first enrolling in an HMO plan, you are provided a list of participating primary care physicians who act as your resource in order to receive any type of medical treatment. This list is based on location and it is a common practice to only be allowed to choose a primary physician that lies in your “service area.” A service area is usually limited to a geographical area close to your home address. After choosing a primary physician, any access to specialists or additional doctors must be approved by receiving a referral. Any type of common doctor visits and check ups will be carried out by your primary physician. In the event that you find it necessary to visit a specialist that is not included in the HMO network, you are responsible for the cost. The only exception to this rule is due to a medical emergency.

When a subscriber first purchases HMO healthcare coverage, a process involving capitation payments is the standard. Capitation payments are calculated by the insurer and will cover a future period of time, often one year from the initial date of insurance. Obviously, the rate is calculated by taking into consideration the number of dependents and their current state of health. Regardless of how often HMO services are used, the monthly payment is fixed and will not go up during the agreed time period. While capitation payments do pose financial risks to the insurance company, at the same time they protect the insurance holder from accumulating “per visit” costs. If an insurance holder has a large family with children, doctor visits tend to be fairly frequent.

It is in the best interest to use capitation payments and to not have to worry about any type of co-pay. Another advantage of capitation payments is that since the payments are calculated so far ahead of time, you have a good idea of how much you are going to spend of health insurance for the entire year. It may be beneficial to have this form of coverage on your policy.