HMOs (Health Maintenance Organizations) and Original Medicare differ in five key ways:
- Providers you can use. HMOs will usually only cover your care from doctors and hospitals in their network, except in the case of emergency or urgent care. Original Medicare will cover your care from most doctors and hospitals in the country. HMOs usually require that you receive a referral from your primary care physician before you can get care from a specialist, while in Original Medicare you do not need to get a referral.
- Benefits. HMOs must offer all the benefits available under Original Medicare (Part A and Part B). Some HMOs may offer additional benefits that Original Medicare does not cover, such as dental care or eye care. Many Medicare HMOs also offer Medicare prescription drug coverage (Part D). If you are in a Medicare HMO, and you want Medicare drug coverage, you must get your drug coverage from that same plan.
- Premium. In Original Medicare, you pay only the Part B premium. HMOs may charge a monthly premium in addition to the Medicare Part B premium. The premium may be higher if the HMO offers prescription drug coverage (Part D) benefits. When you are in an HMO you must continue to pay the Part B premium.
- Out-of-pocket costs. With Original Medicare you generally pay 20% coinsurance for doctors’ and other medical services. Supplemental insurance such as a Medigap* or a retiree plan could help pay for that coinsurance. In an HMO, you usually pay a fixed amount for services (copayment). HMO copays cannot be higher than Original Medicare for some services, like chemotherapy, dialysis and durable medical equipment, but could be higher for other services, such as home health and hospital. Also, unlike Original Medicare, HMOs must have a cap on out-of-pocket costs to protect you against very high costs if you receive expensive care. The maximum out-of-pocket cost for most HMOs in 2018 is $6,700.
- Affordability. If you are generally healthy and only see doctors and other providers in the HMO’s network, your out-of-pocket costs may be lower than in Original Medicare. If you use doctors and hospitals that are not in the HMOs network, or you see many providers, your costs could be higher. Since HMOs include a limit on out-of-pocket costs, you are protected from very high costs if you need a lot of medical care or expensive treatments.
*Note: Many people who have Original Medicare also purchase a Medigap plan to help pay some of their costs (such as deductibles and copays). Medigap plans are supplemental insurance policies that work specifically with Original Medicare. You cannot have a Medigap and a Medicare HMO together.