Your Guide to Medicare HMO Plans

Medicare HMO Plans: A Quick Guide

A growing number of Americans receive their Medicare benefits through private insurance companies offering Medicare Part C, or Medicare Advantage, coverage. The most common type of Medicare Advantage plan is a Health Maintenance Organization (HMO) plan. Is a Medicare HMO plan right for you? Here’s a closer look at how this type of health care coverage works.

How Medicare Is Structured

Medicare is the federal government's health insurance plan for adults aged 65 and over. It helps older adults access medically necessary health care services. There are two parts to Original Medicare.

Medicare Part A, or hospital insurance, helps pay for care in hospitals, nursing homes, skilled nursing facilities and hospices.
Medicare Part B, or medical insurance, helps pay for diagnostic, treatment and preventive care. This includes the services of doctors or other health care providers, lab tests, mammograms and flu shots.

Because Original Medicare doesn't provide supplemental benefits such as dental and prescription drugs, some people purchase optional coverage from private insurance companies.

Medicare Part C, or Medicare Advantage, bundles Part A and B coverage with additional benefits such as prescription drugs, vision care and dental care. If you choose this option, you aren't enrolled in Original Medicare but receive Part A and B coverage through a private insurer.
Medicare Part D is a prescription drug plan that can be added to Original Medicare. If you choose this option, you remain in Original Medicare for your Part A and B coverage.

According to data from the Kaiser Family Foundation, 36% of those receiving Medicare benefits, or 24.1 million people, enrolled in a Medicare Part C plan in 2020. This figure is expected to exceed 50% by 2030.

What Are Medicare HMO Plans?

Medicare HMO plans are the most common type of Medicare Advantage plan.

Other Part C plans include:

Private Fee-for-Service plans
Special Needs Plans
Preferred Provider Organization plans

What Do Medicare HMO Plans Cover?

All Medicare Advantage plans, including HMO plans, must cover the same Part A and Part B benefits as Original Medicare.

These plans also offer a range of supplemental benefits. The types of benefits vary by plan and can include:

Vision
Hearing
Dental
Fitness
Prescription drugs
Acupuncture
Chiropractic care
Transportation to medical appointments
Meal delivery
Adult daycare
Over-the-counter items such as eye drops and vitamins

It's important to note that if your Medicare HMO plan doesn't include prescription drug benefits, you can't purchase a separate Part D plan for this coverage.

How Do Medicare HMO Plans Work?

Private insurance companies are contracted by the federal government to offer Medicare Advantage plans. Insurers must follow certain rules but have flexibility in how they deliver care to plan subscribers.

Typically, HMO plans have agreements in place with a network of doctors, hospitals and other care providers. Plan subscribers must use these providers in order to have their expenses covered. In most cases, you must:

Choose a primary care doctor
Obtain a referral from a primary care doctor to see a specialist
Use hospitals and other providers within the network, except for emergency care
Pay for the full cost of health care delivered outside of the plan's network of providers

There are some Medicare HMO plans that may let you use out-of-network providers. These are called Point-of-Service plans.

The Difference Between Medicare HMO and PPO Plans

The second most popular type of Medicare Advantage plan is a Preferred Provider Organization (PPO) plan. In 2024, about one-third of all available Medicare Advantage plans are local PPO plans.

Similar to an HMO plan, a PPO plan contracts with a network of health care providers. However, unlike an HMO plan, you typically:

Don't need to choose a primary care doctor
Don't require a referral to see a specialist
May use doctors and hospitals outside of the plan's network, but typically for a higher cost

Plans vary in terms of premiums, deductibles and out-of-pocket costs.