What is an HMO (and is it right for you)?

Understanding all the moving parts of health insurance can be daunting, especially when it comes to understanding the different plan types. One popular plan type is a Health Maintenance Organization (HMO). This article will help you understand what an HMO is, how it works, and whether it might be the right plan type for you and your family.

Health Maintenance Organization (HMO) overview

HMO plans are designed to protect you and your family from the costs of the medical services you need when you’re sick or injured. They can also also help protect your health and well-being, by covering the cost of preventive care services.

When you enroll in an HMO plan, you agree to pay a specific rate, or premium, each month. You also agree to use an in-network primary care physician (PCP), or family doctor, to coordinate your care. Your PCP will treat you for general health needs and refer you to specialists as needed. In return, your insurer agrees to pay a portion of your covered health care costs when you use in-network providers. You will not be covered for care that you receive from out-of-network doctors or hospitals (except for urgent care and emergency services).

What’s a referral?
A referral is like an official doctor’s note. Your doctor notifies a specialist that you require services from them. After the referral is approved, you can make an appointment with the specialist. Most AmeriHealth New Jersey referrals are done electronically, so you can get a referral simply by calling your PCP’s office.

What Are the Primary Features of an HMO?

AmeriHealth New Jersey offers different types of HMO plans, but they share some common features. Understanding these features is your key to finding the plan that fits you best. Let’s take a closer look:

Cost, deductibles, and copays

In addition to your monthly premium, you may also pay each time you receive care medical care or have a prescription filled. These payments are often called cost-sharing, or out-of-pocket costs, and come in the following types:

Deductible — A deductible is the amount you pay each year before your health plan starts paying for covered services. For example, if your plan has a $1,000 deductible, you will need to pay the first $1,000 of the costs for the health care services you receive in any given year. Once you’ve paid this amount, your insurance will begin to pay a portion or all of your health care costs, depending on the plan.

Copay — A copay is the flat fee you pay when you see a doctor or receive other covered services. For example, you might pay $20 to see a doctor.

Out-of-pocket maximum — An out-of-pocket maximum is the most you will have to pay for your health care expenses during a plan period (usually a year) for covered services received from providers that participate in the plan’s network. No matter what, you will not pay more than this maximum amount in a given year. Any care you receive for covered services after you meet your out-of-pocket maximum will be covered 100 percent by your insurance company.

Who would benefit most from an HMO health plan?

An HMO plan may be right for you:

  • If you see the doctor often or have an ongoing medical condition
  • If you are looking for lower cost coverage and are not worried about using network providers or getting referrals for specialist visits

What are the pros and cons of an HMO Plan?

Advantages of an HMO

  • Mid-range monthly premium
  • Depending on the plan, may have lower out-of-pocket costs

Disadvantages of an HMO

  • Out-of-network care is not covered, except for urgent and emergency care
  • Must use in-network providers

How does an HMO compare to other health insurance plans?

HMO vs. EPO (Exclusive Provider Organization)

Like an HMO, an EPO plan requires you to use in-network providers (except for urgent and emergency care). EPO members may be required to select a PCP and should refer to their summary of benefits and coverage. But unlike an HMO, it does not require you to get referrals before seeing a specialist. Also, some EPO plans come with Health Saving Account (HSA) options. An HSA is a tax-free savings account where you can save money for your qualified medical expenses (like copays and deductibles).

Want to learn more about EPOs? Take an in-depth look: EPO vs. HMO: How to Choose

HMO vs. PPO (Preferred Provider Organization)

Another popular plan option is a PPO. They offer members the most freedom to see providers both in and out of the network without referrals.

Currently, AmeriHealth New Jersey does not offer PPO plans to indivuals and families. They are only available through our employer groups. If your employer offers AmeriHealth New Jersey coverage, talk to your benefits administrator to learn more about your plan options.

What HMOs are available in New Jersey?

To learn more about the AmeriHealth New Jersey plan options and benefits for individuals and families, refer to our 2022 Benefits at a Glance. To see if a provider or hospital is considered in-network, use our Find a Doctor tool.

When you’re ready to enroll, you can sign up for the health plans through either GetCovered.NJ.gov, or AmeriHealthNJ.com. While there may be cost-saving options available to you when applying directly through AmeriHealth New Jersey, you are not eligible for tax credits. Tax credits are only available through GetCovered.NJ.gov.

To shop for plans and enroll, visit or call:

  New Jersey health insurance marketplace AmeriHealth New Jersey
Online GetCovered.NJ.gov AmeriHealthNJ.com
Phone 833-677-4265 888-968-7241

If you have questions about choosing a health plan or enrolling in a health plan, call AmeriHealth New Jersey at 877-744-5422.