Insurance Glossary


Insurance Term - Health Maintenance Organization (HMO)

Prepaid health plans which cover doctors’ visits, hospital stays, emergency care, surgery, preventive care, check-ups, lab tests, X-rays, and various therapies. In a HMO, one must choose a primary care physician who coordinates all healthcare aspects and makes referrals to any specialists that may be required. In a HMO, one must use the doctors, hospitals, and clinics that participate in the network plan. No benefits are reimbursed for non-emergency benefits provided outside the HMO network. Emphasis is on preventative medicine, and members must use contracted health-care providers. In other words, it is a healthcare system that assumes both the financial risks associated with providing comprehensive medical services (insurance and service risk) and the responsibility for healthcare delivery in a particular geographic area to HMO members, usually in return for a fixed, prepaid fee. Financial risk may be shared with the providers participating in the HMO. Thus, HMO is a prepaid managed care plan that provides specified services to enrolled members through designated hospitals and doctors for a fixed premium per person.