Health Maintenance Organization - HMO

AAA

DEFINITION of 'Health Maintenance Organization - HMO'

An organization that provides health coverage with providers under contract. A Health Maintenance Organization (HMO) differs from traditional health insurance by the contracts it has with its providers. These contracts allow for premiums to be lower, because the health providers has the advantage of having patients directed to them; but these contracts also add additional restrictions to the HMO's members.

INVESTOPEDIA EXPLAINS 'Health Maintenance Organization - HMO'

HMO's are believed to have been started in the early 1900s when companies began to offer employees plans of prepaid medical service, and have done very well since. The HMO Act of 1973 helped to cement the HMO into the U.S. health system by providing grants to start or expand HMOs, removing many restrictions imposed by the individual states, and required employers with more than 25 employees to offer a federally-certified HMO to employees.

RELATED TERMS
  1. Unallocated Benefit

    A provision available in health insurance policies, where the ...
  2. Co-pay

    A type of insurance policy where the insured pays a specified ...
  3. Long-Term Care (LTC) Insurance

    Coverage that provides nursing-home care, home-health care, personal ...
  4. Group-Home Care

    Care given to a group of people with similar disabilities within ...
  5. Health Savings Account - HSA

    An account created for individuals who are covered under high-deductible ...
  6. High-Deductible Health Plan - HDHP

    A health insurance plan that has a high minimum deductible, which ...
Related Articles
  1. Home & Auto

    Fighting The High Costs Of Healthcare

    If your employer is cutting medical benefits, a health savings account may be right for you.
  2. Insurance

    Should You Bite On Dental Insurance?

    Don't pay for a plan that won't cover your pearly whites when you need it to.
  3. Home & Auto

    How To Avoid Medical Debt

    Find out what you can do to avoid a financial meltdown when there's a medical emergency.
  4. Options & Futures

    What's The Difference Between Medicare And Medicaid?

    One program is for the poor; the other is for the elderly. Learn which is which.
  5. Insurance

    What Does Medicare Cover?

    Don't assume you're insured. Find out what you can expect from this healthcare program.
  6. Insurance

    Find Secure And Affordable Post-Work Health Insurance

    Learn how you can avoid financial catastrophe - without Medicare.
  7. Options & Futures

    20 Ways To Save On Medical Bills

    Handy tips to cut the cost of hospital bills, co-pays, prescription drugs and more.
  8. Options & Futures

    How To Choose A Healthcare Plan

    HMOs? PPOs? CDHPs? We'll clear up the confusion so you can find the right coverage.
  9. Retirement

    The Top 3 Retiree Worries (And What To Do About Them)

    Discover the most common problems retirees face, and what they can do to solve them.
  10. Retirement

    Failing Health Could Drain Your Retirement Savings

    You may not be able to prevent illness, but it doesn't have to infect your savings.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center