Medicare · Cornerstone
Medicare HMO plans: how they work and what they cost in 2026
Last reviewed August 1, 20267 min readBy the Goodsurance editorial team Reviewed by the Goodsurance editorial team
When you join an HMO, you choose a primary care physician from the plan's network. That PCP becomes your central point of contact. Before you can see a cardiologist, orthopedist, or other specialist, the PCP typically writes a referral. The specialist must also be in-network, or the visit is either not covered or covered only in a true emergency.
1How a Medicare HMO actually works
This structure is intentional. The HMO model was built around coordinated care: one physician keeps track of your conditions, medications, and test results, and sends you to the right specialist when needed. For people who see several doctors, this can actually reduce duplicated tests and conflicting prescriptions. For people who want direct access to any specialist at any time, the model can feel restrictive.
HMOs are one of several Medicare Advantage plan types. Others include PPOs (Preferred Provider Organizations), which allow out-of-network care at higher cost sharing; PFFS (Private Fee-for-Service) plans; and SNPs (Special Needs Plans), which are designed for people with specific chronic conditions, dual Medicare-Medicaid eligibility, or institutional care needs. HMOs tend to have the tightest networks and, in many markets, the lowest premiums among Advantage plan types.
In short: an HMO delivers full Medicare coverage through a defined network with a PCP coordinating your care, and it generally will not cover out-of-network providers except in emergencies.
2The 2026 cost structure inside an HMO
Medicare HMOs are still Part C plans, so their cost structure combines Original Medicare rules with plan-level design choices.
Part B premium. You keep paying the standard Part B premium regardless of which HMO you join. In 2026, the standard Part B premium is $202.90 per month. If your 2024 modified adjusted gross income (MAGI) exceeded $109,000 (single) or $218,000 (joint), you also pay an IRMAA (Income-Related Monthly Adjustment Amount) surcharge on top of the standard premium, with higher surcharges at higher income tiers. IRMAA applies to Part D as well.
Plan premium. The HMO itself may charge an additional monthly premium, or it may charge $0. Zero-premium HMO options are common in many markets but availability depends on where you live and the bids the plan filed with CMS. A $0 plan premium does not mean $0 total cost; Part B still applies.
Deductibles and copays. Each HMO sets its own deductible (which may be $0) and its own copay or coinsurance amounts for visits, labs, and procedures. These vary by plan and are not hardcoded here. To find out more about coverage and plan-level cost sharing, please contact us to discuss plan options.
Out-of-pocket maximum. This is where HMOs offer a structural advantage that Original Medicare does not. In 2026, the federal in-network MOOP (Maximum Out-of-Pocket) cap for Medicare Advantage plans is $9,250. Once your in-network spending reaches that ceiling in a calendar year, the plan pays 100% of covered in-network costs for the rest of the year. According to KFF, the 2026 enrollment-weighted average in-network MOOP across Medicare Advantage plans is $5,421, meaning many enrollees face lower caps in practice. The federal combined in-network plus out-of-network MOOP cap is $13,900, though most HMOs do not cover out-of-network care in a way that makes this figure relevant.
For comparison, Original Medicare has no annual out-of-pocket cap. The Part A inpatient deductible is $1,736 per benefit period in 2026, hospital coinsurance runs $434 per day for days 61 to 90 of a benefit period, and after the annual Part B deductible of $283, you pay 20% of every covered outpatient service with no ceiling.
In short: an HMO's biggest financial advantage over Original Medicare is the annual out-of-pocket cap, which in 2026 cannot exceed $9,250 for in-network care under federal rules.
3Network rules, referrals, and prior authorization
The referral requirement is the feature that surprises new HMO enrollees most often. Referrals from your PCP are required for most specialist visits; walking directly into a specialist's office without a referral usually means the plan will not pay the claim.
Prior authorization (PA) is a separate process. PA requires the plan to approve certain services, devices, or medications before you receive them. Starting in 2026, under CMS rule CMS-0057-F, standard prior-authorization decisions must be issued within 7 calendar days. Expedited (urgent) decisions must come within 72 hours, and any denial must include a specific reason. If a service is denied, you have appeal rights; the plan must explain which criteria were not met.
HMOs also define a geographic service area. If you move out of that area permanently, you typically lose eligibility for the plan and trigger a Special Enrollment Period (SEP) to choose new coverage. Traveling is handled differently: emergency care is covered anywhere in the United States, and most plans cover urgently needed care while you are temporarily outside the service area. Routine care outside the area is generally not covered.
A variant called an HMO-POS (Point of Service) adds a limited out-of-network option, usually with significantly higher cost sharing, for specific services. If flexibility outside the network matters to you, comparing an HMO-POS to a PPO is worth the time.
In short: referrals, prior authorization with a 7-calendar-day standard decision window, and a defined service area are the three structural rules that shape how you use an HMO.
4HMO versus PPO: a side-by-side look
Both HMOs and PPOs are Medicare Advantage plan types, and both carry the 2026 federal MOOP cap. The differences come down to flexibility and, often, cost.
| Feature | HMO | PPO |
|---|---|---|
| Primary care referral required | Usually yes | No |
| Out-of-network coverage | Emergency only (standard HMO) | Yes, at higher cost sharing |
| Network size | Typically smaller | Typically broader |
| Plan premium | Often lower | Often higher |
| Out-of-pocket max | Federal cap: $9,250 in-network | Same federal cap applies |
Neither type is universally better. If you have established relationships with specialists inside the HMO's network, the referral requirement may be a minor inconvenience. If you split time between two states or need frequent specialist access without gatekeeping, a PPO's flexibility may justify its higher costs. The right answer depends on your specific providers, conditions, and geography.
In short: HMOs tend to cost less but require referrals and limit out-of-network care; PPOs offer flexibility at higher cost sharing.
5Enrollment: when and how you can join an HMO
You can enroll in a Medicare HMO only during specific windows. Getting the timing right matters because late or missed enrollment can result in permanent penalties or coverage gaps.
Initial Enrollment Period (IEP). Your IEP is seven months long: the three months before your 65th birthday month, your birthday month itself, and the three months after. Enrolling during the first three months of that window generally means coverage begins the month you turn 65.
Annual Enrollment Period (AEP). AEP runs October 15 to December 7 each year. During this window, anyone with Medicare can join, switch, or drop a Medicare Advantage or Part D plan for the coming January 1.
Medicare Advantage Open Enrollment Period (MA OEP). If you are already enrolled in a Medicare Advantage plan, you can make one switch during January 1 to March 31, including switching to a different HMO, a PPO, or returning to Original Medicare.
Special Enrollment Periods. Certain life events, including moving out of a plan's service area, losing employer coverage, or gaining Medicaid eligibility, trigger SEPs that let you enroll outside the standard windows.
One timing note for people with employer coverage: the Part B SEP begins when employment or employer coverage ends, whichever comes first, and it lasts 8 months. COBRA and retiree coverage do not count as active employer coverage for SEP or penalty purposes. Also, if you are contributing to an HSA (Health Savings Account), any Medicare enrollment, including premium-free Part A, ends your ability to make new HSA contributions, and Part A can backdate up to 6 months.
In short: most people enroll through the IEP (around age 65) or AEP (October 15 to December 7); the MA OEP provides a second chance each January through March for those already in an Advantage plan.
6Extra benefits and what HMOs may include
One reason Medicare Advantage HMOs attract enrollment is supplemental benefits that Original Medicare does not cover. These can include dental, vision, hearing, fitness programs, and transportation. Which benefits are available, at what limits, and under what conditions varies by plan. Plan-level benefit amounts are set per plan and render from current plan data, not from this article.
What Original Medicare covers stays constant inside an HMO: hospital stays, outpatient services, preventive care, and prescription drugs if the HMO includes Part D coverage (called an MA-PD plan). Hospice care is still covered under Original Medicare even when you are enrolled in an HMO; the HMO does not take over hospice.
If an HMO does not include drug coverage, you would need a standalone Part D plan. In 2026, no Part D plan may set a deductible above $615, and out-of-pocket spending on covered Part D drugs is capped at $2,100 for the year. After that cap, you pay $0 for covered drugs for the rest of the year.
In short: HMOs often bundle dental, vision, hearing, and drug coverage that Original Medicare does not include, but specific benefit amounts vary by plan and market.
Common questions about Medicare
Quick answers to common questions
Tap any question to expand. Each question links to a fuller standalone answer.
Does Medicare cover durable medical equipment?
Yes.
Medicare Part B covers durable medical equipment (DME): reusable medical gear your doctor prescribes for use at home, such as wheelchairs, walkers, hospital beds, oxygen equipment, CPAP machines, and blood sugar monitors. You pay 20% of the Medicare-approved amount after the $283 Part B deductible in 2026, and Medicare pays the other 80%. To be covered, the item must be ordered by a Medicare-enrolled doctor and supplied by a Medicare-enrolled supplier, and some items are rented rather than bought. Equipment meant mainly for use outside the home, or only for comfort or convenience, is not covered.
Does Medicare cover mental health services?
Yes.
Medicare covers mental health care across its parts in 2026. Part B covers outpatient services like therapy, counseling, and visits with psychiatrists, psychologists, and clinical social workers, and since 2024 it also covers marriage and family therapists and mental health counselors. You pay 20% of the Medicare-approved amount after the $283 deductible, and one depression screening each year is free. Part A covers inpatient mental health care, with a lifetime limit of 190 days in a freestanding psychiatric hospital. Part D covers most mental health medications. Many of these services are also available by telehealth, and Medicare Advantage plans cover at least the same benefits.
Does Medicare cover vision care?
Mostly no for routine care.
In 2026, Original Medicare does not cover routine eye exams for glasses or contact lenses, and it does not pay for the glasses or contacts themselves. It does cover some medical eye care: yearly glaucoma screenings for people at high risk, diabetic retinopathy exams, treatment for eye diseases, and cataract surgery (including one pair of standard glasses or contacts afterward). For those covered services you pay 20% after the $283 Part B deductible. Many Medicare Advantage plans add a routine vision benefit covering eye exams and an allowance for glasses.
Does Medicare cover physical therapy?
Yes.
Medicare Part B covers outpatient physical therapy that is medically necessary to treat your condition. You pay 20% of the Medicare-approved amount after the yearly Part B deductible ($283 in 2026). There is no longer a hard dollar cap on therapy, but once your physical and speech therapy together pass $2,480 in 2026, your therapist must add a note (called a KX modifier) confirming you still need care. Claims above $3,000 may be reviewed for medical necessity. Part A covers physical therapy you receive as a hospital inpatient or in a skilled nursing facility. A doctor or therapist must set up and regularly review your plan of care.
Does Medicare cover chiropractic care?
Partly.
Medicare Part B covers one specific chiropractic service: manual manipulation of the spine to correct a subluxation (when one or more bones of the spine are out of position) that a doctor confirms is medically necessary. You pay 20% of the Medicare-approved amount after the $283 Part B deductible in 2026. Medicare does not cover other services a chiropractor might offer, such as X-rays, massage therapy, acupuncture, or routine wellness visits, so you would pay the full cost for those. Some Medicare Advantage plans include extra chiropractic or wellness benefits beyond this.
Does Medicare cover ambulance services?
Yes, in limited situations.
Medicare Part B covers emergency ambulance transportation when traveling any other way could endanger your health, taking you to the nearest appropriate hospital or facility. You pay 20% of the Medicare-approved amount after the $283 Part B deductible in 2026. Air ambulance is covered only when ground transport cannot reach you or would take too long. Non-emergency ambulance trips, for example to dialysis, are covered only when a doctor provides a written order stating they are medically necessary. Medicare does not cover ambulance rides taken purely for convenience.
Does Medicare cover skilled nursing facility care?
Yes, on a short-term basis.
Medicare Part A covers skilled nursing facility (SNF) care after a qualifying inpatient hospital stay of at least 3 days, when you need daily skilled care like nursing or therapy. In 2026 you pay $0 for days 1 through 20 of each benefit period, $217 per day for days 21 through 100, and all costs after day 100. Coverage is for skilled care while you recover, not for long-term or custodial care (help with daily activities like bathing or dressing), which Medicare does not cover. Long-term nursing home care is generally paid through Medicaid or private funds.
Does Medicare cover hearing aids?
No, not under Original Medicare.
In 2026, Original Medicare (Parts A and B) does not pay for hearing aids or the exams to fit them. Part B does cover diagnostic hearing and balance exams when your doctor orders them to help diagnose or treat a medical condition, and for those you pay 20% after the $283 deductible. Many Medicare Advantage plans, however, include a hearing benefit that helps pay for routine hearing exams and hearing aids, often through a specific network or allowance. If hearing coverage matters to you, it is worth comparing Advantage plans or a standalone hearing plan.
Does Medicare cover home health care?
Yes, when you qualify.
Medicare Parts A and B cover home health care if a doctor certifies that you are homebound (leaving home takes a major effort) and need part-time skilled care, such as skilled nursing, physical therapy, occupational therapy, or speech therapy. A Medicare-certified home health agency must provide the care under a plan your doctor reviews. You pay $0 for covered home health visits in 2026, and 20% for any durable medical equipment. Medicare does not cover 24-hour home care, meal delivery, or homemaker services like cleaning when that is the only care you need.
Does Medicare cover diabetes supplies and testing?
Yes.
In 2026 Medicare covers most diabetes care across two parts. Part B (outpatient care and equipment) covers blood sugar monitors, test strips, lancets, and continuous glucose monitors (CGMs) as durable medical equipment, plus diabetes screenings and a self-management training program. You pay 20% of the Medicare-approved amount after the $283 Part B deductible. Part D (drug coverage) covers insulin and related supplies like syringes, and in 2026 your insulin is capped at $35 for a month's supply. If you have a Medicare Advantage plan, it covers at least the same diabetes benefits, sometimes with added extras.
Which is better, Medigap or Medicare Advantage?
Neither is better for everyone; they suit different needs.
Medigap (also called Medicare Supplement, a private policy that pairs with Original Medicare) lets you see any doctor nationwide who accepts Medicare with no network and very predictable out-of-pocket costs, but you pay a monthly Medigap premium and add a separate Part D drug plan. Medicare Advantage (Part C, your Medicare benefits through a private plan) often has a lower or $0 plan premium, bundles drug coverage and extras like dental and vision, and caps your yearly out-of-pocket costs, but uses provider networks and may require prior approval. People who travel, want maximum doctor freedom, and prefer steady costs often lean Medigap; people who want low premiums, extras, and a network they are comfortable with often lean Medicare Advantage. With both, you still pay the Part B premium ($202.90 per month in 2026). To find out which fits your situation, reach out to a licensed Goodsurance advisor at 1-888-301-8091 (TTY 711), Mon to Fri 8 am to 5 pm PT.
Can I see out-of-network doctors on a Medicare Advantage PPO?
Yes.
A Medicare Advantage PPO (Preferred Provider Organization plan, where your Medicare benefits come through a private plan) lets you see doctors and hospitals outside the plan's network, but you usually pay more for out-of-network care than for in-network care. Staying in network keeps your costs lower, while going out of network is allowed and can be worth it if you want a specific provider. This flexibility is a key difference from a Medicare Advantage HMO (Health Maintenance Organization plan), which generally only covers in-network care except in emergencies. With a PPO, you also typically do not need a referral to see a specialist. Keep in mind the provider must accept the plan and Medicare. Emergency and urgent care are covered regardless of network on both plan types. The trade-off with a PPO is more freedom in exchange for generally higher costs than an HMO.
References
- Medicare.govOfficial source for Medicare Advantage rules, costs, and the Plan Finder.
- CMS.gov, Centers for Medicare & Medicaid ServicesFederal rules for Medicare Advantage networks and out-of-pocket limits.
- Kaiser Family Foundation (kff.org)Independent research on Medicare Advantage plan design.