With an HMO, you pay in advance for your care through a monthly fee. As a result there are hardly any deductibles or co-payments. The idea is to make services easily available, often in a clinic-like setting, and to encourage you to come in soon enough to prevent a minor condition from becoming serious.

Various types

HMOs differ in the way they are organized and how they deliver services and pay doctors. In the staff model or group practice plan, doctors are paid a salary regardless of how many patients they see or treatments they prescribe. Because there is no incentive to give unnecessary service, the reasoning goes, the organization incurs fewer costs and patients' premiums can be held down. With this model, care is provided by a primary-care physician or a nurse practitioner who hears your medical complaints first and then decides whether you should see a specialist or be hospitalized.

Another type of HMO, is the individual practice association. Under these plans doctors earn a fee based on services rendered or a monthly fee per HMO patient, regardless of whether the patient is seen. The prepaid premium does away with bills and insurance forms, just as in a regular HMO. But because care is usually not centralized, you and your doctor still have the obligation of locating medical facilities as they are needed. Still, as with a traditional HMO, the amount you pay should not depend on the level of services you use.

A third type, called an open-ended HMO, is a hybrid. This type extends conventional fee-for-service coverage to members. Enrollees get all the benefits of prepaid care but also have the option of going outside the plan to see another physician, typically under another insurer, and paying for the privilege in co-payments.

If you have the option of joining an HMO, don't worry that you might have to deal with just any doctor who happens to be on duty when you have a medical problem. The choice of doctors is limited to those on staff or under contract, but you or members of your family usually will have a choice of which doctor you see. You may have to accept a stand-in in an emergency or if your own doctor is off duty, but that happens in fee-for-service plans, too.

In a well-run HMO you are encouraged to come in for periodic checkups and to make appointments whenever justified. Most plans cover routine visits, checkups, major illnesses requiring hospitalization, anesthesia, lab work, x-rays, children's immunizations, and physician and surgeon services. But details vary among plans.

Studies indicate that HMO members' health care bills are lower than average and that members tend to go to the hospital less and lose less time from work than patients under traditional care. But it's not clear whether the difference is because of wiser planning or because HMOs tend to attract people who are healthier to begin with.

To some people, the main drawback of an HMO is having to give up their present doctor, along with easy access to specialists and hospitals outside the plan, then having to pick a new one from the HMO's list. That may sound like a fair trade-off for lower costs, if you understand the rules from the start. But a lot of people don't.

Although HMOs reimburse for emergency care out of town, outpatient non-emergency care outside the plan's geographical area may not be covered. If the plan has no reciprocal arrangement and you travel a lot, consider other health care plans.

Some HMOs assign nurse practitioners and medical aides to deal with routine complaints. That could make you uncomfortable if you prefer to have a physician handle your medical concerns. To keep costs under control, most HMOs require you to see doctors within the plan unless some special care is unavailable or your HMO doctor makes a referral. If you want a second opinion, you'll probably have to pay for the privilege yourself.

An HMO also might not suit your medical needs. A family with two children needing vaccinations and care for common childhood illnesses and a mother requiring obstetrical and gynecological check-ups might find an HMO worthwhile. But a couple in their twenties with no kids could find that a simple indemnity plan is better for them. Someone who expects extended psychiatric treatment might think twice about an HMO, which generally limits mental-health therapy to ten to 20 visits per year and only if the HMO approves it.

Fee-for-Service Plan Preferred-Provider Organizations