A health maintenance organization, or "HMO", is a prepaid health plan. As an HMO member, you pay a monthly premium. In exchange, the HMO provides comprehensive health care for you and your family, including doctors' visits, hospital stays, emergency care, surgery, laboratory (lab) tests, x-rays, and therapy.

The HMO arranges for this health care either directly in its own group practice and/or through doctors and other health care professionals under contract. Usually, your choices of doctors and hospitals are limited to those that have agreements with the HMO to provide health care. However, exceptions are made in emergencies or when medically necessary.

There may be a small co-payment for each office visit, such as $5 for a doctor's visit or $25 for hospital emergency room treatment. Your total medical costs will likely be lower and more predictable in an HMO than with fee-for-service health insurance.