Illinois Health Insurance Practice Exam

In the context of health insurance, a health maintenance organization (HMO) is defined as a plan that requires members to use a specific network of providers. This structure is designed to control health care costs and ensure coordinated care. Members of an HMO typically select a primary care physician (PCP) who manages their care and provides referrals to specialists within the network. This model encourages preventive care and typically offers lower out-of-pocket costs for services as long as the care is provided within the chosen network.

The other options do not accurately represent the defining characteristics of an HMO. While some health plans may offer a flexible choice of providers or could have high premiums, those features do not reflect the structured approach of an HMO. Additionally, HMOs are not government-managed; rather, they can be among various types of private health insurance plans. This focus on a specific provider network is a key aspect that distinguishes HMOs from other health plans.