With more than 3,000 options across the country, Medicare Advantage Plans are growing in popularity. You may be wondering if you should give it a try. But, do you know what Medicare Advantage Plans are? How they work, or how much they cost? Join me for a deep dive into all things Medicare Advantage.
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What Are Medicare Advantage Plans?
Medicare Advantage Plans, also known as Part C plans, are a private alternative to Original Medicare. Original Medicare, Part A and B, is a government-run health insurance program. Beneficiaries see providers for health care. These providers are compensated by the Medicare system.
With Medicare Advantage, providers are compensated by private health insurance companies. These companies receive payments from Medicare, so it’s still a government-sponsored program. However, patients and medical providers deal only with a private health insurance company.
A Medicare Advantage Plan, then, is a contract between a private insurance company and CMS (the Centers for Medicare and Medicaid Services). When you enroll in a Medicare Advantage Plan, you are leaving Original Medicare. By law, every Part C plan must cover every service and procedure covered by Original Medicare. This includes Part A hospital coverage, and Part B outpatient services.
This is an important point, because you might be worried that a private company would restrict your benefits. Not to worry, your right to coverage is guaranteed. There are three major kinds of Medicare Advantage Plan:
• HMO (Health Maintenance Organization)
• PPO (Preferred Provider Organization)
• PFFS (Private Fee For Service)
There are other kinds of Part C plans, like HMO Point of Service Plans, but these are quite rare.
Medicare Advantage HMO Plans
HMO plans deliver care by using a network of providers. Providers include physicians, specialists, hospitals, and lab facilities. HMOs normally require you to receive services and procedures from a network provider. These physicians are contracted with the plan, and are compensated by the plan.
If you receive services from non-network providers, an HMO plan will not cover it; you will be responsible to pay out of pocket. For this reason, I always urge my clients to find providers using their plan website. That way, you can be sure you’re using a network provider.
Note that in cases of emergency, or for urgently needed services (if you’re out of state, for example) Medicare Advantage HMO plans will cover you, even if you’re out of network.
With an HMO, you will typically choose a Primary Care Provider (PCP). You will receive lab work, or see specialists, only by referral from your PCP.
Medicare Advantage PPO Plans
Preferred Provider Organizations (PPOs) work a little bit like HMOs but with more freedom. With a Medicare PPO Plan, you’ll be able to see any provider in your Plan’s service area. However, you’ll pay the lowest prices if you go to network (preferred) providers.
So, there is a network that you can choose to use if you want to. You’ll pay lower co-payments and co-insurance with these preferred providers. But, the plan will still cover you if you use non-network providers. You’ll just pay higher cost-sharing.
Medicare Advantage Private Fee For Service Plans
Private Fee For Service (PFFS) plans resemble Original Medicare (which is itself called Fee For Service Medicare). Under this model, the Medicare Advantage Plan establishes amounts that it will pay to any provider who is willing to accept the terms of the plan. You can see any provider who accepts the plan terms.
This is a critical point – provides are not required to accept these terms. They will tell you this before you receive services. If they do accept the terms of the plan, then you’ll pay no more than the co-payments required under the terms of the plan. Medicare Advantage Private Fee For Services Plans are fairly rare. HMO and PPO plans are much more common.
How Do Medicare Advantage Plans Close Your Coverage Gaps?
As you know, there are several gaps in Original Medicare (costs that you’re expected to pay out of pocket). Among these are:
• Part A deductible
• Part A co-insurance
• Part B deductible
• Part B co-insurance
• Part B excess-charges
• No prescription drug coverage
In addition to these out of pocket costs, there is no limit on how much you can spend with either Part A or Part B. Medicare Advantage Plans can help close some of these gaps. Part C plans help in several ways:
• They always have a hard out of pocket maximum amount
• They may cover prescription drugs
• They may have more favorable cost-sharing per service
• They often provide benefits not available under Original Medicare
Medicare Advantage Plans must provide a hard out of pocket maximum (OOPM) each year. This spending limit protects you from catastrophic medical bills in the event of a long hospital stay or battle with cancer. Each plan sets their own OOPM, but these amounts tend to vary based on population density. More urban, higher-populations tend to have lower out of pocket limits. However, even rural plans provide an annual cap.
Many Medicare Advantage Plans also provide prescription drugs. These plans are known as MAPD plans. By using an MAPD plan, you get the benefit of prescription drug coverage with the other benefits of Part C. Your alternative would be to stay with Original Medicare and enroll in a standalone Prescription Drug Plan.
Although you can still expect to pay cost-sharing for most services and procedures, these amounts can be lower than under Original Medicare. This is especially true for more expensive items like hospital stays.
Under Original Medicare, you’d pay full price for hospital coverage until you’ve spent $1,484 (2021 Part A deductible) out of pocket. Only then would Original Medicare begin paying benefits. You’d probably pay this amount for just a one day hospital stay; certainly for a two day stay.
However, many Medicare Advantage Plans have daily co-payments under $300. You might stay in the hospital for up to five days and pay less than you would under Original Medicare. In this case, cost sharing under Part C would be more favorable than under Original Medicare.
Medicare Advantage Plans And Extra Benefits
One of the major reasons many of my clients choose Medicare Advantage plans is because they usually offer “extra benefits” – benefits that are not available under Original Medicare.
Extra Benefits are not guaranteed; they can be changed or eliminated from one year to the next. Also, insurance companies aren’t required to offer these extras. However, most of the do, for these reasons:
• To attract more members to the plan
• To improve the health of their members, which will potentially lower the claims they have to pay
The extra benefits provided by a plan will vary from State to State, and even from county to county. These benefits may include:
• Gym or fitness memberships
• Vision coverage
• Hearing coverage
• Transportation benefits
• Dental coverage (some plans have basic dental built-in, others offer dental for an extra premium)
• Personal safety monitoring equipment and services
• More
The vision and hearing benefits have tended to be the most popular. Since Original Medicare doesn’t cover routine vision or hearing, you’d have to pay out of pocket (or full price) for these services and products. This is often true even if you have Medicare Supplement Insurance.
How Much Do Medicare Advantage Plans Cost?
As mentioned earlier, you will still have out of pocket costs for services with Medicare Advantage plans. These are the kinds of costs you can expect to incur:
• Monthly premium for coverage (many plans have $0 premium)
• Annual deductible for medical coverage
• Co-payment and/or co-insurance for each service or procedure
• Annual deductible for Part D drug coverage (not more than $445 for 2021)
• Co-payments or co-insurance for each prescription filled
Many Part C plans, perhaps most, have no monthly premium or deductible. In this case, you just pay the co-pay or co-insurance for each service or procedure you receive. And remember, you’re protected by the out of pocket cap on spending.
A key point to remember is that you still have to pay your monthly Part B premium. So, even if your Medicare Advantage plan doesn’t charge a monthly premium, you still pay the Part B premium ($148.50 per month base premium for 2021). If you stop paying your Part B premium, your Medicare Advantage coverage will end.
Am I Eligible For Medicare Advantage?
The eligibility rules for Medicare Advantage are very similar to those for Original Medicare. You must be enrolled in both Part A and Part B of Original Medicare. There is no age limit for Part C plans; you can enroll before age 65 if you become eligible for Original Medicare due to illness or disability. You can also enroll in Medicare Advantage if you delayed taking Part B.
How Do I Pick A Medicare Advantage Plan?
If you like the idea of having a hard out of pocket cap on your spending, and you’d like some of the extra benefits Part C has to offer, then a Medicare Advantage Plan could be a good fit for you. You should ask yourself these questions:
• Am I okay needing to use a network of doctors and facilities?
• Am I okay needing a referral to see specialists?
• Am I okay paying co-pays and co-insurance for services throughout the year?
If you answered mostly “yes” to these questions then a Medicare Advantage Plan could be a good fit for you. If you answered mostly “no” then you may want to consider Original Medicare, or Medicare Supplement Insurance plus a Part D drug plan.
To find the right Medicare Advantage Plan, make sure you’re only looking at plans that are available in your area. Beyond this, it’s essential to know if your existing doctors will accept the plan(s) you’re interested in.
Also, you want to make sure that your Medicare Advantage Plan will cover any prescriptions you currently take. It’s also a good idea to check on any medications you might take in the future (if your doctor has mentioned any). That way you’ll know that your plan will work for you in the future, too.
If you want to talk about the Medicare Advantage Plans available in your area, schedule a free, no-obligation consultation today. Working together, we’ll see what your options are, and make sure we find something that matches your needs. You can even enroll in the plan of your choice online or over the phone; no face-to-face meeting needed.
If you want to get started sooner, please give me a call or text on my cell phone at 858-248-0337.
What do you think? Did I answer your questions about Medicare Advantage? Leave a comment with any questions, or suggestions for future articles.
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