Medicare Advantage Plans
What is a Medicare Advantage Plan?
Medicare Advantage Plans, often called “Part C” or “MA Plans,” are offered by private companies approved by Medicare. Medicare pays these companies to provide your Medicare Part A (Hospital Insurance) and your Medicare Part B (Medical Insurance) benefits. In other words, a Medicare Advantage plan, although administered by private insurance companies, simply replaces Original Medicare and provides the same coverage as Original Medicare. These plans also often offer additional services like limited vision and hearing and usually have prescription drug coverage included.
The enrollee will continue to pay their Part B premium and also the additional premium charged by the Medicare Advantage insurance company. There are, however, many cases when the Medicare Advantage provider does not charge a monthly premium. In these cases, it will depend on the area you live in and the insurance company you choose to do business with. But as with all things, there are pros and cons to having an MA plan instead of Original Medicare, and we can discuss those and how they would apply to you.
Why Should I Consider a Medicare Advantage Plan?
With any medical insurance, the choice is typically about coverage versus cost. Although you may have to pay an additional premium for your Medicare Advantage Plan, there are several benefits that can easily outweigh the additional cost:
Medicare Advantage Plans will reduce your out-of-pocket expenses that result from Original Medicare.
Most Medicare Advantage plans offer prescription drug coverage (Part D) and additional services
Some Medicare Advantage plans will pay health care expenses outside the U.S. while Medicare will not.
But you must also remember that you will often be restricted to in-network doctors and hospitals (or it will cost more to use out-of-network doctors and hospitals). You can read more about this potential caveat in the “Types of Medicare Advantage Plans” section below.
Types of Medicare Advantage Plans
Currently, there are 6 different types of Medicare Advantage Plans and each insurer can offer different additional coverage as long as they offer at least the same coverage as Original Medicare Part A and Part B. But to keep things short, we will only cover the 4 main types of MA plans starting with the most popular.
1. HMO (Health Maintenance Organization)
The HMO is one of the most common types of Medicare Advantage Plans. With an HMO you are restricted to seeing a primary care doctor that is a member of the HMO and in most cases, your primary care doctor must refer you to a specialist if you want and need to see one. Because of this restriction, HMOs often offer the best price point.
With an HMO, you are typically not covered for health services received outside of your plan’s network except for certain circumstances. This means if you do not follow the rules for services of your plan, you will likely be paying out-of-pocket for services received outside of the network. Although the HMO plans are more restrictive, they are still among the most popular plan because those restrictions are substantially offset by lower plan costs.
2. PPO (Preferred Provider Organization)
If you join a Medicare Advantage plan that offers services through a PPO, you can generally use any doctor or hospital but will pay much less when you use doctors or hospitals that are members of the plan’s network.
Unlike HMO plans, a PPO typically does not require the patient to get a referral from the primary care physician in order to see a specialist. If, however, you intend on seeing a specialist who is not in the network, you will likely be required to pay a higher percentage of the costs (usually around 50%).
Because a PPO plan is far less restrictive when it comes to which doctors and hospitals you can obtain services from, you will generally pay a higher premium than an HMO.
3. HMO Point-of-Service
The HMO Point-of-Service plan is a modified traditional HMO. This plan will typically allow you to see a health care provider outside of the network but your out-of-pocket costs will be higher and similar to a PPO plan. You will also have to use a primary care physician to get referrals to specialists.
4. PFFS (Private Fee-For-Service Plans)
Initially, the PFFS plan was very popular with seniors because it was less restrictive than the HMP or PPO plans. You did not need to choose your primary doctor and in most cases, a referral was not required to see a specialist.
Not having to deal with network physicians and hospitals made this plan one of the most popular until 2011 when Medicare began requiring PFFS plans to implement networks of physicians and medical facilities. This greatly lowered the value of this plan and is why I do not recommend it.
Anytime you are considering a PFFS plan, always make certain in advance that you understand which medical providers you need to use and other requirements in the program.
The two other types of MA plans are the Special Needs Plans (SNPs)- which is for specialized care and usually nursing homes and Medical Savings Account (MSA)- which is a plan with a very high deductible and savings account and is usually not suitable for most people.
I know, that was a lot of information! But don’t worry! We will guide you through the Medicare maze to help you choose the right plan for your needs and budget.
Frequently Asked Questions About MA Plans
Can I switch back to Original Medicare if I do not like Medicare Advantage?
Yes, you can elect to switch to traditional Medicare from your Medicare Advantage plan during the Medicare Open Enrollment period, which runs from October 15 to December 7 each year. But please note that if you want to enroll in a Medicare Supplemental plan, you will have to answer medical questions for underwriting and may be denied.
Why are Medicare Advantage Plans being pushed so hard?
Medicare Advantage plans (Medicare Part C or MA) are heavily advertised because they provide all of the coverages of Medicare Part A, B, and D, plus additional services like dental, hearing, and vision. Most companies offer a zero-premium plan and other services that seniors can take advantage of. BUT, there are trade offs compared to Original Medicare and Supplemental. For one, you will have to work within the MA plan’s network of doctors and hospitals. If you want to learn more about if a MA plan or a Supplemental plan is a better fit for you, contact us to set up a free appointment.
Do I still have to pay Medicare Part B premiums when I am enrolled in a Medicare Advantage Plan?
Yes. Your Medicare Part B monthly premium is still required and will be added to your Medicare Advantage plan insurance company.