It pays to understand what Medicare Advantage offers before you switch from Original Medicare
If you have ever had a Health Maintenance Organization (HMO) plan or a Preferred Provider Organization (PPO) plan through an employer or the Healthcare Exchange, you already have a pretty good idea about how Medicare Advantage plans work. In this article, we’ll explain what you need to know to stay out of trouble.
- Medicare Advantage plans must cover the same benefits as Original Medicare, but how they cover the benefits may be different.
- When comparing Medicare Advantage vs. Medigap, it’s important to evaluate total cost, not simply the monthly premiums.
- Medicare Advantage is not a good deal for everyone. But for some people it is a great deal.
- Medicare Advantage is not compatible with other forms of primary health insurance, including Obamacare plans and Medicare supplements.
- There are 7 types of Medicare Advantage plans, but all plan types are not available everywhere.
- You can only enroll in a Medicare Advantage plan during an enrollment period.
Medicare Advantage Basics
Medicare Advantage plans (aka, Medicare Part C or MA plans) are a private health insurance option to Original Medicare (Medicare Part A and Medicare Part B). The big differences between Medicare Advantage and other HMOs and PPOs are:
- Medicare regulates what plans must cover, but now how they provide coverage.
- Medicare pays a big portion of the Medicare Advantage plan cost for you, but you continue to pay your Part B premium.
- The Centers for Medicare & Medicaid Services (CMS) grades each plan annually with a 5-star rating system making it easier to compare Medicare Advantage plans in your area so you can find the best plan for you.
In this article, we’ll go over some of the top questions people have about Medicare Advantage, including:
There are 7 common reasons that some Medicare beneficiaries, and many healthcare professionals, feel that Medicare Advantage plans are bad. They include higher costs, less freedom to choose healthcare providers, doctor referrals for most services, high maximum out-of-pocket limits, annual changes to health plan benefits, costs, and providers. Read Why Medicare Advantage Plans are Bad: 7 Top Complaints to discover all of the dirty secrets about Medicare Advantage plans.
There is no debate when it comes to which plan offers better coverage. Original Medicare and a supplement plan offer the best coverage, but it costs more up-front. For a complete breakdown of the differences between Medicare Advantage plans and Medigap plans, read: Medicare Advantage vs Medigap: Which is Best for You?
The primary advantage is the monthly premium, which is generally lower than Medigap plans. The top disadvantages are that you must use provider networks and the copays can nickel and dime you to death. To discover all of the pros and cons of Medicare Advantage, read: What are the Advantages and Disadvantages of Medicare Advantage Plans?
Medicare Advantage is a great deal if you are not the one paying the copays. Many people with Medicare Advantage plans, including federal, railroad, and large company retirees, have retirement benefits that pay all of some of their Medicare Advantage plan copays. Other people, like Veterans and low-income individuals, have other government programs available to help pay their healthcare costs. If you're not in one of these groups, Medicare Advantage can be very expensive. Read more about the pros and con in What are the Advantages and Disadvantages of Medicare Advantage Plans?
What is the Difference Between Medicare Advantage Plans and Medicare Supplement Plans?
Medicare supplement plans (i.e., Medigap) work in lockstep with Medicare Parts A and B. In other words, if Medicare doesn’t cover it, a Medigap plan can’t cover it either. For this reason, Medicare supplements can’t offer additional benefits. They are strictly an insurance plan to pick up the gap in coverage in Medicare’s traditional fee-for-service system.
However, private insurance companies that offer Medicare Advantage plans can bundle extra benefits. Some of the most common additional benefits include Medicare prescription drug coverage (Medicare Part D plan), dental coverage, vision, hearing, and telemedicine, too. You can read more about what Medicare Advantage plans cover here.
It’s worth mentioning that when you have a Medicare supplement, you need to use healthcare providers that are approved by Medicare. This includes hospitals, nursing facilities, home health agencies, hospice care, and doctors. Most primary care doctors accept Medicare patients.
What are the Advantages and Disadvantages of Medicare Advantage Plans?
We created an entire article just for this topic. Read Top 9 Advantages and Disadvantages of Medicare Advantage Plans for a full understanding of the benefits and pitfalls.
Is Medicare Advantage a Good Deal?
It all depends.
Medicare Advantage is a great deal if you qualify for Medicaid and a Special Needs Plan is available, have retiree benefits that cover your premium and copays, or if you are exceptionally healthy and rarely need health care services other than your annual wellness visit.
Medicare Advantage is a bad deal if you are paying your copayments out-of-pocket and have one or more chronic health conditions. In this case, Medicare Advantage often costs more than traditional Medicare.
If you have a chronic health condition, you might be wondering, “How much do Medigap policies cost?” The answer all depends on where you live and the plan you choose. Your gender and use of tobacco are also factors. We’ve created a tool to help you find pans and costs in your area:
You might also be curious about where Medigap policies can be used that Medicare Advantage plans can’t. It’s important to know that Original Medicare and a Medigap policy travels with you. However, except in an emergency situation, a Medicare Advantage plan won’t cover you outside of your service area. Most Medigap plans cover you when you travel outside of the USA, too.
So, before you get wooed by a free prescription drug plan, a zero-dollar monthly premium, or a laundry list of additional benefits, make sure you fully understand a plan’s referral requirements, medical care copayments and/or coinsurance, and outpatient costs when you use providers outside of the plan’s network.
Can Medicare Advantage Plans Be Combined with Medicare Part D?
Most Medicare Advantage plans include a Medicare Part D plan for prescription coverage. This can be both good and bad. The good part is that it potentially reduces your out-of-pocket costs. The bad news is that it will potentially increase your out-of-pocket costs.
How can both be true?
All Medicare Part D plans use a formulary (list of medications) to determine the cost tier a medication is in. Each plan determines its own cost tiers and the level of cost-sharing (what you pay at the pharmacy). So, if you are not careful, you can get into a plan with good copays for doctor visits and expensive copays for your medications.
Can I Have Both Medicare Advantage and a Medigap Plan?
No. Medicare supplement insurance is only available if you are enrolled in both Medicare Part A and Part B. If you join a Medicare Advantage plan, you will be automatically dropped from Part A and Part B. If you want the best Medicare coverage possible, keep your Original Medicare and add the most Medicare supplement insurance you can afford.
Do Medicare Advantage Plans Work?
Without a doubt, yes. But, don’t choose a plan simply by looking at the monthly premium and the list of extra benefits. If you do, you may be highly disappointed. Carefully read our notes above and self-qualify yourself. Are you a good candidate or not?
What Are The Different Types of Medicare Advantage Plans?
Currently, there are seven types of Medicare Advantage plans:
- HMO — HMOs deliver care through a network of doctors, hospitals, and other medical professionals that you must use to be covered for your care.
- PPO — PPO plans have provider networks, like HMOs. You pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. However, you are not restricted to using providers in the network
- HMO-POS — With an HMO-POS you have the option to go outside of the network for care, but you’ll pay more when you do. Also, The HMO and POS portions of the plan have separate deductibles. Care you receive in-network through the HMO has a different deductible than the care you get out-of-network through the POS.
- COST — Cost Plans are a type of Medicare health plan available in certain, limited areas of the country. Usually rural areas. Unlike other plans, you can join even if you only have Part B. If you have Part A and Part B and go to a non-network provider, Original Medicare covers the services. You’ll pay the Part A and Part B coinsurance and deductible.
- PFFS — A Medicare Advantage PFFS plan sounds a lot like Original Medicare and Medigap medical insurance, but it’s not. The plan determines how much it will pay doctors, other health care providers, and hospitals, and how much you must pay when you get care. You can go to any Medicare-approved doctor or hospital that accepts the plan’s payment terms and agrees to treat you.
- MSA — Medicare Advantage MSA plans combine a high-deductible insurance plan with a medical savings account that you can use to pay your health care costs.
- SNP — Special Needs Plans are plans designed to provide health insurance to people with special health and/or financial needs.
How To Join a Medicare Advantage Plan
If Medicare Advantage sounds like the right option for you, your next step is to speak with a health insurance agent to go over your HMO, PPO, MSA, SNP, PFFS, and Part D plan options. An insurance agent can find the plans that offer the extra benefits you want and assist you with questions you have about network providers.
If you are getting your Medicare benefits for the first time, you can join a Medicare plan when you turn age 65 or on the 25th month of your Social Security Disability Insurance benefits. You can change plans, or go back to Original Medicare, during the fall open enrollment period.
Call 1-855-266-4865 to speak with a HealthPlanOne agent about the best Medicare Advantage plan for you.
Citations & References:
- Medicare.gov: the official U.S. government site for Medicare | Medicare
- Find a Medicare plan
- Things to know about Medicare Advantage Plans | Medicare
- Trump Administration Drives Down Medicare Advantage and Part D Premiums for S…
- Medicare Open Enrollment | CMS
- 2021 Medicare Parts A & B Premiums and Deductibles | CMS
This article was written by David Bynon and was last updated on .