The four parts of the Medicare program (A, B, C, and D) give Medicare beneficiaries a choice in how they receive their healthcare benefits.
In this article, I will explain what Medicare Part CMedicare Part C is Medicare's private health plan option. Also known as Medicare Advantage, Medicare Part C plans are a type of Medicare health plan offered by companies that contract with Medicare to provide all... is used for and make some suggestions to make it easier for you to decide which parts will work best for you.
Key Takeaways
- Medicare Part C provides private health plan options to Medicare beneficiaries.
- Approved Part C health plans replace Medicare Part AMedicare Part A is hospital coverage for Medicare beneficiaries. It covers inpatient care in hospitals and skilled nursing facilities. It also covers limited home healthcare services and hospice care. and Part BMedicare Part B is medical coverage for people with Original Medicare benefits. It covers doctor visits, preventative care, tests, durable medical equipment, and supplies. Medicare Part B pays 80 percent of most medically necessary healthcare services. benefits from the federal government.
- Private plans may or may not cost less than traditional MedicareOriginal Medicare is private fee-for-service health insurance for people on Medicare. It has two parts. Part A is hospital coverage. Part B is medical coverage..
- If you join a private Medicare plan, you must continue paying your Medicare Part B premiumThe Medicare Part B premium is the monthly charge paid by beneficiaries for their outpatient medical care, services, and supplies. A beneficiary's premium may be uplifted by an IRMAA surcharge if their income is above....
- Private Medicare plans are not compatible with supplemental Medicare insurance (Medigap).
- Private plans can offer extra benefits that traditional Medicare does not cover.
- Some private plans work with MedicaidMedicaid is a public health insurance program that provides health care coverage to low-income families and individuals in the United States. for dually eligible individuals.
What is Medicare Part C?
When the Medicare program was created, it had just two parts, A and B. Medicare Part A is inpatient coverage. Part B is coverage for medical care, including doctor visits, tests, supplies, and durable medical equipmentDurable medical equipment (DME) is equipment that is designed to last and can be used repeatedly. It is suitable for home use and includes wheelchairs, oxygen equipment, and hospital beds..
From the beginning, this simple, two-part health insurance system had its challenges. It straps beneficiaries with 20% of all major medical costs. It doesn’t cover outpatient prescriptions. And, it does not cover routine healthcare, such as dental, vision, and hearing.
Medicare Part C (private health insurance) and Part D (prescription drug coverage) were created to help solve these problems. Medicare Part C is not necessary coverage. It is an option.
Who Can Get Medicare Part C and D?
The two new parts of Medicare are optional. They are overseen by the federal government, but they are provided by private insurance companies.
If you are enrolled in Medicare Part A and Part B, you can get a Part C private health plan. To get a Part D prescription drug plan, you must be enrolled in Medicare Part A and/or Part B.
What Does Medicare Part C Cover?
Although they are not all the same, every Medicare Part C plan must include all of the benefits provided by Original Medicare (Part A and Part B). That’s where all similarities end.
Although private Medicare plans must cover all Part A and B benefits, they can also offer their members additional benefits. Some of the more common extra benefits offered include:
- Prescription drug coverage
- Routine vision, hearing (including hearing aids), and dental care
- Transportation to and from doctor appointments
- Coverage for over-the-counter medications
- Telehealth benefits
- Wellness and preventive care programs, including gym memberships
These extra benefits, as well as access to a network of local healthcare providers, is why Part C was dubbed Medicare Advantage. For many Medicare beneficiaries, it offers a lot of advantages. But not for everyone.
How Are Original Medicare and Part C Different?
The point of a Medicare Advantage plan is to provide more options. They are as different in what they provide as they are in how they provide it.
Original Medicare is Private Fee-for-Service (PFFS) health insurance. Beneficiaries can use any healthcare provider that accepts Medicare assignmentAn agreement by your doctor to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill you for any more than the Medicare deductible and coinsurance.. The provider receives 80% of their payment from the government and the remaining 20% from the patient. Pre-authorization and referrals are not required.
Most Medicare Advantage plansMedicare Advantage (MA), also known as Medicare Part C, are health plans from private insurance companies that are available to people eligible for Original Medicare (Medicare Part A and Medicare Part B). are Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) health plans. Both HMO plans and PPO plans use local provider networks to deliver care.
In the case of HMO insurance plans, members must use the plan’s provider network or pay all costs. PPO networks have a little more flexibility, which allows members to see providers outside of the plan’s network for an additional cost. And, except in the event of an emergency, members must receive care in the plan’s service area.
Both HMO plans and PPO plans require their members to use go through a primary care physician (PCP) for referrals and pre-authorizations. In essence, the PCP is the gatekeeper to care and the point of all coordination. This is why Medicare Advantage plans are called managed care plans.
For some people, a managed care plan works well. PCPs have working relationships with hospitals, specialists, surgical centers, and other care providers. They save patients time and frustration by making referrals and scheduling appointments.
For other people, the gatekeeper role of the PCP can be a nightmare. This is particularly true when it comes to getting second opinions and step therapy, which health plans love.
The most significant difference, though, is how much both types of health insurance cost and how you pay for those costs.
How Much Does Part C Cost?
What you pay to receive coverage in a Medicare Part C plan vs. Original Medicare is just as different as care delivery. For some people, it costs less and for others, it costs more.
How can this be?
In general, the healthier you are the fewer major healthcare services you require. That means healthy people can take advantage of the extra benefits offered by private health plans without dipping into their budget for out-of-pocket costsOut-of-Pocket Costs for Medicare are the remaining costs that are not covered by the beneficiary's health insurance plan. These costs can come from the beneficiary's monthly premiums, deductibles, coinsurance, and copayments. on major medical services.
Conversely, individuals with chronic health conditions could end up paying more with a private health plan due to copaysA copayment, also known as a copay, is a set dollar amount you are required to pay for a medical service. and high maximum out-of-pocket (MOOP) limits. There is a fine balance between paying more upfront (in premiumsA premium is an amount that an insurance policyholder must pay for coverage. Premiums are typically paid on a monthly basis. In the federal Medicare program, there are four different types of premiums. ) vs. paying too much when you receive services (copays and/or coinsuranceCoinsurance is a percentage of the total you are required to pay for a medical service. ).
What About Medigap?
No discussion about Medicare costs is complete if you don’t bring Medigap (Medicare Supplement insuranceMedicare Supplements are additional insurance policies that Medicare beneficiaries can purchase to cover the gaps in their Original Medicare (Medicare Part A and Medicare Part B) health insurance coverage.) into the mix.
With a private health plan, you limit your risk by choosing a plan with a MOOP that’s appropriate for your health and your finances. With Original Medicare coverage, you limit your risk by purchasing Medicare Supplement insurance.
Supplemental insurance helps cover some of the deductiblesA deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share. and coinsurance in Part A and Part B. For instance, a Medigap Plan GIf you're turning age 65 this year, Medicare Supplement Plan G is the most comprehensive Medicare supplement you can buy. It's also the most popular. You might be thinking that Medicare Supplement Plan F is... policy covers all out-of-pocket costs, for Medicare-approved services, except the annual Part B deductible.
Why is that important?
Let’s say you have a Medicare Advantage plan with a $5,000 annual MOOP that has a $300 per day copay for the first 5 days of inpatient careInpatient care refers to care provided in a hospital or other inpatient facility. Inpatients are admitted and stay at least one night depending on their condition.. If you have a 7-day hospital stay, you’ll pay the plan’s monthly premium, plus a $1,500 copay for the Part A inpatient services, plus copays for all of your Part B doctor, testing, supplies, and medication services while you’re in the hospital. It isn’t difficult to see how you will easily reach the $5,000 annual MOOP.
If you have Original Medicare, and a Medigap Plan G policy at $200 per month, your total cost for a full year of coverage, including 7 days of hospitalization, would be $2,400, plus the annual Part B deductible. In most areas of the country, Medigap Plan G policies start well below $200 per month.
You should weigh your risks and decide how you want to budget for your healthcare. If you want to know most of your costs are fully covered every month, Original Medicare and a Medigap plan are the way to go. If you are healthy and can take a little more financial risk, Medicare Advantage may save you money in the long run.
What About Medicaid?
Medigap is how people who can afford it get the best coverage possible. These same individuals can afford a Medicare Advantage plan that offers more benefits and a lower MOOP, albeit with a higher monthly premium.
For financially disadvantaged people, the Medicaid program offers healthcare benefits. These benefits do not disappear when you get Medicare. In fact, they work together. You can be dually eligible for both programs.
In the case of Original Medicare, there are several Medicare Savings Programs (e.g., QMB, SLMB, QI) that help pay monthly premiums and certain out-of-pocket expenses. With Medicare Part C there are dual-eligibleDual-eligible beneficiaries are those who receive both Medicare and Medicaid benefits. It includes beneficiaries enrolled in Medicare Part A and/or Part B while receiving full Medicaid and/or financial assistance through a Medicare Savings Program.... Special Needs Plans (SNPs) that coordinate the benefits available to individuals that qualify for Medicaid.
Whichever type of Medicare coverage you choose, Medicare covers the majority of your healthcare costs if you qualify for Medicaid. And, there are other benefits available through Social Security, such as the Extra HelpSocial Security's Low-Income Subsidy (LIS) program helps Medicare beneficiaries pay for their Medicare Part D prescription drugs by paying some of the costs. Also known as "Extra Help", beneficiaries who qualify for LIS receive premium... program, which helps with prescription costs.
What About Prescriptions?
Most Medicare Advantage plans include drug coverage (Part D) benefits. These plans are known as Medicare Advantage Prescription Drug Plans (MAPD).
People who keep their Original Medicare benefits, and people who enroll in a health plan without prescription drug coverage, can add a stand-alone Medicare Part DMedicare Part D plans are an option Medicare beneficiaries can use to get prescription drug coverage. Part D plans provide cost-sharing on covered medications in four different phases:Â deductible, initial coverage, coverage gap, and catastrophic. Each... plan.
What About Enrollment?
Another significant difference between Medicare Part C and traditional Medicare has to do with enrollment and enrollment periodsEnrollment periods are designated time periods to enroll or disenroll from the various parts of Medicare. There are six Medicare enrollment periods..
In traditional Medicare, you separately enroll in Part A and Part B. You do not have to be enrolled in both. For example, if you are still working you can enroll in Medicare Part A and continue participating in your employer’s group health benefits.
To join a Medicare Advantage plan, you must be enrolled in both Medicare Part and Part B.
Both traditional Medicare and Part C have enrollment periods, starting with your Initial Enrollment PeriodThe Initial Enrollment Period is a seven-month period when new beneficiaries can enroll in Medicare without a penalty. Most people enroll in Medicare at age 65. (IEP) when you first qualify. After your IEP, you will need to use one of several Open EnrollmentIn health insurance, open enrollment is a period during which a person may enroll in or change their selection of health plan benefits. Health plan enrollment is ordinarily subject to restrictions. Periods. Each of these enrollment periods has different rules for switching to and from Original Medicare and Medicare Advantage. Medicare gives Part C plan members an additional enrollment period that allows them to jump from one plan to another, but only once.
Summary
Now you know that Part C is used for private health plans known as Medicare Advantage. These plans give you the opportunity to choose options that will better serve you and your individual needs.
Citations and References
- medicare.gov
- Welcome to Medicare | Medicare
https://www.medicare.gov/ - Explore your Medicare coverage options
https://www.medicare.gov/plan-compare/ - Welcome to Medicare | Medicare
http://www.medicare.gov
- Welcome to Medicare | Medicare
- kff.org
- Medicare Advantage in 2022: Enrollment Update and Key Trends | KFF
https://www.kff.org/medicare/fact-sheet/medicare-advantage/ - Medicare Advantage 2022 Spotlight: First Look | KFF
http://www.kff.org/issue-brief/medicare-advantage-2022-spotlight-first-look - Medicare Advantage 2023 Spotlight: First Look | KFF
https://www.kff.org/medicare/issue-brief/medicare-advantage-2023-spotlight-first-look/
- Medicare Advantage in 2022: Enrollment Update and Key Trends | KFF
- cms.gov
- Health Plans, Reports, Files and Data | CMS
https://www.cms.gov/HealthPlanRepFileData/04_Monthly.asp - Medicare Advantage Rates & Statistics | CMS
https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats - The Inflation Reduction Act Lowers Health Care Costs for Millions of Americans | CMS
https://www.cms.gov/newsroom/fact-sheets/inflation-reduction-act-lowers-health-care-costs-millions-americans
- Health Plans, Reports, Files and Data | CMS
- hhs.gov
- What is Medicare Part C? | HHS.gov
https://www.hhs.gov/answers/medicare-and-medicaid/what-is-medicare-part-c/index.html - Who’s eligible for Medicare? | HHS.gov
https://www.hhs.gov/answers/medicare-and-medicaid/who-is-elibible-for-medicare/index.html
- What is Medicare Part C? | HHS.gov