Medicare Advantage (MA), also known as Medicare Part C, are health plans from private insurance companies that are available to people eligible for Original Medicare (Part A and Part B). About 30 percent of all new Medicare beneficiaries enroll in Medicare Advantage.
Medicare Advantage Plans are not the same as supplemental Medicare insurance, like Medigap plans. They are a complete alternative to traditional Medicare health insurance that has the flexibility to offer additional services.
In this article we’ll address the following top questions, and many more:
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?
MA Plan Pros
- The maximum out-of-pocket cost is $7,550 a year
- Many plans cost $0 extra a month
- Most plans include drug coverage
- Many include basic hearing, dental, and vision benefits
- May include gym discounts (Silver Sneakers)
MA Plan Cons
- Can only switch during Open Enrollment
- Not easy to compare because plans are not standardized
- No nationwide coverage (plans don't travel with you)
- Most are HMO plans that require referrals to see a specialist
- Plans can change health and drug coverage each year
Learn more in this article.
Original Medicare is a Private Fee-for-Service (PFFS) health insurance system. Beneficiaries can use any healthcare provider that accepts Medicare. Most Medicare Advantage plans are a form of managed care health insurance, including HMOs and PPOs. As such, they have networks of doctors and hospitals that plan members use to receive care. With Original Medicare, the federal government pays about 80% of all Medicare-approved costs and the beneficiary pays the remaining 20% out-of-pocket. However, the 20% gap in coverage can be supplemented with a Medigap plan. With Medicare Advantage, members must pay all copays out-of-pocket until spending reaches the plan maximum, which can be up to $7,550. To learn more about how plans work, read How Does Medicare Advantage Work.
Most Medicare Advantage plans are HMOs and PPOs that are similar to employer group coverage or plans you get on the Health Exchange (Obamacare). The big difference is the cost to the beneficiary. By law, all Medicare Advantage plans must provide the same coverage included in Original Medicare (Part A and B), but plans can also include extra benefits (the advantage) such as routine dental, hearing, and vision care. Most plans include prescription drug coverage. However, even though plans must offer the same coverage as Original Medicare, they are not required to provide coverage in the same way. The big difference is how plan members are charged for services (copays), how services are regulated (referrals), and the use of provider networks. For more information about the pros and cons of Medicare Advantage, see: What are the Advantages and Disadvantages of Medicare Advantage Plans?.
With an MA plan, you get all of your Medicare Part A (Hospital Insurance) coverage, Medicare Part B (Medical Insurance) coverage, and other health benefits through a single plan. By law, an MA plan must offer the same health insurance coverage provided by Original Medicare. Most offer more coverage and benefits. You can discover additional benefits when you compare plans using our Medicare Advantage plan finder tool. Also see: How to Compare Medicare Advantage Plans.
It’s important to note that joining an MA plan does not take you out of Medicare. You still have all of the rights and protections the government guarantees, however, your healthcare services are covered by your private insurer. Also, Medicare Advantage is not the same as Obamacare. If you qualify for Medicare you are not eligible for Obamacare, regardless of your income status.
RELATED: How Does Medicare Advantage Work?
What is the Difference Between Medicare and Medicare Advantage Plans?
Traditional Medicare, commonly called Original Medicare, is a simple private fee-for-service health insurance system provided by the federal government’s Centers for Medicare and Medicaid Service (CMS). It is a cost-sharing system. Overall, Medicare covers about 80 percent of a beneficiary’s major healthcare costs and the beneficiary pays the remaining 20 percent. The beneficiary’s share can be paid as an out-of-pocket cost or through additional insurance (e.g., a Medigap policy).
With Original Medicare, there are no provider networks and you never need a referral from your doctor to see a specialist. Also, the costs for healthcare services are determined by Medicare. Providers must accept Medicare assignment (service costs) if they want to be part of the Medicare provider eco-system. Those providers who don’t accept Medicare assignment can charge up to 15 percent more (e.g., “Excess Charges”). This additional cost is passed on to the patient.
The simple system makes Original Medicare relatively easy to understand compared to a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO) plan. Most Medicare Advantage plans are HMOs, PPOs, and other forms of managed care.
Managed care is a business. The insurance companies are in business to make money, and the primary way they control their costs is by controlling access to costly healthcare services.
Unlike Original Medicare, HMOs, PPOs, and other types of Medicare Advantage plans do not have standardized cost-sharing. Each plan is free to set its own copayment and coinsurance rates. As a result, it is very difficult for most people to fully understand their out-of-pocket costs with a private plan.
There’s one more major difference. With Original Medicare, there’s no open enrollment period. With Medicare Advantage, open enrollment comes around every Fall, and plans are free to change benefits, costs, provider networks, or drop plans completely.
What Do Medicare Advantage Plans Cover?
By law, all Medicare Advantage plans must provide all of the same coverages and benefits as Medicare Part A and Part B, but they don’t have to cover the benefits in the same way. For example, under Medicare Part A a beneficiary will pay a flat-rate deductible when they are admitted to the hospital. For 2021, the deductible is $1,452 per benefit period. This is where many people get confused.
A benefit period begins the day you’re admitted as an inpatient in a hospital or skilled nursing facility (SNF). The benefit period ends when you haven’t gotten any inpatient hospital care (or skilled nursing care in an SNF) for 60 days in a row.
How does this differ from HMO plans or PPO plans? Simple, most of these plans charge a per-day copay for a set number of days of hospitalization. For instance, an HMO might charge you $395 per day for the first 5 days. In this case, a beneficiary’s cost in the HMO would cost more than Original Medicare if they were admitted for five or more days (e.g., $395 * 5 = $1,975).
The good news is that you don’t have to worry about a plan not covering all of your major medical needs, just like Original Medicare. But, you do need to take the time to look at a plan’s copays before you join to make sure they will work with your health and financial needs.
In addition to the basics, Medicare Advantage plans can also bundle health services that are not included in Medicare Part A and Part B, including Medicare drug coverage (i.e., Medicare Part D), and routine dental, vision, and hearing care.
What are the Advantages and Disadvantages of Medicare Advantage Plans?
The primary benefit of a Medicare Advantage plan is the extra benefits the insurers are allowed to add. The most popular additional benefits include prescription drug coverage, routine dental care, vision, and hearing, too. These minor healthcare options are not covered by Original Medicare.
Most people with traditional Medicare benefits add stand-alone plans to get these coverage options, such as a Medicare prescription drug plan (Part D).
The primary disadvantages of the private health insurance option include:
- Referrals are generally required to see a specialist in the plan’s network (your primary care doctor is the gatekeeper to your care to other healthcare providers).
- Most insurance plans have network providers and require you to use the network in your service area.
- Copays are often more than with Original Medicare, not less. People often believe Medicare Advantage plans cost less, but this is rarely the case. If you have retiree benefits from an employer that help cover some or all of your copays, your costs may be less. Also, if you are exceptionally healthy, and typically only see your doctor for your annual wellness exam, your overall costs may be less.
What are the Different Types of Medicare Advantage Plans?
Most people choose one of three types of Medicare Advantage Plans: Health Maintenance Organization (HMO) plans, Preferred Provider Organization (PPO) plans, or Private Fee-for-Service (PFFS) plans. These common MA plans are offered in most areas.
There are other types of plans that may or may not be offered in your area, including HMO Point-of-Service plans, Medical Savings Accounts (MSA), and Special Needs Plans (SNP). If you are looking for an MA plan that can replace a Medigap policy that gives you fee-for-service flexibility at a reduced overall cost, investigate MSA plans in your area.
Who Can Join a Medicare Advantage Plan?
The requirements for joining a plan are very simple. You must be enrolled in both Medicare Part A and Part B, and you must continue to pay your Medicare Part B monthly premium. If the plan you choose has an additional premium (many plans have no additional premium), you must pay that as well.
NOTE: If you have end-stage renal disease, most plans will not accept you.
Do you need more information? Call 1-855-266-4865 to speak with a licensed HealthPlanOne advisor.
Citations & References:
- Medicare.gov: the official U.S. government site for Medicare | Medicare
- Find a Medicare plan
- What’s Medicare Supplement Insurance (Medigap)? | Medicare
- Trump Administration Announces Historically Low Premiums and New Insulin Bene…
- 2020 Medicare Parts A & B Premiums and Deductibles | CMS
- Institutional Special Needs Plans (I-SNPs) | CMS
- Medicare Advantage | KFF
- A Dozen Facts About Medicare Advantage in 2020 | KFF
- A Dozen Facts About Medicare Advantage in 2019 | KFF
- Medicare Insurance-Compare Medicare Plans Online or Call Us Toll Free
- Medicare Insurance-Compare Medicare Plans Online or Call Us Toll Free
- Choice | Price | Convenience | eHealth Medicare
This article was written by David Bynon and was last updated on .