Medicare Advantage (Part C) plans are considered as an alternative to original Medicare, and the various plans offer different benefits. The choice of a plan depends on a person’s healthcare needs.
This article will discuss the Medicare Advantage program, offer a brief comparison with original Medicare, and describe Medicare Advantage plans. It will also look at enrollment, eligibility, and costs.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare Advantage (Part C) plans are offered by private companies that contract with Medicare to provide the same benefits and coverage as original Medicare (Part A and Part B). Some plans offer additional benefits, including prescription drug coverage.
In 2019, more than 30% of all Medicare enrollees were in Medicare Advantage plans, according to the Kaiser Family Foundation (KFF).
In 2019, Medicare paid an estimated $250 billion to companies offering Medicare Advantage plans to provide enrollee benefits, according to KFF. The company negotiates with healthcare facilities and providers to create a network of providers.
A person who chooses to enroll in a Medicare Advantage plan can return to original Medicare or select a different Medicare Advantage plan at key times during the year.
There are several differences between original Medicare and Medicare Advantage, including:
|Option||Original Medicare||Medicare Advantage plans|
|Provider choice||With original Medicare, a person can see any doctor or go to any facility that accepts Medicare.||Medicare Advantage plans often work with a network of providers, and may also need a person to get a referral to see a medical specialist.|
|Out-of-pocket limit||Original Medicare does not have an annual out-of-pocket limit.||Most Medicare Advantage plans include an out-of pocket limit, which could help reduce a person’s healthcare costs.|
|Prescription drug coverage||Original Medicare does not include a prescription drug plan (Part D).||Some Medicare Advantage plans include prescription drug coverage.|
Private companies offer Medicare Advantage (Part C) health plans. The four most common plans include:
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
- Private Fee-for-Service (PFFS)
- Special Needs Plans (SNPs)
There is also a Medicare Medical savings account (MSA) that offers a savings account with a high-deductible health plan.
Health Maintenance Organization (HMO)
In a Health Maintenance Organization (HMO) plan, a person generally establishes their care with an in-network primary care doctor. They will see this doctor when they need referrals for a specialist. The plan has in-network facilities for emergency care and urgent care. If a person wants to see a doctor outside of the network, they may have to pay full price for the medical services.
Preferred Provider Organization (PPO)
A Preferred Provider Organization (PPO) is different from an HMO in that most people do not have to choose a primary care doctor to see a specialist. PPO plans usually have in-network and out-of-network providers, with a person experiencing the greatest cost-savings by seeing an in-network provider.
PPOs may offer more benefits than HMOs although the cost may also be higher.
Private Fee-for-Service (PFFS)
A Private Fee-for-Service (PFFS) plan allows a person to go to any Medicare-approved doctor or healthcare facility that accepts the plan’s terms. Some PFFS plans establish a network of providers that offer lower costs.
Special Needs Plans (SNPs)
Special Needs Plans (SNPs) can be HMO or PPO plans but specifically designed to meet the needs of a person with specific medical conditions, such as diabetes, heart disease, and end-stage renal disease.
All SNPs offer a prescription drug plan, which may include prescription medications for treating a person’s medical condition. Some SNPs are also specific to a person who lives in a nursing home or needs home healthcare.
Medicare medical savings Account (MSA)
A Medicare medical savings account (MSA) is a plan option that combines a high-deductible health plan with a savings account. A person can put money into the savings account (usually tax-free) and use this money to pay their health costs before reaching the annual deductible. The plan then covers healthcare costs.
An MSA does not offer a prescription drug plan, so a person will have to choose one separately. However, some MSAs offer additional benefits, such as dental, long-term care, and vision.
Are Advantage plans region-specific?
Some Medicare Advantage companies operate in select states and may have different plan options and names depending on where a person lives.
Medicare Advantage plans are usually region-specific because the plan negotiates with providers in that region to be in their network. KFF notes that there may be more plan availability in larger areas than in rural locations.
To get more information about Medicare Advantage plans, a person can call 1-800-MEDICARE to find out which plans are available in their area or use Medicare’s Plan Finder.
Do Medicare Advantage plans offer prescription drug coverage?
An estimated 90% of Medicare Advantage plans offer prescription drug coverage, according to KFF, and plans that offer Part D or prescription drug coverage are chosen by more than 80% of people who enroll in a Medicare Advantage plan.
A Medicare Advantage company will list the drugs it covers under a listing called a formulary. Medicare requires each formulary to cover at least two medications in common drug classes, such as anti-high blood pressure medications and medicines to treat diabetes.
Medicare offers three set times a year when a person can enroll in Medicare Advantage plans. These include:
- The initial enrollment period that covers 3 months before, the month of, and 3 months after a person’s 65th birthday when they can first enroll in original Medicare and choose a Medicare Advantage plan.
- The open enrollment period is from October 15–December 7, and a person can join a Medicare Advantage plan, return to original Medicare, or choose a new Medicare Advantage plan.
- The Medicare Advantage enrollment period from January 1–March 31 is the time when a person can switch Medicare Advantage plans or return to original Medicare. However, a person cannot initially sign up for Medicare Advantage during this enrollment period.
Sometimes, a person may qualify for a special enrollment period during which they can enroll in a new Medicare Advantage plan. This may happen if a person moves into a new area, or their current Medicare Advantage plan no longer offers coverage.
A person with end stage renal disease (ESRD) may enroll in an Advantage plan only if it is an SNP that accepts people with the condition.
Medicare Advantage plans costs are in addition to a person paying the monthly Part B premium to Medicare. These costs may include premiums, deductibles, and out-of-pocket costs, and vary between plans. However, according to KFF, the average Medicare Advantage plan premium was $29 in 2019.
This online tool can help a person find a plan and compare costs.
Sometimes, a person may have both Medicare and Medicaid. Medicaid is a state-funded insurance program that may help pay for some of the out-of-pocket costs related to healthcare.
Medicare Advantage plans are an option for a person who wants to limit their out-of-pocket expenses or need extra benefits that original Medicare does not offer. There are several key times throughout the year when a person can enroll.