Private health insurance companies administer Medicare Advantage Prescription Drug (MAPD) plans. They combine Medicare parts A, B, and D under one policy.
Medicare Advantage Prescription Drug (MAPD) plans refer to Medicare Advantage plans that includes prescription drug coverage.
Original Medicare consists of Part A, hospitalization insurance, and Part B, outpatient medical insurance. Medicare Advantage plans are an alternative option.
All Medicare Advantage plans provide parts A and B benefits. However, many of the plans also include prescription drug coverage and other benefits, such as dental and vision.
Below, we look at Medicare Part D, as well as the types of Medicare Advantage plans.
We discuss the differences between Medicare Advantage plans that have prescription drug coverage and those that do not.
Lastly, we look at the costs of Medicare Advantage and the help available to pay for the plan.
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.
There are two ways for people with Medicare to get prescription drug coverage. One way is through a Medicare Advantage plan that includes coverage of prescribed medication.
Another way, which is available for someone with original Medicare, is through a Medicare Part D plan.
In both of these cases, Part D plans offer a set standard of coverage. Each plan has a formulary, which is a list of prescription drugs that the policy covers. Formularies vary among insurers.
In most cases, Medicare does not allow a person with a Medicare Advantage plan to buy a separate Part D plan. However, Medicare may make an exception if an individual has a Medicare Advantage plan that does not provide prescription drug coverage.
Medicare Advantage (MA) plans, also known as Medicare Part C, is a group of insurance plans administered by private health insurance companies. Medicare pays these companies to provide individuals with parts A and B benefits.
MA and coverage for prescribed medication
MA plans can also offer prescription drug coverage. Plans that include cover for prescribed medication are sometimes known as MAPD plans.
Many MA and MAPD plans offer additional benefits that original Medicare does not. Common benefits include dental, vision, and hearing care. Also, wellness programs such as gym memberships could be an added benefit.
MA and MAPD plans have less flexibility than original Medicare in the choice of healthcare providers. While a person with original Medicare may use any provider that accepts Medicare, most people with an MA plan must use an in-network provider.
There are several types of MA plans. The four main plans include:
- Health Maintenance Organization (HMO) plans
- Preferred Provider Organization (PPO) plans
- Private Fee-for-Service (PFFS) plans
- Special Needs Plans (SNP)
Two less common types are HMO Point of Service (HMO-POS) and Medicare Savings Account (MSA) plans.
Health Maintenance Organization (HMO) plans
Most HMO plans require a person to choose in-network healthcare providers.
Exceptions to this include occasions when someone needs emergency care, urgent care, or out-of-area dialysis care.
Although some plans permit an individual to visit out-of-network providers, it usually costs less to visit those within the network.
HMO plans generally include prescription drug coverage.
Most plans require a referral to see a specialist.
HMO Point of Service plans
HMO-POS plans allow individuals to get some services from out-of-network providers. These plans require a higher coinsurance or copayment.
Preferred Provider Organizations (PPO) plans
A person with a PPO plan has the flexibility to choose either in-network or out-of-network doctors and hospitals. As with HMO plans, the in-network providers usually cost less.
Most PPO plans cover prescription drugs.
The plans generally do not require a referral to see a specialist.
PPO plans usually offer benefits that original Medicare does not.
Private Fee-for-Service plans
The private insurance company administering a PFFS plan will set the amount they pay for doctors, hospitals, and other healthcare providers. The insurer will also set the amount that a person will pay towards their healthcare costs.
A person is free to choose between in-network or out-of-network providers, but again, an in-network provider is usually more cost-effective.
Some PFFS plans cover prescription drugs.
The plans do not require a referral to see a specialist.
Special Needs Plans
An SNP customizes benefits, healthcare provider options, and drug formularies to meet the needs of a person with certain chronic diseases, such as diabetes, heart disease, or dementia.
The rules of the plan require a person to use in-network providers unless they need emergency care, urgent care, or out-of-area dialysis.
The benefits of SNPs include prescription drug coverage.
The plans do not require a referral to see a specialist.
Medicare Savings Account plans
MSA plans work differently from other Advantage plans.
Medicare deposits a certain amount of money into a person’s bank account, and they use the money to pay for healthcare expenses during the year.
MSA plans do not include cover for prescription drugs.
According to the Kaiser Family Foundation, the average monthly premium for a Medicare Advantage plan in 2019 was $29. The cost of the premiums can range from $0 to more than $100.
The Part B monthly premium in 2021 is $148.50 per month. A person may not have to pay this premium as there are plans that pay some, if not all, of the cost.
Some MA plans may have two deductibles, including a deductible for the plan and deductible for prescription drug coverage.
They may also have different copayments or coinsurance, but all of the plans put a limit on yearly out-of-pocket expenses.
In all cases, costs can be affected by whether a person uses in-network providers and how many extra benefits they choose.
Because Medicare programs have deductible, copayment, and coinsurance costs, out-of-pocket expenses can be high.
Some individuals with a Medicare Advantage plan may be eligible for Medicaid, which is open to people with either original Medicare or Medicare Advantage.
Medicaid helps pay healthcare costs for someone who meets the qualifying income and resource requirements. If a person has Medicare plus full Medicaid, most of their health care costs are usually covered.
An MAPD plan is a Medicare Advantage plan that has prescription drug coverage.
MAPD plans include Medicare parts A, B, and D benefits.
People may choose from several types of plans, including HMO, PPO, PFFS, and SNP plans.
The features and rules differ among the types of plans, and the costs vary greatly.
A person interested in an MAPD plan may wish to compare the different aspects, rules, and prices of the plans carefully before making a choice.