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Medicare Advantage Plans
Americans are entering Medicare at a rapid pace as Baby Boomers reach retirement age. As this trend has solidified, another similar trend has emerged: a tremendous increase in Medicare Advantage enrollment. You’ve certainly encountered the massive amounts of advertising dedicated to Medicare Advantage plans on all forms of media. Because of all of the advertising associated with it, many people are mistrustful of Medicare Advantage. In this guide, we’ll dig in to the details of Medicare Advantage – the program as a whole as well as some of the details of how the plans work, and how to make sure you choose the plan that’s right for you.
What Are Medicare Advantage Plans?
Medicare Advantage plans are also known as Part C of Original (Traditional) Medicare. They were created in 1996. The idea behind this program is that these plans are a way for you to receive your Medicare benefits through a private insurance company, rather than through the federal government.
When you enroll in a Medicare Advantage plan, you actually leave the Original Medicare program. You now receive all of your Part A and B benefits from your insurance company. There are several protections built-in to the Part C program:
- Medicare Advantage plans are required to cover all benefits and procedures covered by Parts A and B of Original Medicare
- You have the right to drop your Medicare Advantage plan and return to Original Medicare during two yearly enrollment periods
So, you’re not “stuck” with Medicare Advantage, and you’re not giving up any benefits you’re entitled to under Original Medicare. In fact, you will probably have access to more benefits than you would have under Parts A and B.
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How Do Medicare Advantage Plans Work?
Medicare Advantage plans are issued by private insurance companies. When you visit the doctor, have lab work done, or experience a hospital stay, you’ll give the provider your Medicare Advantage plan card. The provider then bills your plan. The Medicare program is not involved in the process.
Medicare Advantage plans negotiate prices with providers for all of the Medicare-approved services and procedures available to Medicare Beneficiaries. The plan also sets the amount that you’ll have to pay for the procedure. With Medicare Advantage plans, this tends to be a fixed co-payment for most services and procedures, although there are a few treatments that require co-insurance (a percentage of the cost) as your out-of-pocket cost sharing.
One of the key reasons people opt for Medicare Advantage plans is the fact that they come with Out of Pocket Maximum (OOPM) caps. This is a hard limit on your spending. You’ll never pay more than the limit for medical care in one year. This feature is totally absent from Original Medicare, where your spending is potentially unlimited.
Besides covering all of your Part A and B benefits, most Medicare Advantage plans also give you “extra benefits,” which are benefits beyond what Original Medicare covers. There are a wide variety of extra benefits available, but they tend to include:
- Dental coverage (either included or available for an extra premium payment)
- Routine vision and hearing coverage (exams and also allowances for lenses, frames, and hearing aids)
- Gym and fitness programs
- Transportation to or from medical appointments
- Healthy living or over-the-counter allowances
- Safety monitoring devices and services
- Emergency coverage outside the United States
- Part D prescription drug coverage
Not every plan will offer all of these extra benefits, and plans don’t offer the exact same extras, either. These extra coverages can be a real boon to your health care since they aren’t covered by Medicare. If you stick with Original Medicare (even if you enroll in a Medicare Supplement plan), you’ll have to pay out of pocket for these services, or purchase individual dental, vision, or hearing coverage, which can put a strain on your monthly cash flow.
Who Is Eligible For Medicare Advantage Plans?
Part C Medicare Advantage plans are available to everyone eligible for and enrolled in Medicare. There are no age restrictions like you can find with Medicare Supplement Insurance plans. So, if you enter Medicare at an early age because of your health or disability status, you can enroll in a Medicare Advantage plan at that time.
When it comes time to enroll, you will choose one specific Medicare Advantage plan offered by one insurance company. Plans are only available by location, usually a county or state. You can only enroll in plans that are available to you were your primary residence is located. This restricts the total number of plans available to you since you can’t access Medicare Advantage plans outside of your state of residence. Your coverage under the plan may well allow you to see providers in other states – it’s just that you can’t enroll in an out-of-state Medicare Advantage plan.
When Can I Enroll In Medicare Advantage?
You have multiple opportunities to enroll in Medicare Advantage plans. These opportunities include:
- When you first become eligible to enter Medicare Parts A and B (your Initial Coverage Election Period (ICEP)
- During the Annual Election Period (AEP) each fall
- During a Special Election Period, if one applies to you
- During the Medicare Advantage Open Enrollment Period (MA-OEP) if you are already enrolled in a Medicare Advantage plan
You have the right to move into and out of Medicare Advantage plans throughout your life; it is never an irrevocable decision. However, you must use one of these enrollment periods to make these changes. You can’t just drop your Part C coverage or add it at any time of the year.
You also can’t enroll in a Medicare Supplement Insurance plan if you have Medicare Advantage coverage. If you decide that you want Medicare Advantage coverage, you’ll have to cancel you’re Supplement plan first.
What Kinds Of Medicare Advantage Plans Are There?
There are several ways to group Medicare Advantage plans. In this guide, we’ll first divide them by prescription drug coverage:
- Medicare Advantage-only plans, and
- Medicare Advantage Prescription Drug Plans (MAPD)
Many Medicare Advantage plans come with Part D drug coverage built in. Unless you receive drug coverage from another source like the VA or Tricare for Life, you should enroll in an MAPD plan. This is because you generally can’t enroll in both a Medicare Advantage plan and a standalone Prescription Drug Plan (very limited exceptions apply).
Besides the distinction concerning drug coverage, there are also differences in how benefits are structured. There are three main kinds of Medicare Advantage plan:
- Private Fee For Service (PFFS)
- Preferred Provider Organization (PPO)
- Health Maintenance Organization (HMO)
There are a couple of other types of plan, but they are rare, as are PFFS plans. We’ll focus on the two most popular types of Medicare Advantage plans: PPOs and HMOs.
Medicare Advantage PPO Plans
PPO plans have a select network of providers (doctors, labs, hospitals, etc.). When you use these in-network providers, you will pay the lowest prices. However, with a PPO plan, you have the right to see non-network providers. When you go “out-of-network” you’ll pay higher co-payments and co-insurance. However, your plan will still pay some benefits.
PPO plans tend to have higher premiums than HMO plans. And, you’ll definitely see higher prices for out-of-network services. This includes deductibles, cost-sharing, and Out of Pocket Maximum amounts – they’re all generally higher outside the preferred provider network.
With PPO plans, you retain a great deal of physician freedom, and you often are able to avoid referral requirements. If you want to see a particular specialist, you can see them directly, rather than having to obtain a referral from a Primary Care Physician.
Medicare Advantage HMO Plans
Medicare Advantage HMO plans are much more restrictive than PPOs. They’re also usually less expensive in terms of premiums, cos-sharing, and out of pocket maximum amounts.
With an HMO, you must use the plan’s network of providers. If you use non-network providers, the plan will not cover the service or procedure you received and you will be responsible for the full charges. The only exception here is if you need emergency or urgently needed care. In these cases, you have nationwide coverage.
Another feature of HMOs is reliance on the Primary Care Physician to manage your care. Since they are in some ways responsible for your care, you must go through your Primary Care Physician to get referrals to specialists, have lab work done, and receive services and procedures that won’t be performed by the Primary Care doctor.
Unbiased Help With Medicare Advantage
There are a couple of crucial steps you need to take before enrolling in a Medicare Advantage plan. It is imperative that you look up your doctors to make sure they accept any plan you’re interested in. You must also check to make sure that your medications are covered by the plan you want to enroll in. If this sounds intimidating to you, Lakeland Medicare Advisors can help. We can lookup both your doctors and your medications and find plans that will work with both. We’ll even help you compare benefits and costs across multiple plans, helping you find the one that best fits your needs. Give us a call to get started with your free consultation.
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