There are three main types of Medicare Plans: Part D prescription drug plans, Medicare Advantage plans, and Medicare Supplement Insurance plans, also known as Medigap.
When you become eligible for Medicare, you may choose to enroll in Original Medicare. Or, if you’re looking for additional coverage options, you may consider a Medicare Advantage plan. With Medicare Advantage plans, you receive the same benefits and coverage as you would with Original Medicare, but with additional benefits and potentially lower costs.
However, there are both advantages and disadvantages to Medicare Advantage plans, and a number of things to consider before making a decision or choosing the plan that’s right for you.
What Is Medicare Advantage?
Medicare Advantage plans, also known as Part C or MA plans, are offered by private insurance companies contracted through Medicare. With a MA plan, you will receive the same level of coverage that Original Medicare Parts A (hospital insurance) and Part B (medical insurance) provide, as well as additional benefits offered by the MA plan.
Most MA plans provide coverage for:
- Hospice care
- Doctor visits
- Prescription drugs
- Preventive care and screenings
- Fitness memberships
They may also offer additional benefits such as coverage while you travel, nutrition counseling, improvements to your home (such as adding wheelchair ramps), and more.
There are primarily four types of Medicare Advantage plans.
- HMO (Health Maintenance Organization): Specific network of doctors and providers, and requires you to receive a referral or prior authorization before seeing a specialist. If you see an out-of-network provider, you likely must pay the full cost of the visit.
- PPO (Preferred Provider Organization): Allows you to see providers both in- and out-of-network, though out-of-network service may cost more. Typically, referrals are not required.
- PFFS (Private Fee-for-Service): You can see any provider, as long as they agree to the MA plan’s payment terms and conditions.
- SNP (Special Needs Plan): Membership is limited to those with specific, qualifying illnesses or scenarios. Allows you to see in-network doctors, get referrals for specialists, and includes drug coverage.
What are the advantages of Medicare Advantage plans?
When compared to Original Medicare, there may be a number of advantages to choosing a MA plan.
- Additional benefits. Medicare Advantage plans offer the same hospital and medicalcoverage that Original Medicare does, but they also provide additional benefits such as coverage for vision, hearing, dental, wellness programs and more. With Original Medicare, many of these services would not be covered and you’d have to pay out of pocket for them, or purchase additional insurance coverage, which could add up quickly. MA plans are built to include coverage for all of the benefits and services you’d need.
- Personalized. Most MA plans offer different plan types and tiers of coverage for you to choose from based on your personal situation. This includes different levels for monthly premiums, deductibles, drug coverage, copays and coinsurance, as well as extra benefits. With such a variety, you’re likely to find a plan that works for you.
- Lower cost. Some MA plans have a $0 monthly premium or deductibles, and they also typically set limits on out-of-pocket costs. This can help save you money on both coverage and care, especially because Original Medicare does not have maximum out-of-pocket limits. Some plans also pay your Medicare Part B premium for you, so you wouldn’t have the additional cost.
- Coordinated care. MA plans work to make sure your health care is as stress-free as possible. When you enroll in a plan, you’re required to select a primary care provider who helps coordinate the care you receive. Plans often have medication therapy management programs, medical management, and other teams who work together with you and your providers to make sure you’re getting the care you need.
- Includes Part D. With most MA plans, Part D prescription drug coverage is combined with the medical plan. By working with one plan for all of your coverage, including Part D, you may find cost savings, efficiency, and peace of mind.
What are the disadvantages of Medicare Advantage Plans?
Just as there are advantages to a MA plan, there are also disadvantages to consider.
- Select providers. If you opt for an HMO plan, the providers you can use may be limited. Before selecting an MA plan, ensure your current doctors are included in the provider network. Otherwise, you may have to pay more to see out-of-network providers.
Additionally, there may also be a limitation on in-network facilities, durable medical equipment providers, and pharmacies you can use. Carefully review the plan’s provider network to make sure everything you need is in-network for the plan. Otherwise, you may want to opt for a PPO plan, though that may cost more.
- Service area limitations. Similar to select in-network providers, many MA plans are not available in every state, but are limited to select states. This means your coverage may be limited when it comes to traveling or out-of-state coverage, especially if you spend part of the year in a different state than where you live. Talk to the plan to understand your coverage if you’re out of state.
- Complex coverage. With the different tiers, levels and coverage options, as well as provider network and additional benefits, Medicare Advantage plans can be complicated. There are also many plans for you to choose from, so it could be overwhelming finding one that works for you. Review the benefits of each plan to find one with coverage you need, and be sure your providers are in the plan’s network. Then, compare costs, look at customer reviews, and talk to friends and family to help make your decision.
- Referrals or prior authorizations. In some cases, MA plans may require a referral or prior authorization to see a specialist, or for specific care or a procedure. While this is to prevent misuse or overuse of healthcare, it can also delay care or coverage you may need. It’s important to regularly work with your primary care physician and other doctors to ensure you have the referrals or prior authorization requests you may need for services.
- Copays can be costly. Each MA plan can structure their copays and coinsurance differently, and the costs may change each year. While you may have a $0 monthly premium, the cost of copays for specialist visits, lab services or supplies may outweigh the monthly premium savings. Carefully review the coverages and costs before choosing a plan.
How much does Medicare Advantage cost?
Your out-of-pocket cost for a Medicare Advantage plan can vary based on a variety of factors. When comparing costs of MA plans, be sure to consider:
- Monthly Premium. Some MA plans have a $0 monthly premium, while others may charge $100 or more. According to the Centers for Medicare and Medicaid Services, the average monthly premium for an MA plan is $30.
- Part B Premium. Some MA plans will pay part or all of your Part B premium, while others require you pay that premium in addition to the plan’s monthly premium (if applicable). In 2023, the premium for Part B is $164.90.
- Deductibles. Compare the annual deductibles, which is the amount you must pay for health care or prescription drugs before the MA plan begins to pay.
- Copays and Coinsurance. Many plans will have information on their website regarding copays and coinsurance for different services, and these may be different than what Original Medicare pays. For example, you may have a $10 copay if you go to the doctor, or pay 20 percent coinsurance for a hospital stay.
- HMO vs PPO. HMO and PPO plans have different costs based on whether or not you stay in the network. HMO plans typically require you use in-network providers only, while PPO plans generally have out-of-network providers that will be covered at a higher cost.
- Extra Benefits. Some plans may offer above and beyond benefits at additional costs. Prioritize the importance of these extra benefits, but understand they may increase how much you must pay for your MA plan.
- Out-of-pocket limits. Each MA plan will have a limit on how much you will pay out-of-pocket each year. Compare these limits to get an idea of the maximum you’ll have to pay for health care and prescriptions.
- Prescription drug costs. Many MA plans also include a Part D prescription drug coverage option. Take a look at how much the plan charges for each tier of prescription drugs, and pay special attention to the cost of any drugs you are currently prescribed.
How do I choose a Medicare Advantage plan that’s right for me?
If you’ve decided to enroll in a Medicare Advantage plan, the next step is to determine which plan works best for your needs. Our Find a Plan tool is easy to use - just enter your zip code and any prescription medications you take to start scrolling through the available plans in your area..
When choosing an MA plan, there are a few things you want to consider:
- Does the plan provide coverage in your area?
- Which plan costs less for the coverage level you need?
- Does the plan cover your prescription drugs?
- Are your current doctors and pharmacy in-network?
- Does the plan offer extra benefits you want, such as vision, hearing, dental, prescription drug coverage, or travel coverage?
- What are the out-of-pocket costs?
You should also take time to read reviews from customers, as well as compare customer service ratings. Also look at each plan’s star ratings, which are calculated each year by Medicare and help showcase how well the plan performs in a variety of categories.
Medicare Advantage Enrollment Period
There are several scenarios in which you may be eligible to enroll in a Medicare Advantage plan. In addition to meeting the below requirements, you must live in the plan’s service area for at least six months out of the year, and in most cases cannot be diagnosed with end-stage renal disease (ESRD).
Initial Enrollment Period
- You’re newly eligible for Medicare because you turn 65. You can enroll in the three months before the month you turn 65, the month you turn 65, and the three months after the month you turn 65. If you sign up during this time, you can drop the plan any time during the next 12 months and return to Original Medicare.
- You’re newly eligible for Medicare because you have a disability. You can enroll starting 21 months after you get Social Security or Railroad Retirement Board (RRB) disability benefits. Medicare coverage begins 24 months after receiving benefits, and you can sign up through the 28th month after receiving benefits.
- You’re already eligible for Medicare because of a disability and you turn 65. In this case, you can either sign up for an MA plan or switch from your current plan to another. You can also drop your MA plan and return to Original Medicare. This can take place in the three months before the month you turn 65, the month you turn 65, and the three months after the month you turn 65.
- You have Medicare Part A coverage and get Part B for the first time. This general enrollment period takes place between April 1 - June 30.
Annual Enrollment Period
Each year, you can make changes to your MA coverage by either enrolling in an MA plan, switching to a different MA plan, or dropping coverage and returning to Original Medicare. If none of the above scenarios apply to you, this annual enrollment period (AEP) is when you can enroll in a plan. This takes place from October 15 to December 7. You can also join a Medicare Prescription Drug Plan during this time.
Medicare Advantage Open Enrollment Period
FromJanuary 1 to March 31,you can make additional changes to your health coverage. This includes switching from one Medicare Advantage plan to another and disenrolling from your MA plan and returning to Original Medicare.FromJanuary 1 to March 31,you can make additional changes to your health coverage. This includes switching from one Medicare Advantage plan to another and disenrolling from your MA plan and returning to Original Medicare.
Special Enrollment Period (SEP)
Throughout the year, certain scenarios may qualify you to make changes to your Medicare coverage. This may include events such as moving to another service area or losing other insurance coverage, though there are a number of qualifying scenarios. These periods happen in addition to the regular enrollment periods previously outlined. To learn if your scenario qualifies for an SEP, contact Medicare.
Special Circumstances (Special Enrollment Periods)
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