A Medicare Advantage plan is a private health insurance plan approved by Medicare. You may opt to get your Part A, B and D benefits from a Medicare Advantage plan instead of traditional Medicare. These Medicare private insurance plans usually have an HMO or PPO network of doctors.
Medicare Advantage Explained
Medicare Advantage plans were created as an alternative to Original Medicare and Medigap. By joining one of these plans, you direct Medicare to pay the Advantage plan a set monthly amount for your care. In return, the plan will deliver all of your Part A & Part B services. They take on all of your medical risk.
You must continue to pay your Medicare Part B premium while enrolled in an Advantage plan. You must be enrolled in both Medicare Parts A and B and live in the plan’s service area.
Medicare Advantage policies are NOT Medigap plans. They work differently because they pay instead of Medicare, not after Medicare. Learn more about how Medicare Advantage works here.
Medicare Advantage Coverage
Many people new to Medicare will ask us for the pros and cons of Medicare Advantage plans vs Original Medicare. Much of this is in the way you access your benefits.
With Original Medicare, you will have deductibles and a 20% coinsurance on Part B. You can visit any doctor or hospital that participates in Medicare, and most do.
With an Advantage plan, you will use the plan’s network of providers, which is usually local. You will pay co-payments when you receive healthcare services. Each plan sets its own cost-sharing. For example, you might pay a small copay for a primary care doctor visit, and perhaps a higher copay to see a specialist. Likewise, some plans will charge you a daily hospital copay, and other plans might charge a flat amount for the whole stay.
Perhaps one of the biggest differences is in changes to the plans. Medicare may have small changes to the Part A and B deductible, but the 20% coverage on outpatient services never changes. Part C Medicare Advantage plans change annually.
Medicare itself states: Limitations, copayments and restrictions may apply, and each plan’s benefits, formulary, pharmacy network provider network, premium and copayments may change on January 1 of each year. Members need to be diligent about reviewing the plan materials sent to them each year in September to see what’s changing.
For more on what Medicare Advantage policies cover, see our Part C page.
You can also check out our Youtube video on the pros and cons of Medicare Advantage plans.
Why Medicare Advantage was Created
For many years, people on Medicare had only Medigap plans to choose from. While these plans have excellent coverage, not everyone could afford them. These people often opted to have only Original Medicare. When illnesses struck, they would find themselves with bills for expensive deductibles and coinsurance that they could not afford.
At this time, they might try to get a Medigap plan, but now that they had developed health issues, they could not qualify. This often resulted in medical bankruptcy.
Medicare Advantage plans provided a solution to these problems. Medicare Part C provided lower cost plans with just one health question. People can now join them during certain times of the year called enrollment periods.
Advantage plans were also built with an out-of-pocket maximum cap on your medical spending. Think of this as a safety net. If you have heavy health spending that results in a certain out-of-pocket limit, then the plan kicks in and pays the rest for the remainder of the calendar year (Part D expenses are calculated separately).
Another popular feature of Advantage plans is that they often include a built-in Medicare Part D drug plan, which saves you from having to purchase that separately.
Joining a Medicare Advantage plan
If you are trying to decide which type of coverage is appropriate for you, check out this article on Medicare Advantage vs Medicare Supplement coverage. It’s Medicare Advantage explained in comparison to Medigap as your other option.
Part C Advantage plans have different networks, premiums, and cost sharing. Working with an insurance agency that specializes in these plans is a great way to ensure that you consider all the variables before choosing your insurance company. Our team is very familiar with how Medicare Advantage plans work.
Want Medicare Advantage explained in a one-on-one setting? Get help from our Medicare insurance experts today at (855) 732-9055!
If you are following our Learn Medicare Track, go next to: Medicare Advantage Plans: How They Work.