How Do Medicare Advantage Plans Work?


seniors studying Medicare Advantage plans.
Medicare insurance contains certain "gaps" that can lead to significant out-of-pocket costs for certain medical occurrences.  Initially, consumers who wanted to strengthen their Medicare coverage only had one choice:  A Medicare supplement plan.

There are a variety of supplement plan options that provide different levels of supplement protection.  The various plan types are designated by letters of the alphabet (A-N).  Generally, the more comprehensive the coverage, the higher the cost of the supplement plan.

President Bill Clinton signed Medicare+Choice into law in 1997.  The name changed to Medicare Advantage in 2003.  Medicare Advantage Plans are an "all in one" alternative to the Original Medicare / Supplement plan arrangement.  These plans are offered by private companies approved by Medicare.  If you join a Medicare Advantage Plan, you still have Medicare.  These "all in one" plans include Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance), and usually Medicare prescription drug (Part D).

Advantage plans are required to offer at least the same level of coverage as the Original Medicare Part A and Part B coverage.  Most Advantage plans also feature several attractive additional benefits that are not offered by original Medicare.  These benefits could include coverage for vision care, hearing aids, dental care, prescription drug coverage, transportation to and from medical facilities, and even fitness center membership.  The result is usually a very comprehensive medical insurance plan.

If you enroll in a Medicare Advantage plan, you will continue to pay your Medicare Part B premium.  The private insurer determines what the Medicare Advantage plan premium will be.  This premium amount will vary from one plan style to another.

Good to know:  Max out any discounts, programs and benefits.  Insurance companies sometimes offer health and wellness programs, including discounts on fitness classes, programs dedicated to help with specific medical conditions, apps to help you track medications and health records, or other perks.  Make sure you check your insurance company's website regularly for new benefits.

Medicare Advantage plan monthly premiums tend to be somewhat less expensive than Medicare Supplement plan monthly premiums.  Some Medicare Advantage plan premiums may be as low as $0 per month.

Copay costs may also be less with a Medicare Advantage plan.  For, example, if you visit a primary care physician under a Medicare Advantage plan, you may pay a copayment of $10.  However, if you visit a primary care physician under Original Medicare, you may have a coinsurance of 20%, which could be significantly more than $10.

A Medicare Advantage plan will limit your maximum out-of-pocket expense.  Once you have spent that maximum, you pay nothing for covered medical services for the remainder of the year.

Medicare Advantage Rules and Guidelines

Medicare pays a fixed amount for your care each month to the companies offering Medicare Advantage Plans.  In turn, these companies must follow rules set by Medicare.

Each Medicare Advantage Plan can charge different Out-of-pocket costs.  They can also have different rules for how you get services – for example:

Whether you need a referral to see a specialist.
What shared medical costs you are responsible for.

Good to know:  Choose the right plan for your family.  Do your homework before you select a plan.  Don't just go with the name you know, or stay with a plan because it is what "you've always had".  Also, consider what kinds of medical needs your family currently has.  Make sure your plan choice features the network of doctors and medical facilities, to best serve your family's current medical circumstance.  If you or someone in your family takes medication, take a hard look at the cost of prescriptions drugs within the plan you choose.  A little research can save you a lot.

Many Medicare Advantage plans have smaller doctor and hospital networks than do Medicare Supplement plans.  Also, many Advantage plans work within an HMO style, managed care administration structure.  In such a structure, a primary care physician manages your care and is responsible for referring you to a specialist if necessary.

For more information concerning Medicare Advantage, Medicare Supplement or Medicare Prescription Drug Plans, please give us a call. 

Other articles:
How To Switch From A Medicare Advantage Plan To A Medicare Supplement Plan.
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