Medicare Advantage Plans (also known as MA Plans or Medicare Part C) are another way for seniors to receive Original Medicare and additional benefits like vision, dental and hearing coverage. Read on to see if a Part C Plan might be a good fit for you or your aging loved one.
Original Medicare vs. Medicare Advantage Plans
Original Medicare consists of Part A (Hospital Insurance) and Part B (Medical Insurance), both of which are administered by the federal government. Advantage Plans, on the other hand, are offered by private insurance companies that have been approved by Medicare, such as Aetna, Blue Cross Blue Shield, Cigna, Humana and UnitedHealthcare. Part C Plans provide the exact same Part A and Part B coverage, but they usually include a few extra benefits as well. In many cases, the overall premiums, co-pays and deductibles of this coverage option can be lower for a beneficiary compared to Original Medicare combined with a Medigap policy (also known as a Medicare Supplement Insurance policy).
When a senior joins a Medicare Advantage Plan, they deal with the insurance provider directly and the company coordinates with Medicare on their behalf. Like Medigap, these plans offer extra benefits that fill in some gaps in Medicare coverage. For example, most Medicare Advantage Plans include Part D prescription drug coverage and some even cover vision, dental and hearing services. However, insurance companies have the freedom to determine the premium, coinsurance and copayment amounts that beneficiaries must pay, and these vary greatly between plans.
Unlike Original Medicare, MA Plans feature an annual maximum out-of-pocket (MOOP) spending limit, which caps the total amount a beneficiary is liable to pay for health care in a given year. In 2021, the out-of-pocket limit is increasing to $7,550. This number does not include premium payments, but it does include deductibles, coinsurance and copayments. The MOOP cap provides protection in the case of a catastrophic medical event. Once a senior has reached this limit, qualifying health care services are covered at 100 percent for the remainder of the year.
In terms of costs, beneficiaries who choose Medicare Advantage Plans must still pay their Part B premiums. Medicare decides the premium amount for each person, depending on their income, and this is usually deducted automatically from a senior’s Social Security check. The standard Part B premium in 2021 is $148.50 per month. Some Part C Plans do not involve an additional premium, but many do, especially those that provide expanded coverage for services outside of those covered by Original Medicare. Seniors have the option of deducting their Part C premiums as well, but they must request this.
Types of Medicare Advantage Plans
The most common types of MA Plans include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-for-Service (PFFS) Plans and Special Needs Plans (SNPs). Depending on which plan a beneficiary picks, they may be limited to using doctors and hospitals that belong to the plan’s network.
Here is a brief description of how each type of Medicare Advantage Plan works:
Medicare HMO PlansHMOs are typically the most affordable option, but they do require beneficiaries to receive care from primary care doctors, specialists and hospitals that are in the plan’s network.
Medicare PPO PlansPPO Plans allow beneficiaries to use any physician, regardless of whether they are in the plan’s network. However, using in-network providers is more cost effective.
Medicare PFFS PlansBeneficiaries with PFFS Plans can go to any primary care doctor, specialist or hospital that accepts the terms of the plan’s payment. However, there is no guarantee that a doctor will accept a senior’s PFFS Plan even if they accept Medicare, so it’s important to inquire before scheduling appointments and procedures.
Medicare SNPsThese plans are created specifically for beneficiaries who have unique needs. For example, some SNPs only accept seniors who live in nursing homes, have certain medical conditions or are dual-eligible beneficiaries (those who are eligible for both Medicaid and Medicare).
How to Choose a Medicare Advantage Plan
Weigh each of the following factors when making decisions about Medicare coverage for yourself or a loved one:
CostCompare the total out-of-pocket costs associated with specific plans, including premiums, deductibles and other cost-sharing charges. Some plans help pay a beneficiary’s share of cost for Medicare-covered services through coinsurance, co-payments or deductibles.
BenefitsEach senior’s healthcare needs are unique. While some may require additional prescription drug coverage to help make ends meet, others may take few medications but consider dental coverage indispensable. In addition to Original Medicare, consider what supplemental benefits are useful or downright necessary. Prescription drug, vision, dental and hearing coverage are some of the most popular added benefits that draw seniors to MA Plans. Furthermore, a Centers for Medicare and Medicaid (CMS) press release reports that around 730 Medicare Advantage Plans will provide additional types of supplemental benefits in 2021, such as adult day health care services, caregiver support services, in-home support services, therapeutic massage or home-based palliative care.
Doctor and Hospital ChoiceWhen comparing MA Plans, consider the following questions about each plan’s provider network. Can you see the doctor(s) you want? Are referrals required to see specialists? Can you go to the hospital you want? Is the use of certain doctors or hospitals associated with reduced out-of-pocket costs? If you need clarification, contact the plan for more information about their doctors and hospitals.
ConvenienceIf enrolling in a certain MA Plan means you’ll have to switch to a new in-network doctor (or doctors), there are some details to consider. Where are the doctors’ offices located? What are their hours? Are they accepting new patients? If a senior travels extensively or lives in a different state for part of the year, will the plan provide adequate coverage? Many Medicare Advantage Plans only cover certain service areas, which can be very small. Therefore, a Part C Plan may not be ideal for snowbirds or seniors who travel frequently.
Prescription DrugsAre the medications you take covered under the plan’s formulary (list of covered drugs)? What will your prescription drugs cost under the plan?
Pharmacy ChoiceAre there any restrictions on which pharmacies a beneficiary can use to fill covered prescription medications?
Quality and PerformanceOf course, quality of care and performance vary among plans, doctors, hospitals and other health care providers. Medicare uses a five-star rating system to help beneficiaries choose the highest quality plan that meets their individual needs and budget. Be sure to look up the star rating of any MA Plans you are considering on Medicare.gov before making a decision.
Help Choosing Medicare Advantage Plans
It’s important to gather all pertinent information and carefully compare the benefits, drawbacks and costs as closely as possible. For assistance making decisions about health insurance coverage, contact your local Area Agency on Aging (AAA) to make an appointment with the State Health Insurance Assistance Program (SHIP). SHIP locations provide local, in-depth and objective insurance counseling and assistance to Medicare beneficiaries, their families and caregivers. This help is particularly important around initial enrollment periods when beneficiaries first become eligible, the Annual Medicare Open Enrollment Period (October 15 – December 7) and the annual Medicare Advantage Open Enrollment Period (January 1 – March 31).
The more you learn about available Medicare options, the better prepared you will be to make the selection that is right for you or your loved one.
Sources: What's Medicare? (https://www.medicare.gov/what-medicare-covers/your-medicare-coverage-choices/whats-medicare); Things to know about Medicare Advantage Plans (https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/things-to-know-about-medicare-advantage-plans); Costs for Medicare Advantage Plans (https://www.medicare.gov/your-medicare-costs/costs-for-medicare-advantage-plans); Medicare Part B Costs (https://www.medicare.gov/your-medicare-costs/part-b-costs); Health Maintenance Organization (HMO) (https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/medicare-advantage-plans/health-maintenance-organization-hmo); Preferred Provider Organization (PPO) (https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/preferred-provider-organization-ppo); Private Fee-for-Service (PFFS) Plans (https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/private-fee-for-service-pffs-plans); Special Needs Plans (SNP) (https://www.medicare.gov/sign-up-change-plans/types-of-medicare-health-plans/special-needs-plans-snp); A Dozen Facts About Medicare Advantage in 2020 (https://www.kff.org/medicare/issue-brief/a-dozen-facts-about-medicare-advantage-in-2020/)