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What is a Medicare Advantage Plan: How Does It Work?

Old couple watching tv what is medicare advantage
Medicare Advantage – By now, you’ve probably seen a TV commercial (or ten) that talks about all the benefits Medicare Advantage plans offer. But before you go running to enroll in one of these plans, you’ll need to know the foundations they’re built on so you can fully understand how Medicare Advantage plans work. Today, we’re going to review the basics of Medicare Advantage plans, how their coverage works, who is eligible, and how much they cost.

The Basics of Medicare Advantage

There are a few names for Medicare Advantage plans. You might hear them referred to as Medicare Part C or see them abbreviated as either MA or MAPD plans. If you have an MAPD plan, it means it includes prescription drug coverage. You can remember this by thinking “PD” for either “prescription drugs” or “Part D,” which is the part of Medicare that designates drug plans. So, how do Medicare Advantage plans work? The federal Medicare program allows private insurance companies to offer Part C plans to Medicare beneficiaries. Every Part C plan must meet minimum requirements, which means they have to offer all the same benefits of Original Medicare (Part A and B) other than the hospice feature, which you’ll still have under Medicare Part A. If you enroll in a Part C plan, you will get your Part A and B benefits from the private insurance company rather than the government. In return, the government pays the insurance company to provide the coverage. They do this to try to minimize government costs. In addition, most Advantage plans include extra benefits you won’t find in Original Medicare. Some include Part D prescription drug coverage, gym memberships, dental care (like cleanings, dentures, and other restorative treatment), vision exams and eyeglasses, hearing aids, meal delivery, transportation, adult daycare, and more. You might even find a Part C plan that offers a Part B premium giveback, which reduces the amount you pay for Medicare Part B. You won’t find any of those benefits in Original Medical or a Medicare supplement. You’d have to enroll in separate policies to get just a portion of those benefits, which would require additional premiums and more insurance cards to keep track of! The one you choose will have a big impact on which doctors you can see and the way your plan works.
Discussing Medicare Advantage Plans
The one you choose will have a big impact on which doctors you can see and the way your plan works.

Types of Medicare Advantage Plans

One of the most important things to understand about Medicare Advantage plans is that there are actually six different kinds of plans. The one you choose will have a big impact on which doctors you can see and the way your plan works. The six kinds of Advantage plans are:
  • Health Maintenance Organizations (HMO)
  • Preferred Provider Organizations (PPO)
  • Point-of-Service Plans (HMO-POS)
  • Private Fee-for-Service Plans (PFFS)
  • Special Needs Plans (SNP)
  • Medical Savings Account Plans (MSA)
We won’t get into too much detail here, but to give you an idea of why it’s important to know which kind of Advantage plan you have, let’s talk briefly about the difference between an HMO and a PPO plan. With an HMO plan, you must see a doctor that participates in the plan’s network. If you see a non-HMO provider, you will have no coverage for services – you’ll be responsible for 100% of the cost. With a PPO plan, you’ll have fewer out-of-pocket costs if you visit a PPO provider, but you’ll still have some coverage if you see a provider outside of the plan’s network. That’s a big difference in just one of the features of these plans.

Who is eligible for Medicare Advantage?

You must be enrolled in both Medicare A and B to apply for Part C. One advantage to these plans is that there is no medical underwriting, which means no insurance company can deny coverage based on your past or current medical conditions. The only individuals who might not be able to get some Medicare Advantage plans are those who have been diagnosed with ESRD, End-Stage Renal Disease. These individuals can choose to enroll in an MA Special Needs Plan designed for people with ESRD. However, those plans are not available everywhere. If they undergo a successful kidney transplant, they will again be eligible for all Advantage plan options.

How much do Medicare Advantage plans cost?

The average monthly premium for an MAPD plan is around $25 per month. There are many Medicare Advantage plans that come with a $0 monthly premium. Your cost for a Part C plan will depend on which type of plan you choose, where you live, and what coverage it provides. Please understand that even if you find a $0 premium plan, these plans are not “free” as you might hear them advertised. You’ll still have deductibles, copayments, and coinsurance costs with every Part C plan. In addition, if you enroll in Part C, you should take time to review the plan’s summary of benefits to make sure you know how to use the plan in a way that provides the most benefits. Use contracted providers and follow the plan’s rules to avoid unexpected costs.

How do I enroll in Medicare Advantage?

If you’re thinking about enrolling in Medicare Advantage, speak to one of our licensed insurance agents. Our agents are experts in Medicare and will make sure you are presented with all your options and know the ins and outs of whatever plan you choose. We’ll look at different plans and multiple insurance companies to make sure we find a plan that fits your needs. Call us today to schedule an appointment.

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