Medicare Advantage

medicare advantage plansMedicare Advantage plans were created under the Balanced Budget Act of 1997 and signed into law by President Bill Clinton. These plans are commonly called Part C of Medicare.

Congress designed this program to give Medicare beneficiaries a lower-premium option than Medigap. They also have very little Medicare underwriting. This means they are a coverage option for people who missed their open enrollment window for Medigap and now cannot qualify for Medigap due to health conditions.

Medicare Advantage plans are NOT similar to Medigap plans – they are different. Members get their benefits from a private insurance company instead of original Medicare.

How Medicare Advantage Works
A Medicare Advantage plan is a private Medicare insurance plan that you may join as an alternative to Medicare. When you do, Medicare pays the plan a fee every month to administer your Part A and B benefits. You must continue to stay enrolled in both Medicare Part A and B while enrolled in your Medicare Advantage plan.

You will present your Advantage plan ID card at the time of treatment. Your providers will bill the plan instead of Original Medicare.

medicare advantage

Each Advantage plan has its own summary of benefits. This summary will tell you what your copays will be for various healthcare services. Your plan will offer all the same services as Original Medicare, such as doctor visits, surgeries, labwork and so on. You might pay $5 or $10 to see a primary care doctor. Specialists will often be more. Some of the higher copays may come in for diagnostic imaging, hospital stay, and surgeries.

You can usually expect to spend several hundred on copays for these items. However, this varies greatly between states, so review plans in your area to get the specifics.

One neat thing about Medicare Advantage plans is that some of them offer minor benefits for routine dental, vision or hearing. Some plans include gym memberships. See our Medicare Part C page for more on what Medicare Advantage covers.

medicare advantage plans
Medicare Advantage plans use a private network of doctors

Medicare Advantage Networks
In exchange for lower premiums that Advantage plans offer, you agree to play by certain rules. Most Medicare Advantage plans have HMO or PPO networks.

Medicare HMO networks generally require to treat only with network providers, except in emergencies. You will need to select a primary care physician. That physician will coordinate a referral if you need to see a specialist.

Medicare HMO plans are the most prevalent type of network. According a study by Mark Farrah associates, they will represent 71% of all Medicare Advantage plans on the market.

Medicare PPO networks allow you to see doctors outside the network but you’ll have substantially higher out-of-pocket spending to do so.

In limited counties, there are Medicare Private-Fee-for-Service plans. These plans may or may not include Part D. How you access care is also different. While this plan type was very common in the past, it has been slowly phased out in most areas. Read more about Medicare PFFS plans here.

Some people may feel like the rules restrict or limit them in ways that are disagreeable. However, others are willing to abide by the rules if they find a plan with an attractive low premium.

It’s a personal choice. If you are deciding between Medicare Advantage and Medigap, you’ll want to consider some of the rules before you enroll.

Basic Medicare Advantage Rules
You must be enrolled in both Medicare Part A & B and live in the plan service area. Some people think they can drop Part B if they enroll in Medicare Advantage. That is false! If you drop Part B while enrolled, you will immediately be kicked out of your Medicare Advantage plan.
Medicare Advantage plans have one health question: Have you been diagnosed with End-Stage Renal Disease (kidney failure)?
Use network doctors and hospitals for the lowest out of pocket costs. Plans may have HMO or PPO networks. Most Medicare HMO plans do not cover anything out of network except emergencies. In PPO networks, seeing a provider outside the network will result in substantially higher spending.
Get prior authorization for certain procedures, especially in Medicare Advantage HMO plans.
You must obtain a referral from your primary care physician before seeing a specialist on many HMO plans
Put your red, white and blue Medicare card in a safe place. Do not give it to any of your healthcare providers. If they bill Medicare, those bills will be rejected. You must direct your providers to bill your Medicare Advantage plan.

Medicare Advantage Enrollment Periods
medicare advantage enrollment periodsMedicare Advantage plans have lock-in periods. You can enroll in one during Initial Enrollment Period when you first turn 65. After that, you may enroll or dis-enroll only during certain times of year. Once you enroll in Medicare Advantage, you must stay enrolled in the plan for the rest of the calendar year. You may only dis-enroll from an Advantage plan during specific times of the year.

The Annual Election Period in the fall is the most common time to change your Medicare Advantage plan. This period runs from October 15th – December 7th each fall. Changes made to your enrollment will take effect January 1.

If you decide to leave a Medicare Advantage plan and return back to Original Medicare, you must notify your Medicare Advantage plan carrier. Otherwise Medicare will continue to show that you are enrolled in the Advantage plan instead of Medicare. This is a common billing nightmare that we see among people who enrolled on their own without the help of an agent.

It is in your interest to enroll in Medicare Advantage through an insurance agent who can fully explain how the plan works. Enrolling without an agent means you are on your own if problems occur on the back end of your policy.

Medicare Advantage Disenrollment Period
Some people don’t realize this and join Medicare Advantage plans without the help of an agent. Therefore they don’t know about all of these rules. Sometimes they find themselves enrolled into a plan that their doctor doesn’t accept or that doesn’t include one of their medications. This happens most often in January after a person has used the Annual Election Period to join a Medicare Advantage plan.

For this reason, Congress designed the Medicare Advantage Disenrollment Period (MADP). The MADP runs from January 1st – February 14th each year. During this time, you can disenroll from any Medicare Advantage plan and return to Original Medicare.

Unfortunately, this does not guarantee that you can return to the Medigap plan you had before. Unless this was your first time ever in a Medicare Advantage plan, then you will usually have to answer health questions and go through medical underwriting to get re-approved for Medigap. Consider this before dropping any Medigap plan to go to Medicare Advantage.

Medicare vs Medicare Advantage
The intent of Congress in creating these plans was to give you options in accessing your Medicare benefits. Some reasons why people might choose an Advantage plan are:

Many plans have low monthly premiums (although you must continue to pay your Medicare Part B premium)
You pay for medical services as you use them in the form of copays and coinsurance
Unlike Original Medicare, Medicare advantage plans have an out of pocket maximum cap to protect you against catastrophic spending
The convenience of having your medical and Part D drug benefits rolled into one plan
Some plans may include benefits for things like limited vision coverage. Limitations, copayments, and restrictions may apply.
Remember, it’s a personal choice – there is no right and wrong. Consider Original Medicare vs Medicare Advantage based on your own knowledge of your medical usage.

Medigap vs Medicare Advantage
Without question, Original Medicare with a Medigap plan gives you very comprehensive coverage. The primary differences are that with Medigap plans, you can see any doctor that accepts Medicare. You don’t have to ask your doctors if they take your specific Medigap insurance company. The network is Medicare, which has over 800,000 providers. The network is nationwide, not local.

Medigap plans also have fuller coverage on the back end. Medicare pays 80% and your Medigap plan 20%, leaving you with little out of pocket. You won’t have the repetitive copays that you will on a Part C plan.

Medigap plans also don’t change their benefits from year to year. This means they don’t require as much homework from you. You won’t have to annually review the upcoming benefit changes like you will on an Advantage plan.

However, Medigap plans do not include Part D coverage, so you will need to buy a separate Part D policy. They also do not offer any routine dental, vision or hearing while some Medicare Advantage plans may at least have a little bit of this.

You can learn more about Medigap vs Medicare Advantage here.

Again, there is no right or wrong. The two types of coverage just work differently. Go with the option that feels right for you.

Other Considerations about Medicare Advantage
Be sure to carefully consider these things before joining a plan:

Not all hospitals and doctors accept Advantage plans. Ask your agent to help you verify whether your medical providers accept the plan you are interested in.
Advantage plan benefits may change every year. In September, you will receive a packet from your Part C insurance company telling you what is changing. The plan’s benefits, formulary, pharmacy network, provider network, premium and/or co-payments and co-insurance may change on January 1 of each year. Will you be diligent enough to review your annual packet and communicate with your agent if you have concerns about the changes?
Your enrollment is generally for the entire year. You may only dis-enroll from an Advantage plan during certain times of the year. If you decide in April that you don’t like the plan, you will have to wait until the following annual election period begins in October in order to change your plan unless you qualify for a special election period.
If you enroll in one right out of the gate at age 65, you need to be sure you want this coverage long-term. Your open enrollment window to get a Medigap plan with no health questions ends at 6 months past your Part B effective date. You might not be able to get a Medigap plan later if you have health conditions because applying for Medigap later will require you answer medical questions. You can be turned down for Medigap at that point if you are not healthy enough to qualify.
Conclusion
People often ask us our opinion on which plan is the best Medicare Advantage plan. This varies based on a number of personal factors. What’s right for your friend or neighbor may not be right for you. Don’t risk making a mistake on something as critical as your health insurance. Get help from an experienced agent who can explain your options in detail.