When I talk about Medicare Advantage to people, I always preface the conversation with something like, “Medicare Advantage plans are the ones all those commercials on TV are talking about.” You know the commercials – they promise dental, vision, hearing, rides to medical appointments and everything else you can think. And they tell you it will not cost you a thing. Now, because the following will make your eyes glaze over, I’ll try to keep it to the basics.
What is Part C?
Medicare Advantage (MA) plans are commonly referred to as Part C and I will use these terms interchangeably so you get used to understanding they are one in the same. Medicare Advantage plans are NOT the same as Medicare Supplements and should not be confused as the two types of plans work differently. You cannot have a Medicare Advantage plan and a Medicare Supplement – it’s either or. Some Medicare Advantage plans have Prescription Drug (Part D) coverage built in and may be referred to as an MAPD (Medicare Advantage Prescription Drug plan).
Part C plans are sponsored by private insurance companies that are contracted with the government to administer your Part A (Hospital) and Part B (Medical), as well as Part D (Drugs). Each sponsoring Part C insurer may have several different plans in each county of each state where they provide services. So, in one county you may have just a few Part C insurers, but you may have dozens of Medicare Advantage plans. Many of these plans have low or no premiums. You may wonder how they make money then. Basically, they are paid for each month a member is enrolled in their plan. At the end of the day, this actually saves Medicare money.
How Do Part C Plans Work?
Part C plans must pay as good as or better than Original Medicare. Part C plans have a maximum out-of-pocket for healthcare. In other words, the Medicare Advantage plan has a built-in financial safety net which limits how much an enrollee will pay in a worse case scenario. The maximum out-of-pocket (MOOP) is per year. Different plans have different MOOPs, but they are limited each year in what that may be. While it is true most people do not ever reach the MOOP, you need to be aware of it because it can and does happen.
You will pay a copay or coinsurance for most services, including but not limited to hospital stays, emergency rooms visits, doctor visits, and out-patient services. Preventative services are included at no cost. It is these copays and coinsurance which add up until the MOOP is reached. In the event the MOOP is reached, your healthcare services are covered at 100% for the remainder of the plan year. Keep in mind, Part D (prescription drugs you administer yourself) amounts are not considered in the Part C MOOP.
Types of Medicare Advantage Plans
Most Medicare Advantage plans are HMOs and PPOs. There are a few PFFS and Cost Plans, but they are rare these days and are seen less and less. Being that most Part C plans are HMOs or PPOs, you will have a network of doctors and will see your greatest cost savings by staying in-network.
With an HMO you have only in-network coverage. If you go out-of-network for any reason other than an emergency, you should not expect to have coverage and should expect to pay all charges. Keep in mind, an emergency is just what it states. So, let’s say you are away on vacation and have an emergency. You go to the emergency room. You are covered. But what happens if you are admitted to the hospital? Your original emergency is now an in-patient hospital stay and you are out of network.
PPOs, also, have a network of providers but there is an out-of-network component so in the above scenario, you would still have coverage. With PPOs, as stated previously, you see your greatest cost savings by staying in-network and will usually pay more going out-of-network. If you want a Medicare Advantage plan and you travel, this is something you will want to consider.
Many Medicare Advantage, Part C, plans have additional benefits that are not paid by Original Medicare. These are the “extra” benefits the commercials tout and may include dental, vision, hearing, rides to medical appointments, groceries, over-the-counter (OTC) items, help with household chores, fall-alert systems, etc. Part C plans are not required to provide any extra benefits so each plan will have its own benefit structure.
Special Needs Plans
To add one more element, there are Medicare Advantage plans specifically designed for people with limited income or chronic illnesses. These are called Special Needs Plans (SNP). Since SNPs meet special needs, they can be very attractive for the populations they serve. You are required to meet the qualifications of each SNP or you will be denied coverage.
Prescription Drug Plans (PDP)
Remember, not all MA plans cover prescription drugs aka Part D. Most do, but some do not. There are limited situations in which someone does not need Part D. Even if you do not take prescription medications you need drug coverage. That is to say, you need “creditable drug coverage” or you run the risk of paying a late enrollment penalty. Further, each Medicare Advantage Prescription Drug Plan will have its own formulary which determines if and how your medications are covered.
Who Can Enroll in Part C Plans?
To enroll in a Medicare Advantage plan, you must be have both Part A and Part B. You apply for these when you are turning 65 or, in some situations, later. You may, also, enroll in Medicare Advantage if you are under 65 but disabled and receiving full Medicare. Veterans who have Medicare may enjoy the additional advantages of having Part C, as well.
When Can I Choose a Plan?
You will have specific windows of opportunity to enroll. The first window is your initial enrollment period which occurs when you are first eligible for Part A and Part B. This may occur when you turn 65 or if you are under 65 and eligible for full Medicare due to disability. In addition, you have an Annual Enrollment Period from October 15-December 7, during which you may make plan changes.
You are typically in a plan for the entire plan year which is January 1 through December 31. Beyond this, you may have special enrollments periods (SEPs) during which you may make changes. Moving, being diagnosed with certain chronic illnesses, or changes in income are a few of the ways someone may qualify for an SEP during the year. Although, these do not necessarily guarantee you will qualify for an SEP.
How Do I Choose A Part C Plan?
You must live in a plan’s service area to enroll in a plan. Before choosing a plan, you will want to consider whether your doctors are in network, your possible need for out of network coverage, associated plan costs, are your prescription drugs covered, do you have a chronic condition or limited income and resources. Additional factors, specific to each person, may need to be studied.
Things To Consider
Remember when I said that you may have dozens of Medicare Advantage plans but only a few insurers? In addition to everything else, this is where they differentiate: one plan may have a larger network, one a lower maximum-out-of-pocket, one may or may not cover prescription drugs, one may have more dental, one more OTC – you see where I’m going with this. You will, also, find some plans have a premium; some do not. And don’t forget some Part C plans are SNPs.
In a Nutshell….
I know that was a lot of information. There are a lot of rules and regulations that go into Medicare Advantage and a tremendous amount of compliance in selling them. If you are not careful you may find yourself in a plan that has enormous financial repercussions. As always, I am here if you need help. And, I don’t cost you a penny.