Medicare Advantage Plan – Understanding Part C

Medicare HMO and PPO Coverage and Options

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Medicare Advantage Plans are offered by private health insurance companies that are approved by Medicare and have a contract to provide you with Medicare benefits.

Enrollment in Advantage plans has been steadily growing for years. As of 2019, there were about 22 million Americans enrolled in Medicare Advantage plans, which amounted to about 34% of the total Medicare population (the other 66% have Original Medicare).

What Does a Medicare Advantage Plan Cover?

If you join a Medicare Advantage Plan, the plan must provide all of your Part A (Hospital Insurance) and Part B (Medical Insurance) benefits, including emergency and urgent care. The only major benefit not covered by these plans is hospice care – this benefit is covered by Original Medicare even if you choose a Medicare Advantage Plan.

Many Medicare Advantage Plans offer extra coverage, such as vision, hearing, dental, and general checkups and other health and wellness programs. Most advantage plans—90% in 2020—include Medicare prescription drug coverage (Medicare Part D).

Most Medicare Advantage Plans are managed care plans, which generally fall under the categories of health maintenance organizations (HMO), preferred provider organizations (PPO), exclusive provider organizations (EPO), point of service plans (POS), or a combination of those.

Depending on the plan, you may be required to choose a primary care physician (PCP), get a referral from your PCP to see a specialist, and/or use only doctors, hospitals, and other medical facilities and services that are part of that health plan’s provider network.

Some private health insurance companies offer a Medicare Advantage Plan known as a Private Fee-for-Service (PFFS) Plan that may allow you to see any doctor or use any Medicare-approved hospital. However, unlike Original Medicare, you may have a copayment for doctor visits and not all providers may be willing to treat you. However, in a PFFS Plan, you do not have to choose a PCP and you do not need a referral to see a specialist.

What Does a Medicare Advantage Plan Cost?

Each month, Medicare pays your Advantage plan a fixed amount of money to provide your care. The Advantage plan is then responsible for paying your doctor, hospital, and other providers of care.

Although your Advantage plan must follow Medicare’s rules, it can charge you a premium and additional out-of-pocket expenses, such as an annual deductible, a copayment for a doctor visit, and coinsurance for durable medical equipment (such as a wheelchair).

In addition to the premium charged by your Advantage plan, you also are responsible for your Medicare Part B monthly premium, which is taken out of your Social Security check (people who aren't receiving Social Security pay Medicare directly for their Part B coverage). But about half of all Medicare Advantage plans have no additional premiums other than the Part B premium.

For example: George lives in Massachusetts and has a highly-rated Medicare Advantage Plan through Tufts Health Plan. He has an HMO plan with drug coverage. His total monthly premium cost for the plan is $188.60 in 2020 (the Medicare Part B premium of $144.60 plus $40 charged by Tufts). Also, his out-of-pocket expenses include a $10 copay for each PCP visit, $40 for each specialist visit, 20% coinsurance for durable medical equipment, and an annual deductible of $225 for prescription medications.

How Do I Join a Medicare Advantage Plan?

Generally, you can join a Medicare Advantage Plan if you have Medicare Part A and Part B and you live in an area where there is an advantage plan that accepts new members. Some plans only cover certain counties within a state and you must live in one of those counties where the plan is offered.

And most Medicare Advantage plans do not accept new enrollees who have end-stage renal disease (ie, kidney failure), although that will change in 2021 as a result of the 21st Century Cures Act. 

Some Medicare Advantage Plans hold local seminars to introduce their plans and you can get and complete a paper application at that time. You also can enroll by calling the plan, visiting the plan’s website, or on www.medicare.gov. The Medicare site also lets you compare plans in your area. You also can join by calling Medicare at 800-633-4227.

If you are switching to a different advantage plan, all you have to do is join the new plan and you will automatically be disenrolled from your old plan. You will not have any lapse in your coverage.

Medicare limits when you can join, switch, or drop a Medicare Advantage Plan. You can join a plan when you first become eligible for Medicare. This is any time beginning three months before the month you turn 65 and ends three months after the month you turned 65.

For example, if you turn 65 on April 28th, your eligibility period starts on January 1st and ends on July 31st.

If you are disabled and have Social Security Disability Insurance, you can join an advantage plan three months before to three months after your 25th month of disability.

You also can switch or drop your Advantage plan during the annual enrollment period between October 15 and December 7 of each year.

And if you're already enrolled in an Advantage plan, you can choose to switch to a different Advantage plan or switch to Original Medicare (ie, Parts A and B, directly from the government) during the annual Medicare Advantage open enrollment period, which runs from January 1 to March 31 (only one plan change is allowed during this window, and you cannot switch from Original Medicare to a Medicare Advantage plan during this window—as opposed to the October 15 to December 7 window, when you can switch multiple times and go from Original Medicare to an Advantage plan or vice versa).

For more details on Medicare Advantage Plan enrollment, visit the Medicare website.

What Else Do I Need to Know About a Medicare Advantage Plan?

It’s important that you understand the differences between Original Medicare and Medicare Advantage Plans. Some things to remember about Advantage plans are:

  • You must follow the rules! For example, if you are in an advantage plan HMO, you must choose a PCP and only use medical providers in your plan's network.
  • You can join an Advantage plan even if you have one or more pre-existing conditions (except for people with kidney failure, who generally can't join a new Advantage plan; this will change in 2021). There is no waiting period.
  • If your Advantage plan decides to no longer participate in Medicare, you can join another plan or return to Original Medicare.
  • If your Advantage plan does not include prescription drug coverage, you can join a Medicare Part D plan in your state. But if you're enrolled in an Advantage plan that includes prescription drug coverage and you then enroll in a stand-alone Part D prescription drug plan, you'll be from your Advantage plan and enrolled in Original Medicare in conjunction with your new Part D plan.
  • As long as you are enrolled in a Medicare advantage Plan, you do not need to buy a Medicare Supplement Insurance policy (Medigap). In fact, it is illegal for anyone to sell you a Medigap policy if you are in an advantage plan. The benefits offered by a Medigap policy are covered (at least in part) by your advantage plan and the supplement does not pay for your plan's deductibles, copayments, or coinsurance.
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Article Sources

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  2. Jacobson, Gretchen; Freed, Feredith; Damico, Anthony. Kaiser Family Foundation. Data Note. Medicare Advantage 2020 Spotlight: First Look. October 2019. 

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