Medicare Advantage Plans
What is Medicare Advantage?
Medicare Advantage, or Medicare Part C, is a health plan that offers Medicare Part A, B, and typically D benefits through a private company. Medicare Advantage offers everything Original Medicare Part A and Part B offers but with better benefits and coverage options. Typically however this comes at a higher upfront cost than Original Medicare (although some Advantage plans do have $0 premiums).
- Since Medicare Part A and Medicare Part B are always part of Medicare Advantage and must offer at least the benefits offered by Original Medicare, you’ll never get fewer benefits than you would from Original Medicare.
- If you need coverage beyond Original Medicare, you’ll want to shop for a Medigap or Medicare Advantage Plan. Both of these pair with Prescription Drug Plan (Part D), although Advantage Plans usually include drug coverage.
- Medicare Advantage has unique enrollment and dis-enrollment periods to be aware of.
Is Medicare Advantage Minimum Essential Coverage?
Medicare Advantage (Medicare Part C) counts as minimum essential coverage under ObamaCare (the Affordable Care Act). If you have Medicare Part A (Hospital Insurance) or Medicare Part C (Medicare Advantage), you’re considered covered and won’t owe the fee for not having health insurance under ObamaCare.
Is Medicare Advantage Part of ObamaCare?
Medicare isn’t part of the Affordable Care Act (ObamaCare) neither is supplemental Medigap insurance nor Medicare Advantage plans. You won’t shop for your coverage through the marketplace. Instead, you’ll want to follow the instructions under the “how to sign up for Medicare Advantage” section below.
How Does the Affordable care Act Affect Medicare Advantage?
The Affordable Care Act makes some changes to Medicare Advantage, but most are aimed at the health insurance industry rather than those with Advantage Plans. First off no benefits were cut from Advantage plans. In fact. Many Part A benefits that were previously subject to out-of-pocket costs are now “free.” The ACA (ObamaCare) also helps to close the Part D “donut hole,” so drug coverage is improved too.
A major change specific to Advantage Plans is a requirement that Advantage plans cannot charge enrollees more than traditional Medicare for chemotherapy administration, skilled nursing home care, and other specialized services.
Since 2014, Medicare Advantage plans have not been allowed to spend more than 15 % of their Medicare payment on administrative costs, insurance company profits and non-healthcare related items. These cost-cutting measures are estimated to bring in $1,000 in savings to CMS per Advantage Plan member without reducing any benefits. This is expected to help decrease Medicare part B payments, especially for low-income seniors. Remember: Medicare Advantage Plans must provide at a minimum what Original Medicare covers.
A 1.9% cut to the program had been planned, but the federal government reversed course on the decision and increased the program by 0.4%. However, insurers still say the payments are less.
Medicare Advantage Facts
We break down Medicare Advantage, and how it pairs with Medicare Part D and compares to Medigap insurance below. These short facts might help you understand Advantage Plans better.
• You must already have Medicare Part A and Part B to be eligible for a Medicare Advantage policy.
• When you get an Advantage Plan you’ll get your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage from the Medicare Advantage Plan and not Original Medicare.
• With Medicare Advantage, you usually pay a monthly premium in addition to your Part B premium. However, all claims are paid from your Advantage Plan.
• Advantage plans come at a higher upfront cost than Original Medicare, but typically pay a higher percentage of claims and offer better benefits and drug coverage.
• Medicare pays a fixed amount for your care each month to the companies offering Medicare Advantage Plans. These companies must follow the rules set by Medicare.
• Medicare Advantage Plans usually include Medicare Part D (Prescription Drug Coverage), but not every plan does. You’ll need to shop for the right advantage plan for your specific needs.
• It is possible to have a Medicare Advantage Part C plan and a Medicare Prescription Drug Coverage Part D plan, if your Advantage Plan doesn’t include drug coverage.
• In regards to Medicare, only Medicare Part A (hospital insurance) and Medicare Part C (Medicare Advantage) count as minimum essential coverage. If you have the minimum essential coverage, you won’t owe the fee for not having health insurance.
• The best time to buy a Medicare Advantage policy and or Part D drug coverage is during your initial Medicare Enrollment Period (see details below).
• Every year there are two open enrollment periods, one enrollment period and one dis-enrollment period, where you can make changes to your Advantage and Part D plans.
How Does Medicare Advantage Work?
Medicare Advantage (Part C) essentially replaces Original Medicare (Part A and Part B). When you choose a Medicare Advantage Plan, your Medicare services are paid for by your Advantage Plan instead of Original Medicare (although you’ll still pay your Part B premium on-top of your new Part C premium). Medicare Advantage Plans typically offer better coverage options, typically including prescription drug (Medicare Part D), and always include at least the benefits offered by Part A and Part B.
What is the Difference Between Original Medicare and Medicare Advantage?
Medicare offers fewer upfront costs and benefits with fewer coverage options and greater out of pocket costs. You can get a full breakdown of the differences from this quick PDF from medicarerights.org.
What Does Medicare Advantage Cost?
Every Advantage Plan has different premium costs and has different copays, coinsurance, deductibles, and maximums. Typically you’ll pay your Part B premium and then your Advantage Plan (Part C) premium every month. If your plan includes Part D drug coverage, then that will typically be part of your Advantage Plan premium. However, if you get Part D separately, you’ll pay a separate premium.
Am I Eligible for Medicare Advantage
To be eligible for a Medicare Advantage (Medicare Part C) you must have Medicare Part A and Part B and live in the plan’s service area. If you only have Part A, you will become eligible for Part C when you join part B. At this point, you will have a 60 day initial enrollment period (see below) to switch to an Advantage plan. Please note that people with End-Stage Renal Disease (permanent kidney failure) generally can’t join a Medicare Advantage Plan.
Should I Get an Advantage Plan?
Seniors whose medical costs and needs aren’t adequately covered by Original Medicare usually supplement their plans with Medigap, Prescription Drug Coverage (Medicare Part D), or Medicare Advantage (Medicare Part C). The supplemental insurance you choose should be based on your specific medical needs. Any broker, agent, or provider authorized to sell supplemental Medicare plans can help you choose the right plan for you, but be aware that different insurers can charge different amounts for the same coverage, so you’ll always want to shop around before buying.
Please note you cannot have Medigap insurance and an Advantage Plan at the same time. However, you can pair Part D with a Medigap policy or with an Advantage Plan that doesn’t offer Part D coverage.
Does Medicare Advantage Cost More Than Medicare?
Medicare Advantage will typically come at a higher premium price than Original Medicare and will be paid for on-top of your Part B premium. This cost is meant to be offset by your actual annual medical claims and the additional benefits offered by the Advantage Plan.
Should I Get Medicare Advantage or Medigap?
Getting a Medicare Advantage Plan and piecing together your own Medicare plan by picking up a supplemental Medigap policy and Prescription Drug Coverage under Medicare Part D give similar results. The benefit over one avenue or another depends on your specific medical needs and projected medical costs weighed against available plans in your area.
Can I Have Medicare Advantage and Medigap?
Medigap policies can’t work with Medicare Advantage Plans. Although you can switch from one to the other, you can’t have both at the same time. They can both pair with Part D drug coverage, although most Advantage Plans offer Part D as part of their package.
Medicare Advantage Claims
Your Medicare Advantage Plan essentially replaces Original Medicare, meaning instead of Medicare paying its share of your claims Medicare pays the private insurance company and that company then pays its share of your claims as dictated by your plan. Please note you will still owe your Part B premium every month. Your Part C premium will be paid separately.
What Doesn’t Medicare Advantage Cover?
Your Medicare Advantage Plan coverage depends on which plan you choose.
Does Medicare Advantage Cover Prescription Drugs?
Medicare Advantage Plans almost always cover prescription drugs by including the benefits of Medicare Part D as part of the Advantage Plan. If your plan doesn’t offer drug coverage, you can join a Medicare Prescription Drug Plan, but be aware you can’t have prescription drug coverage through both a Medicare Advantage Plan and a Medicare Prescription Drug Plan.
If you choose a plan that doesn’t offer drug coverage and want drug coverage down the line, it will usually make more sense to switch to a different Advantage Plan or to switch to a Medigap plan and then sign up for Part D as well.
Different Types of Medicare Advantage Plans
Unlike Original Medicare, there are a few different types of Medicare Advantage Plans. The most common plans are Health Maintenance Organizations (HMO) and Preferred Provider Organizations (PPO) plans, but there are a few other options that you should know about. They are Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. Let’s take a look at these different basic plan types to get an idea of what each one can do for you.
• Medicare Advantage HMO Plans: In a Health Maintenance Organizations (HMO) plan you can only go to doctors, other health care providers, or hospitals on the plan’s list except in an emergency. You may also need to get a referral from your primary care doctor. You can learn more about HMO plans at Medicare.gov.
• Medicare Advantage PPO Plans: In a Preferred Provider Organization (PPO) Plan, you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. You pay more if you use doctors, hospitals, and providers outside of the network. You can learn more about PPO plans at Medicare.gov.
• Medicare Advantage PFFS Plans: In a Private Fee-for-Service (PFFS) Plan, the plan determines how much it will pay doctors, other health care providers, and hospitals, and how much you must pay when you get care. You can learn more about PFFS plans at Medicare.gov.
• Medicare Advantage SNP Plans: Medicare SNPs limit membership to people with specific diseases or characteristics and tailor their benefits, provider choices, and drug formularies to best meet the specific needs of the groups they serve. You can learn more about SNP plans at Medicare.gov.
Each of these plan types offers different options. For instance, some insurers may offer different PPO plans with different costs and coverage in your area.
Medicare Advantage Initial Enrollment Period
Your initial Medicare Advantage enrollment period is 3 months before, the month during, and the month after you turn 65. There are several special enrollment periods discussed below as well.
You can sign up for a Medicare Advantage Plan or Medicare Prescription Drug Coverage (Part D), or make changes to coverage you already have during your Medicare Advantage initial enrollment period. Your initial enrollment periods are:
1. When you first become eligible for Medicare or when you turn 65, during your Initial Enrollment Period. This includes 3 months before you turn 65, the month you turn 65, and 3 months after. The period is extended for those who qualify for Medicare due to disability.
2. During certain enrollment periods that happen each year.
a) Between April 1–June 30 of each year you are eligible to switch to a Medicare Prescription Drug Plan (Part D) if you don’t have Part A and you enroll in Part B during the January 1–March 31 general enrollment period.
b) Between April 1–June 30 of each year you are eligible to switch to a Medicare Advantage Plan (Part C) if you have Part A and you enroll in Part B during the January 1–March 31 general enrollment period.
3. Under certain circumstances that qualify you for a Special Enrollment Period (SEP), like:
■ You move.
■ You’re eligible for Medicaid.
■ You qualify for Extra Help with Medicare prescription drug costs.
■ You’re getting care in an institution, like a skilled nursing facility or long‑term care hospital.
Please note there is a late enrollment penalty added to your Part D premium for the duration of your coverage if there is a period of 63 days in a row where you don’t have Part D or any other creditable prescription drug coverage after your initial enrollment period.
See this Medicare Advantage Open Enrollment PDF from Medicare.gov for more Medicare Advantage open enrollment and sign up information.
Medicare Advantage Open Enrollment Periods
The enrollment periods for Medicare Advantage are January 1–March 31 (limited enrollment and dis-enrollment) and October 15–December 7 (open enrollment).
- During the January 1 – March 31 enrollment period you can dis-enroll in Medicare Advantage and make other changes, but you are NOT permitted to join a Medicare Advantage plan during this period if you don’t already have one.
- During the October 15 – December 7th you can enroll in a new Medicare Advantage plan and change your Advantage Plan or Part D drug plan.
- Open enrollment periods are not the same as your initial Medicare enrollment period discussed above. See the table below for the specifics of each enrollment period.
First Medicare Advantage Open Enrollment Period: January 1–March 31
■ If you’re in a Medicare Advantage Plan, you can leave your plan and switch to Original Medicare. Your Original Medicare coverage will begin the first day of the following month.
■ If you switch to Original Medicare during this period, you will have until March 31 to also join a Medicare Prescription Drug Plan to add drug coverage. Your prescription drug coverage will begin the first day of the month after the plan gets your enrollment form.
Note: During this period, you can’t:
■ Switch from Original Medicare to a Medicare Advantage Plan.
■ Switch from one Medicare Advantage Plan to another.
■ Switch from one Medicare Prescription Drug Plan to another.
■ Join, switch, or drop a Medicare Medical Savings Account Plan.
Second Medicare Advantage Open Enrollment Period: October 15–December 7
■ Change from Original Medicare to a Medicare Advantage Plan.
■ Change from a Medicare Advantage Plan back to Original Medicare.
■ Switch from one Medicare Advantage Plan to another Medicare Advantage Plan.
■ Switch from a Medicare Advantage Plan that doesn’t offer drug coverage to a Medicare Advantage Plan that offers drug coverage.
■ Switch from a Medicare Advantage Plan that offers drug coverage to a Medicare Advantage Plan that doesn’t offer drug coverage.
■ Join a Medicare Prescription Drug Plan.
■ Switch from one Medicare Prescription Drug Plan to another Medicare Prescription Drug Plan.
■ Drop your Medicare prescription drug coverage completely.
How to Sign Up For Medicare Advantage Insurance
1. First, make sure you qualify for Original Medicare, you’ll need to enroll in Parts A and B to be eligible for an Advantage Plan. To sign up for Original Medicare go to Medicare.gov.
2. Make a choice between Medicare Advantage and a Medigap Plan. Medigap plans supplement your original Medicare plan while an Advantage Plan effectively replaces it.
3. Once you decide what direction you want to go with your supplemental Medicare insurance, you’ll want to find a broker, agent or provider authorized to sell Medicare Advantage Plans to help you choose the right plan for you based on your specific needs. Remember you’ll want to check out your Medigap policy options and ensure your plan covers Part D if you need drug coverage.
Medicare Advantage Coverage Choices
Choosing the right Medicare Advantage plan depends on your medical needs and costs. You’ll want a plan that covers your known needs and projected needs at a cost that will result in lower total costs than original Medicare. Make sure to choose a plan that includes drug coverage if you need it and a network that includes any doctors or services you know you’ll need.
Should I Get Medicare Advantage?
Whether or not Medicare Advantage makes sense for you depends on your intentions and situation. In many cases, Medicare Advantage will make sense if your total annual costs will be reduced with an Advantage Plan over an Original Medicare plan. Remember you can call any broker, agent or provider authorized to sell these plans and have them help you through the process.
Understanding Medicare Advantage