Medicare advantage plans are an extra and optional part of the Medicare system. These plans are similar to purchasing insurance except that people continue to make payments on Part B (Medical) Medicare. In addition to these payments folks have the option to enroll in varying insurance company provided benefits. These could be very similar to the preferred provider organizations (PPOs) or health maintenance organizations (HMOs) that folks participated in prior to being eligible for Medicare or they can have different benefits. They may change the way that coverage is delivered and what people pay for that coverage.
The amount that it costs to participate in Medicare advantage plans can be variable. Some people pay very little over Medicare Part B payments and others will pay a lot. Plans could change payment structure so that people make copayments instead of coinsurance payments when they have medical visits, and they may alter deductibles, to either increase or decrease them. Low cost plans might include HMOs, but these do change the types of Medicare that can be received. They limit providers to a participating network (as do PPOs), which may or may not be helpful to the individual. An HMO with a strong provider network might have all the benefits needed and be cheaper in cost per doctors visits or hospitalization than is regular Medicare Parts A and B.
HMO Medicare advantage plans may offer other benefits that don’t normally get covered by regular Medicare including vision or dental. Most of these plans also have prescription drug services (Medicare Part D), which means people won’t have to choose a Part D plan. Again, some companies might limit drugs covered, or make rules about payments for these.
There are a few other Medicare advantage plans that deserve discussion. PPOs function like HMOs but they allow people to use out of network doctors and reimburse at a much lower rate. It is very important that people verify a PPO network has adequate providers available, or this automatically shifts consumers into paying much more for their medical care. Especially check listings of specialists and do some calling to make sure these specialists are still actually contracted with the PPO network.
Private fee for service plans (PFFS) may charge a premium above Medicare B, which is paid over to an insurance company. These plans don’t have networks, and can charge a copayment and/or part of total amount billed, called balance billing. Finding doctors who will take this plan can be difficult, and doctors can on each visit determine whether or not they will accept coverage, so it’s impossible to be certain doctors will always accept this plan.
There are other Medicare advantage plans for people with special medical needs. An alternative to any of these plans is Medigap coverage, which is paid on top of the Medicare premium and helps to cover more of the coinsurance payments and some services not offered by Medicare. Some people may find this bonus coverage more helpful than advantage plans are, since it assures the person that they will be entitled to all Medicare coverage, plus more. Medicare advantage plans, in contrast, may change or limit Medicare coverage.
However, people should known that it’s not necessary to have Medigap and a Medicare advantage plan. Typically Medigap doesn’t work if a person is signed up for an advantage plan. It is actually illegal in many cases for those on advantage plans to be sold Medigap.
Another point that ought to be considered is Medicare Part D or prescription drug coverage. Those looking at advantage plans should verify drug coverage. While the majority of plans do provide some provisions for reduced price drug costs, not all plans do, and separate enrollment in Part D might be necessary.