Medicare Advantage plans were signed into law by President Bill Clinton under the Balanced Budget Act of 1997.
These plans are also called Part C of Medicare.
Oftentimes, they are referred to as replacement plans...
These programs were designed to give Medicare beneficiaries a lower-premium option than Medigap.
They also have very little Medicare underwriting. In fact the only disqualifying question for a plan is typically if you're undergoing dialysis or requiring a kidney transplant.
This means they are a coverage option for people who can't qualify for Medigap due to health conditions if they missed their open enrollment or made mistakes.
Medicare Advantage plans are NOT the same as Medigap plans. They are completely different. Benefits are provided from a private insurance company and their network of doctors and facilities. That's why they are often referred to as replacement insurance. Sometime's they're zero premium... That sounds amazing! But how... They're definitely not free. Medicare Advantage has a legal maximum out-of-pocket of $6,700 per year which is usually a major red flag. While not all plans have that sort of out-of-pocket, these plans are much more challenging to navigate because of their initial complexities and network restrictions.
How Medicare Advantage Works
A Medicare Advantage plan is a privatized version of Medicare that some people enroll in as an alternative to Medicare. If you do, Medicare pays the private company a direct fee each month to administer your Part A and B benefits. (That’s partly why it's also called a Medicare replacement plan.) Medicare pays the Medicare Advantage company on your behalf to take on your medical risk. This is how Medicare Advantage plans are funded.
You must continue to pay your Part B premium and stay enrolled in both Medicare Part A and B.
Instead of using your Red, White & Blue Medicare Insurance card you will present your Medicare Advantage Insurance card. Your care providers will instead bill the private company rather than Medicare. If your doctor isn't in the network, they won't accept this form of Medicare. This is another reason how these plans end up being referred to as Medicare replacement plans.
It’s important to note that one may always return to Original Medicare during a future annual election period (AEP - Every Fall!).
Each Advantage plan has different benefits and networks but you will at least receive the same services offered by Original Medicare such as doctor visits, surgeries, labwork and so on.
The most common additional charges received through Medicare Advantage plans are co-pays, deductibles and co-insurance besides different pricing or potential refusual of service based on network restrictions.
Many of the higher co-pays and other expenses come in the form of diagnostics, 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 positive thing about Medicare Advantage plans is that they may offer minor benefits for routine dental, vision or hearing.
When trading for lower premiums that Medicare Advantage plans offer, you join a private network. Most oftentimes an HMO or PPO networks.
HMO networks generally require to treat only with network providers, except in emergencies. You will be required to choose a primary care physician. You will need their referral to see a specialist.
HMO plans are the most common type of network.
PPO networks allow you to see doctors outside the network but you’ll have MUCH higher out-of-pocket spending when the doctor or facility isn't a part of the network.
Some people feel like these sort of limitations on coverage and network are a deal-break for their lifestyle. But, others are willing to join a restrictive plan because of lower premiums.
As with everything... it's your choice. If you're trying to decide between Medicare Advantage and Medigap, you’ll want to consider these things before finalizing your enrollment.
- You must be enrolled in both Medicare Part A & B and live in the plan service area.
- If you drop Part B while enrolled, you will immediately be kicked out of the Medicare Advantage plan.
- Medicare Advantage plans have a single health question that disqualifies you: Have you been diagnosed with End-Stage Renal Disease (kidney failure)?
- You must use network doctors and hospitals for the lowest out of pocket costs.
- Plans will have HMO or PPO networks.
- Most HMO plans do not cover anything out of network except emergencies.
- Costs will be much higher out of network when enrolled with a PPO.
- Must get prior authorization for certain procedures.
- Must obtain a referral before seeing a specialist.
You won't be using your Red, White & Blue card and don't give it to any of your healthcare providers. If your providers end up billing Medicare your bills will be rejected.
You are obligated to your Medicare Advantage plan for the entire calendar year.
Medicare Advantage plans are locked in for a single year. The first time you can enroll is during your Initial Enrollment Period when turning 65.
Once you enroll in Medicare Advantage, you must stay enrolled in the plan for the remainder of the calendar year.
You can only dis-enroll from a Medicare 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.
Each year during the fall, the Annual Election Period runs from October 15th – December 7th.
All changes will go into effect on January 1st.
Medicare Advantage Open Enrollment Period
Some people don’t understand all the plan details or the enrollment periods without the help of a professional so they don't know all of these rules and make mistakes in their enrollment. Sometimes they find themselves enrolled into a plan that their doctor doesn’t accept or that doesn’t include one of their medications.
Each year there is a Medicare Advantage Open Enrollment Period that runs from January 1st – March 31st.
During this time, you can leave any Medicare Advantage plan and return to Original Medicare to buy a Medigap policy and will be allowed to purchase a separate Part D drug plan to avoid penalties.
Unfortunately, this doesn't always guarantee you can buy the same Medigap plan you had before. Unless it was your first time ever with a Medicare Advantage plan, then usually you'll have to answer health questions and go through medical underwriting.
The other option people have during the Medicare Advantage Open Enrollment Period is to change their current Medicare Advantage plan to a different Medicare Advantage plan. You can only do this once per year.
Medicare vs Medicare Advantage
Something is better than nothing... Original Medicare has nothing written into law that protects you against catastrophic spending. These plans were created to give options for Medicare beneficiaries that can't afford a comprehensive Medigap policy. A few reasons why one might choose a Medicare Advantage plan are:
- Many plans have low monthly premiums (you MUST still pay the Part B premium)
- You pay for medical services as you use them in the form of co-pays, deductibles and coinsurance
- Medicare advantage plans have an out-of-pocket maximum cap of $6,700 per year to protect you against catastrophic spending
- Oftentimes your Part D drug benefits are combined in a single plan so you don't have to purchase Part D separately.
- May include some small additional benefits for things like dental or vision coverage.
Remember, it’s always your choice so what works best for you might not be the best for your neighbor.
Medigap vs Medicare Advantage
Undoubtedly, Medigap plans give you the most comprehensive coverage. The biggest difference is that with Medigap plans, you can see any doctor, any specialist, any hospital that accepts Medicare. Over 91% of all providers accept Medicare. All Medigap insurance companies coverage is accepted the same so you have nationwide coverage, not a local network.
Medicare pays 80% and your Medigap plan 20%, leaving you with little to NO out-of-pocket. You won’t have the co-pays or co-insurance that you will on a Medicare Advantage plan.
Medigap plans also don’t change the benefits and they are guaranteed renewable so you'll never be denied this coverage unless you're not paying the premiums. This means you won't have to review your plan every year or enroll in a new one when things change.
The biggest complaint we hear about Medigap plans is that they do not include Medicare Part D coverage, so you must buy a separate policy for your prescription coverage. They also do not offer any routine dental, vision or hearing while oftentimes a Medicare Advantage plan may at least offer some limited coverage like teeth cleanings or eye exams.
It all comes down to your personal choice. The two types of coverage are just different.
Important things to consider...
Be sure to carefully consider these things before joining a plan:
- Not all hospitals and doctors accept Advantage plans.
- Advantage plan benefits may change every year.
- Your enrollment is for the entire calendar year.
- You may only change Advantage plans during specific times of the year.
- If you enroll in one during your initial enrollment into Medicare at age 65, you MUST BE SURE you want this coverage long-term.
- Your open enrollment window to get a Medigap plan with no health questions doesn't last forever...
- You might not be able to get a Medigap plan later if you have health conditions due to medical underwriting.
Do you pay Part B premium with Medicare Advantage?
Yes, you will always pay the Part B premium regardless of enrollment into Medicare Advantage or Medigap. Don't be fooled by a $0 premium Plan. You will continue to pay the Part B premium to Medicare each month or have it deducted automatically from your Social Security check.
How can Medicare Advantage plans be free?
Medicare Advantage plans are definitely not free. Some plans advertise $0 premium. This means you pay no premium for the Advantage plan, but you must always pay the Part B premium to Medicare and then you'll also be paying deductibles, co-pays, and coinsurance at the time you use your benefits. These plans have a legal maximum of $6,700 out-of-pocket per year.
Want more FREE information?!
Our team gets asked their opinion on what they feel are the best Medicare Advantage plans. It always comes down to personal reasons. The right plan for one person may not be the right plan for you... Better to not risk making a mistake on something as important as your Medicare. We believe it's best to work with an experienced agent who can explain all your options in detail.
Contact Simple Senior Care for help today at (800) 860-0459! Our licensed and experienced team and help you compare plans in 48 states.