Medicare Advantage plans combine the hospital and medical benefits you get from Medicare Parts A and B, respectively. They’re also managed by private insurance companies.
Key Takeaways of Medicare Advantage
- In addition to your Original Medicare benefits, Medicare Part C will cover specific benefits – and out-of-pocket expenses – which Part A and Part B don’t cover
- Medicare Advantage Plans help lower your costs by using medical networks (like MSA, SNP, PFFS, PPO, or HMO networks) to handle your care
- You have to be enrolled in Original Medicare in order to be eligible for Medicare Advantage; the only exception is for people with End-Stage Renal Disease (ESRD)
- Once enrolled in Original Medicare, you must wait for the Initial Coverage Election Period or the Annual Election Period if you want to switch to Medicare Part C
What Are Medicare Advantage Plans?
With a Medicare Advantage Plan, you can get all of the benefits of Medicare Parts A and B, with the option of adding more. For example, you may end up with fewer out-of-pocket expenses after receiving medical care. These include things like coinsurance, deductibles, and co-payments.
In addition to lower costs, some of these private plans offer you the choice of adding special benefits to your plan that you cannot get with Original Medicare. These include things like dental, vision, or even wellness programs. And don’t worry – Medicare Part C plans come with prescription drug coverage. You will also still receive the hospice benefits that you would be entitled to if you were still receiving Part A.
As far as Medicare Supplement plans go, it is illegal to purchase a Medicare Supplement plan while you have Medicare Advantage because you would be wasting money on duplicate coverage that you don’t need. Medigap plans cover the “gaps” in Original Medicare, and so does Medicare Advantage. They just provide this supplemental coverage in different ways.
Types of Medicare Advantage Plans
Different Medicare Advantage Plans organize their care providers into different types of medical networks. The size and scope of these networks will determine how much you pay for your care and the type of care you are eligible to receive.
- HMO Plans are Health Maintenance Organization Plans. Most of the time, you can only see in-network doctors or get care at in-network facilities. If you go outside of the network, you will likely end up paying full price. These plans usually cost less than plans with bigger networks.
- PPO Plans are Preferred Provider Organization Plans. You are strongly encouraged to stay in-network, but you may also see out-of-network providers at a potential discount. As long as those providers and facilities accept Medicare Assignment, you can get your care there. Just understand that there could be additional fees.
- PFFS Plans are Private Fee-for-Service Plans. You must contact your doctor or facility in advance and make sure that they accept the terms and conditions of your Medicare Advantage Plan before you get care. Otherwise, you may end up paying out-of-pocket. Patients in PFFS Plans also may be subject to a 15% “Balance Billing” cost. Also, keep in mind that your doctor or facility can choose to stop accepting the agreement at any time, so it’s good to be proactive with your communication.
- SNP Plans are Special Needs Plans. If you have very specific – and also very expensive – medical needs, you may qualify for one of these plans. Every type of SNP provides prescription drug coverage. Seniors who may want to look into an SNP Plan include those living in institutions, seniors who are on both Medicaid and Medicare, and seniors suffering from chronic conditions. Some of these conditions include HIV/AIDS, ESRD, or diabetes.
- HMO-POS Plans are Health Maintenance Organization-Point of Service Plans. These plans are also available through Medicare Advantage. You have more options for going out-of-network, but the rates can be drastically different. Out-of-pocket expenses with in-network providers are also lower.
- MFA Plans are Medical Savings Account Plans. If you want to have the most control over your health care, this is the plan for you. You will have to pay a higher deductible for this convenience. But in exchange, you get funds from the government deposited into a special savings account. These funds will pay for your health care costs from any provider – you are not restricted to a medical network. It’s also tax-free as long as the care you pay for is an IRS-qualified medical expense.
Basics of Medicare Advantage Eligibility
Aside from seniors who have ESRD, those who are eligible for or already enrolled in Medicare Parts A and B are allowed to apply for Medicare Part C. But these plans are based on your geographic location, and may not be available in all areas.
In 2021, changes to the law have made it so that anyone applying for Medicare Advantage will no longer require a health evaluation in order to be accepted by your insurance provider of choice. This change makes it easier to get the plan you want at a reasonable price.
Also, be sure to check with any organization you may still be receiving health benefits from (like an employer or union) before enrolling. This helps you avoid wasting money on duplicate coverage or losing benefits based on overlapping coverage.
Basics of Medicare Enrollment
If you want to enroll in Medicare Advantage, you have to wait for the right Election Period to come around. An election period is the narrow window of opportunity you have a chance to enroll in, get out of, or change your Medicare Advantage Plan.
Your Initial Coverage Election Period
This Election Period happens when you first become eligible for Original Medicare. It starts three months before your 65th birthday, includes the month you turn 65, and ends three months after that. This Election Period can also happen after receiving Social Security benefits for 25 months minimum. The window of opportunity is the same seven months, but instead of revolving around your birth month, the month of your official eligibility is in the center of that window.
The Annual Election Period
If your Initial Coverage Election Period has come and gone, you need to wait for an Annual Election Period in order to switch to a Medicare Advantage Plan. For all qualifying seniors, the AEP starts October 15 and lasts through December 7. Your benefits will kick in on January 1 of the following year.
The Medicare Advantage Open Enrollment Period
If you change your mind about Medicare Advantage, you’ll have to wait for The Medicare Advantage Open Enrollment Period which occurs each year between January 1 and March 31. During this window, you can switch back over to Original Medicare and also enroll in a Medicare Part D prescription drug plan. You can also switch to Medicare Advantage from Original Medicare if you prefer.
Special Election Periods
Unless you qualify for a Special Election Period, you cannot enroll in Medicare Advantage outside of the AEP. There are certain qualifying life events that you must experience in order to get approved for this SEP. Some of those include (but are certainly not limited to):
- Losing Medicaid eligibility
- Becoming eligible for Medicaid
- Moving into an institution
- Qualifying for the Extra Help prescription drug program
- Moving to a new zip code that is not serviced by your Medicare Advantage Plan