Medicare Advantage Plan
(Part C)
HMOs / PPOs
A Medicare Advantage plan is a private health insurance plan approved by Medicare. You may opt to get your Part A, B and D benefits from a Medicare Advantage plan instead of traditional Medicare. Originally called Part C, these Medicare private insurance plans usually have an HMO or PPO network of doctors.
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You must continue to pay your Medicare Part B premium while enrolled in an Advantage plan. You must be enrolled in both Medicare Parts A and B and live in the plan’s service area.
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Advantage plans were also built with an out-of-pocket maximum cap on your medical spending. Think of this as a safety net. If you have heavy health spending that results in a certain out-of-pocket limit, then the plan kicks in and pays the rest for the remainder of the calendar year (Part D expenses are calculated separately).
Medicare Advantage Coverage
With Original Medicare, you will have deductibles and a 20% coinsurance on Part B. You can visit any doctor or hospital that participates in Medicare, and most do.
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With an Advantage plan, you will use the plan’s network of providers, which is usually local. You will pay co-payments when you receive healthcare services. Each plan sets its own cost-sharing. For example, you might pay a small copay for a primary care doctor visit, and perhaps a higher copay to see a specialist. Likewise, some plans will charge you a daily hospital copay, and other plans might charge a flat amount for the whole stay.
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Medicare may have small changes to the Part A and B deductible, but the 20% coverage on outpatients services never changes. Part C Medicare Advantage plans change annually.
Limitations, copayments and restrictions may apply, and each plan’s benefits, formulary, pharmacy network provider network, premium and copayments may change on January 1 of each year. Members need to be diligent about reviewing the plan materials sent to them each year to see what’s changing.
Cost of Medicare Advantage plans
They usually have lower premiums than Medigap plans….sometimes even a $0 premium on some plans in some areas.
When a plan has a $0 premium, it means that you will pay no additional premiums for the plan itself. You will still pay for your Part B premiums monthly though. You must be enrolled in both Medicare Parts A and B to be eligible for a Medicare Advantage plan.
Why would any company offer a $0 premium plan? Because you agree to use the plan’s network providers to get your care. This means you’ll have substantially fewer doctors to choose from than if you chose a Medigap plan. The insurance company has more control over your choice of providers, with whom they negotiate contracted rates.
Check your doctors
It’s important to check with your doctors first to see if they are in the plan’s network. This is especially important if the Advantage plan you are considering is an HMO plan, which often have the smallest networks.
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Look for one with a network that has plenty of providers in your area.
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Your Medicare Advantage insurance company will pay your healthcare bills instead of Medicare paying them. You will pay copays for the services you obtain from providers in the plan’s network as you go along. Generally the copays are reasonable, but you’ll want to review them before you enroll to make sure.
These copays can vary from plan to plan as well. One plan might charge $40 for a specialist visit while another plan charges $50. These copays can add up while you are using medical services so think about your medical usage when selecting a plan.
Check your drug formularies
A lot of Medicare Advantage plans also include Part D coverage, so there is often no need to buy a separate drug plan. Some people enjoy the convenience of this.
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It's important to carefully check whether the plan includes the medications you might be taking. It's common for people to check all their doctors but didn’t check to see if the built-in drug plan included their meds. Then they find out they are stuck in a plan that doesn’t offer an important and usually expensive medication.
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​You see, Medicare Advantage plans have specific enrollment periods. If you enroll in a plan, Medicare locks you into that plan through December 31st. You can change mid-year only if a circumstance gives you a special election period, such as moving out of state. This makes it very important that you choose a plan wisely.
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Joining a Medicare drug plan may affect your Medicare Advantage Plan
Many people ask whether they can start with Medicare Advantage and change to Medigap later if they get sick or need more coverage. Although it sounds great to buy the cheapest insurance now until you get sick and then switch back to the more comprehensive insurance, it doesn’t work that way.
If you leave a Medigap plan to go on Medicare Advantage coverage instead, you may not be able to get back into a Medigap plan later. You might be outside of your one-time initial enrollment window by then, and that means Medigap plan insurance companies can ask health questions on your application. The insurance carriers can decline you for certain health conditions or even medications that you take.
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An exception: There is a trial period for people who try Medicare Advantage for the first time. If you decide to dis-enroll from the plan and go back to Original Medicare within the first 12 months of Medicare Advantage coverage, then you can return to your Medigap plan with no underwriting. After the 12 months is up, then you are subject to underwriting.
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Another exception is for people under age 65 who got Medicare early due to a disability. When that person turns 65 and now is eligible for Medicare based on age instead of disability, that person will get an second open enrollment window. They can then change from Medicare Advantage to Medicare supplement without underwriting.