Most people over 65 have Original Medicare to cover the bulk of their health care costs. It consists of Parts A and B.
But Medicare does not pay 100% of your Medicare approved expenses, nor does it cover most prescription drugs.
It is designed to cover most of your approved inpatient hospital health care costs (Part A) and about 80% of your approved outpatient costs (Part B) leaving you to pay the balance.
These are, essentially, only two options available to help with these costs.
The first option is to enroll in a Medicare supplement policy (also known as “Medigap“) and a Prescription Drug Plan. The second option is to enroll in a Medicare Advantage (Medicare Part C) Plan. See the first chart below.
Before we compare Medicare Advantage Plans in depth, you might find these resources helpful:
- Medicare Supplements vs. Medicare Advantage – Insider’s Guide
- The Best Medicare Advantage Plan – 5 Tips To Help You Choose
- Medicare Advantage 0 Premium Plans – Should You Beware?
Medicare Advantage Definition
A good Medicare Advantage Plan definition is that it is a government program offered by private insurance companies that contract with Medicare to provide you with all your Part A and Part B benefits. It helps to pay for much of your out-of-pocket costs that you would be responsible for under original Medicare. Medicare’s website offers a good tool to compare Medicare Advantage Plans.
What is Medicare Part C?
Medicare Part C is another term for a Medicare Advantage Plan. They are essentially one in the same. Medicare Part C is the part of Medicare created to make these plans available to Medicare eligible individuals as an alternative to Original Medicare.
Medicare Advantage vs Medicare
If you’re enrolled in a Medicare Advantage Plan, you actually “leave” Original Medicare (Parts A and B).
Medicare services are covered through the plan and aren’t paid for under Original Medicare. Medicare pays the insurance company when you enroll, and the insurance company in turn pays for your Medicare approved health care costs according to the benefits specified in your plan.
So, you will still have to pay some deductibles, co-pays and coinsurance.
With most plans, though, your out-of- pocket cost will be less than with Medicare Part A and Part B alone, and most plans offer a maximum out-of-pocket dollar amount, after which, the insurance company would pay any additional expenses. Most of the Medicare Advantage Plans include prescription drug coverage (Medicare Part D) at no extra cost, and offer extra coverage such as vision, hearing, dental and /or health and wellness programs not generally covered by Medicare.
Medicare Advantage vs. Medicare Supplement
If you are new to Medicare, or even if you have been enrolled for some time, and want to get more coverage than just Medicare A and B, you will need to choose between enrolling in one of two options. The chart below illustrates these options:
In most states there are 10 standardized plans available. The richest of the plans, Plan F, covers 100% of your out-of-pocket expenses resulting from any Medicare approved benefits, You would then, most likely enroll in a Prescription Drug Plan to help pay for your prescription drug costs. These plans, also, are offered by private insurance companies.
In Option 2, you would enroll in a Medicare Advantage plan, also known as Medicare Part C, and “leave” Original Medicare. It will help pay for your out-of-pocket costs associated with your Medicare approved benefits, and most plane include a Prescription Drug Plan.
We will now , clearly and simply, cover in depth all aspects of a Medicare Advantage Plan
First, to compare Medicare Advantage Plans, it is important to know that:
- You will actually” leave” Original Medicare (Medicare Parts A and B) and enroll in Medicare Part C
- When you enroll, your Medicare Parts A , B and D benefits are combined into Medicare Part C.
- Prescription drug coverage is included in most plans.
- Advantage plans are a government program administered by private Companies.
- Many plans offer extra benefits not covered by Original Medicare.
- You must use doctors and other health care providers in your chosen company’s network.
- You must live in the service area of the plan
- You cannot have End Stage Renal Disease (ESRD)
- Specific enrollment periods apply.
Medicare Advantage Benefits
Medicare advantage plans pay for your Part A and Part B Medicare costs, and often include co-pays for services that are only partially covered by Medicare, plus additional coverage for services not covered by Medicare, such as prescription drugs, dental, eyeglasses or hearing aids. Some even pay for health club memberships. Which drugs are covered depends on the plan’s ‘formulary’.
The benefits offered under Medicare Advantage Plans can vary by company and service area. Each plan, though, must offer a minimum set of benefits per Medicare rules. Below is a list of benefits typically included in the Summary of Benefits for most plans with a brief description of each:
- Plan Type: Can be HMO, PPO, PFFS, or SNP (See Medicare Advantage HMO vs. PPO below)
- Annual Deductible: Usually $0 when using in-network services for most plans
- Out-of-Pocket Maximum: Out-of-pocket dollar amount, after which, the insurance company would pay any additional expenses.
- Doctor and Hospital Choice: Most plans will require you to go to network doctors, specialists, and hospitals.
- Inpatient Hospital Care: Most plans will cover all costs except for a limited copay.
- Inpatient Mental Health Care: Most plans will cover all costs up to 190 days except for limited copays.
- Skilled Nursing Facility Care: Most plans cover all costs up to 100 days except for limited copays.
- Ambulance Services: Most plans cover all costs except for a one-time copay per event.
- Emergency Room Care: Most plans cover all costs except for a one-time copay per event.
- Urgent Care: Urgent Care centers are setup to assist patients with an illness or injury that does not appear to be life –threatening, but also can’t wait until the next day. Most plans cover all costs except for a small copay.
- Home Health Care: Most plans cover all Medicare-covered home health visits.
- Durable Medical Equipment: Includes items like wheelchairs, oxygen, etc. Most plans pay all but 20% for Medicare-covered equipment.
- Outpatient Services: Includes Diagnostic tests, x-rays, lab and radiology services, and outpatient surgery. Most plans pay all costs except for a specified copay.
- Preventive Services: Includes most preventive screenings. Most plans cover all costs.
- Hospice: Most plans will cover all costs for selected Medicare-certified hospice center.
- Doctor Office Visits: Includes specialist visits referred by primary care doctor. Most plans pay for each visit except for a small copy.
- Supplemental Benefits: These are services that are not generally covered by Medicare. They can include coverage for services such as dental, vision, eyewear chiropractic, acupuncture, rides to and from your doctor’s office, and fitness club memberships. Some plans cover some of these services at no additional cost, while some plans will cover some supplemental benefits more extensively with an additional monthly premium.
Medicare Advantage HMO vs. PPO
When you compare Medicare Advantage Plans, you see that most plans today use the HMO or the PPO model. There are other types of plans available, and many times they are available in the same area. So it is a good idea to know something about all the types are and how they differ:
- HMO (Health Maintenance Organization Plan) – Allows you to see doctors and other health professionals that participate in its network. If you see a health care provider that is not in the network, the plan may not pay those health care costs. (Except emergency care, out of area urgent care, or out of area dialysis)
- PPO (Preferred Provider Organization Plan) – Covers both in- and out-of-network providers, giving you the freedom to choose any doctor. Generally you will pay higher copays or coinsurance for out-of-network providers.
- PFFS (Private Fee-for-Service Plan) – Pays a specific amount for health care services and the treating doctor has to accept that amount – even if it is less than his or her usual charge. If the doctor does not agree to those terms, then Medicare will not cover services through that doctor.
- SNP h (Special Needs Plans) – These are plans for people who have – as its name implies – special needs. That includes (but is not limited to) those living in a nursing home, Medicaid-eligible individuals, and people with chronic diseases or disabling conditions, like diabetes, End Stage Renal Disease (ESRD) or HIV/AIDS.
- MSA (Medical Savings Account Plan) -Includes both a high deductible and a bank account to help you pay that deductible. The amount deposited into the account varies from plan to plan. The money is tax free as long as you use it on IRS-qualified medical expenses, which includes the health plan’s deductible.
Again, the majority of the plans available are either the HMO or the PPO type. So, which is the best plan for you? If both types are available in your area, you must know the provider network in all the plans for which you are eligible as a first step in making the proper decision.
What Does Medicare Advantage Cost?
The monthly premium varies widely among plans, even in the same area. As an example, the chart below illustrates the different premiums for some popular plans. This is a partial list of Medicare Advantage Plans in the San Francisco area:
In most plans, the monthly cost for Medicare Part D (Prescription Drug Plans) is included in this cost, even for plans with a zero monthly premium.
Medicare Advantage Zero Premium Plans
So, how is it that some plans have a zero premium? Well, the Federal Government pays health plans to provide your Medicare Advantage benefits. Sometimes plans require you to pay a premium in addition to the money they receive from the Government, and some choose not to charge a premium. Those that do not are $0 premium plans.
It is very important to note that you will still be responsible for your Medicare Part B premium, unless it is covered by a third party such as state Medicaid.
You must still pay the monthly cost of Medicare part B, no matter what the monthly cost is for your selected Medicare Advantage Plan.
For 2014 the Medicare Part B premium is 104.90 for most people.
Medicare Advantage Enrollment
You may only enroll in a Medicare Advantage Plan during an election period and:
- You must live in the service area of the plan
- You cannot have End Stage Renal Disease (ESRD)
There are several election periods:
Initial Enrollment Period (IEP) You can enroll in a Medicare Advantage Plan when you first become eligible for Medicare. Your Initial Enrollment Period (IEP) is a seven-month period that starts 3 months before the month you turn 65, includes the month you turn 65, and ends 3 months after the month you turn 65.
If you are under age 65 and you receive Social Security disability, you qualify for Medicare in the 25th month after you begin receiving your Social Security benefits. You may enroll in a Medicare Advantage plan three months before your month of eligibility, during the month of eligibility, and three months after the month of eligibility. For example, if your Medicare Part A and B coverage begins in May, your Medicare Advantage IEP is February through August.
Annual Enrollment Period (AEP) If you are already enrolled in Original Medicare, then you must wait until the next enrollment period to sign up for Medicare Advantage. The Annual Election Period (AEP) is October 15 through December 7. The plan coverage chosen during the AEP begins on January 1 of the next year.
Special Enrollment Period SEP) Generally, once you enroll, you stay enrolled until the next Annual Election Period (AEP) opens. However, there are some situations that might qualify you to make a change during the rest of the year. This is called a Special Election Period (SEP). Some examples of these situations include (but are not limited to):
- You move outside your Medicare Advantage Plan’s service area
- You qualify for Extra Help (a program to help you afford prescription drugs)
- You qualify for Medicaid (Medi-Cal in California)
- If you move into an institution (such as a nursing home)
Medicare Advantage Disenrollment
If, after enrolling in a Medicare Advantage Plan, you change your mind, you can switch back to Original Medicare (Medicare Part a and B) from January 1 through February 14 each year. Most likely you would be losing prescription coverage as a result of the switch. You will have until February 14 to sign up for a stand-alone Medicare Prescription Drug Plan.
Your coverage would begin the first day of the month after the plan gets your enrollment request. During this period you cannot:
- Switch from Original Medicare to a Medicare Advantage Plan.
- Switch from one Medicare Advantage Plan to another.
- Switch from one Prescription Drug Plan to another.
Medicare Advantage Star Ratings
Medicare wants is to make sure that the quality level of Medicare Advantage Plans stays high and consistent. It is important that you review the star ratings when you compare Medicare Advantage Plans.
In this effort, Advantage Plans are each year are rated on a scale ranging from 1 to 5 stars. One star represents poor performance, while a five-star rating is considered excellent. Plan Ratings are published each year in fall, before the open enrollment period begins and beneficiaries may enroll in or switch plans.
The overall score makes it easy for Medicare beneficiaries (that’s you) to compare plans, based on quality and past performance.
How Are Star Ratings Are Determined
Medicare uses over 50 different quality criteria points for Medicare Advantage Plans. The information is taken from member satisfaction surveys and health care providers in order to give overall performance star ratings.
The criteria for plans covers the following topics:
- Staying healthy, including how often members got various screening tests, vaccines, and other check-ups that help them stay healthy.
- Managing chronic (long-term) conditions, including how often members got certain tests and treatments that help them manage their condition.
- Health plan responsiveness and care, including ratings of member satisfaction with the plan.
- Member complaints and appeals, including how often members filed a complaint against the plan.
- Customer service, including how well the plan handles calls from members and makes decisions about member appeals.
- Member complaints and Medicare audit findings, including how often members filed a complaint about the drug plan and findings from Medicare’s audit of the plan
- Member experience with the drug plan, including member satisfaction
- Drug pricing and patient safety, including how well the drug plan prices prescriptions and provides updated information on the Medicare website, and how often members with certain medical conditions get prescription drugs that are considered safer and clinically recommended for their condition.
To get more information, compare Medicare Advantage Plans, review plan comparisons, or for general questions please call us at 415-999-5071 or email us.