There are Medicare Advantage Plans available at no additional monthly premium to Original Medicare and all plans have a limit on how much a beneficiary can pay out-of-pocket, excluding the cost of prescription drugs. The maximum allowed in Medicare Advantage plans by health reform is $6,700. It should be noted that Original Medicare does not have an out-of-pocket limit. Also, the premiums, co-pays, and deductibles in many Medicare Advantage plans are lower than they are in a Medigap policy.
Medicare Advantage plans are Medicare Part C. They include the following types of plans.
- Health maintenance organizations (HMOs)—beneficiaries must get care from doctors or hospitals in the plan’s network, except in emergencies, and beneficiaries must get referrals to see specialists.
- Preferred provider organizations (PPOs)—although beneficiaries can see other health care providers, they pay less if they use providers in the plan’s network.
- Private fee-for-service (PFFS) plans—beneficiaries can see any health care provider who accepts the terms of the plan’s payment.
Less common options include special needs plans (SNPs), HMO point-of-service (POS) plans, and medical savings accounts (MSAs). SNPs are usually HMOs and are available only to Medicare beneficiaries who have a need for institutional care, a specific type of chronic medical condition, or dual eligibility for Medicare and, due to low income or limited resources, Medicaid. The most common plan is for Medicare beneficiaries who also qualify for Medicaid.
Like Medigap insurance policies, Medicare Advantage plans are provided by private insurance companies. In many cases, however, the premiums, co-pays, and deductibles in Medicare Advantage plans are lower than they are in a Medigap policy. Nevertheless, an individual considering a Medicare Advantage Plan must carefully review each plan’s Summary of Benefits before joining the plan. These plans have varying co-pays for things like a visit to a primary care physician, a visit to a specialist’s office, or a hospital stay.
All Medicare Advantage plans must provide the same coverage as Original Medicare, and most plans offer additional benefits, including Medicare Part D prescription drug coverage. Additional benefits include routine vision and dental care, audiology services, and even fitness classes. Most Medicare beneficiaries will have access to 10 different Medicare Advantage plans.
Note that before enrolling in a Part C plan, a person must first be enrolled in Original Medicare—both Part A and Part B. Then, if a person decides to enroll in a Medicare Advantage plan, the person chooses the plan and enrolls with the private insurer. About one in four recipients of Medicare chooses a Medicare Advantage plan.