Original Medicare is health insurance for America’s senior citizens aged 65 years and older and those who qualify earlier due to disability. You will experience cost-sharing expenses while on Medicare since Medicare has gaps and does not cover every health care service in full. Due to this, private insurance companies sell Medicare Supplement policies or Medicare Advantage plans. Medicare Advantage plans work very differently than Original Medicare and a Medicare Supplement (Medigap plan). If you are wanting to learn about your different coverage options, here are five things to know about Medicare Advantage plans.
1. Part A and Part B comes from the carrier
When you enroll in a Medicare Advantage plan, you will no longer receive Medicare Part A and Medicare Part B from the U.S. government. Once you enroll in a Medicare Advantage plan, Medicare pays your insurance carrier a fee to administer your Medicare Parts A and B benefits.
The insurance company you purchase your Advantage from will set your cost-sharing amounts. The carrier will set your copay, coinsurance, premium, and deductible amount for your healthcare services. Medicare Advantage plans can average anywhere from $0 to $70+. However, you are still responsible for the Part B premium, which is $170.10 in 2022. The insurance plan will also have a maximum out of pocket limit, which is a cap of $7,550 in 2022. However, a carrier can set this amount to be lower.
The government requires Medicare Advantage plans by law to cover the same services that Original Medicare covers. However, according to the Kaiser Family Foundation, around 70% of Medicare Advantage enrollees must obtain prior authorization for services such as durable medical equipment, inpatient hospital stays, or Part B medications. Therefore, Advantage plans can have more hoops to jump through to get a service covered than Original Medicare.
2. Medicare Advantage plans have networks
Unlike Original Medicare and Medigap plans, Medicare Advantage plans have network restrictions; This means that your carrier will set a service area of doctors and pharmacies you can receive your care from. For example, you can only visit your doctors within your network when you have a Health Maintenance Organization (HMO) Medicare Advantage plan. If you were to go outside of the network for non-emergency care, you would pay 100% of the bill.
Preferred Provider Organization (PPO) Medicare Advantage plans allow you to go outside your healthcare network. So, if you do not want to be restricted to a specific network and enjoy flexibility, consider the PPO option. Keep in mind, though, you will pay more for out-of-network services compared to in-network.
3. Advantage plans can include prescription drug coverage
Medicare Part A covers inpatient hospital care, and Part B covers outpatient services, such as doctor office visits and ambulance rides. Original Medicare does not cover medications, but some Medicare Advantage plans include a Part D plan (drug coverage).
Medicare Part D plans cover prescription drugs you pick up at the pharmacy. Many Medicare Advantage plans have a built-in Part D drug plan. So, if you enroll in an Advantage plan with drug coverage, you will want to ensure the drug plan covers your needed medications. If not, you will be responsible for the total cost of your prescriptions.
4. Some plans have additional benefits
Original Medicare does not cover routine dental, vision, or hearing services. Due to this, many private insurance companies include additional ancillary benefits to their beneficiaries. For instance, there might be a Medicare Advantage plan in your area that offers a dental benefit or a gym membership. Another plan in your area might cover routine eye exams or food delivery. However, not all Medicare Advantage plans are required to offer these additional benefits.
These extra benefits can change from year to year. So, it would be best if you didn’t enroll in a plan solely for its dental benefit because your plan might not offer that same benefit the following year.
5. Medicare Advantage plans have lock-in periods
Lastly, Medicare Advantage plans have lock-in periods. This means that once you are enrolled in a Medicare Advantage plan, you can only drop or change your plan during a qualified election period. For example, the Annual Election Period is from October 15 – December 7. You can drop, switch, or enroll in a Medicare Advantage plan or Part D coverage during this time.
If you miss an election period, you will have to wait for another election period, such as the Medicare Advantage Open Enrollment (January 1 – March 31), to change your Medicare Advantage plan. With that said, there is no medical underwriting when you change plans. Therefore, if you have any underlying health conditions, you will still be able to enroll in a Medicare Advantage plan without a worry.
If you are nearing Medicare age, you may find that Medicare is no easy maze to navigate, and it can be even more confusing when you learn that you have plan options for medical coverage! There are pros and cons to any type of Medicare plan, but know that you don’t have to make a decision alone. Consider contacting a reputable Medicare broker for guidance and advice or visit Medicare.gov for more information.