How Medicare Advantage Plans Work
How Medicare Advantage Plans Work, First of all, it is worth reviewing some basic concepts. Medicare is divided into four parts: Part A covers inpatient hospital care and skilled nursing care. There is no premium if you or your spouse have earned at least 40 Social Security credits.
Part B covers physician services and outpatient hospital care. There is a monthly premium to pay for this coverage, which in 2021 is $148.50, with a deductible of $203. People with higher incomes pay more.
The other parts of Medicare, Part C, also known as Medicare Advantage, and Part D, prescription drug coverage, are optional and offered by private insurers.
Medicare Advantage is an all-in-one managed care plan, usually by an HMO or PPO. Advantage plans offer the benefits of Parts A and B, and most also include Part D or prescription drug coverage. Some offer extra benefits not available through Original Medicare, like fitness classes or dental and vision care.
If you choose Medicare Advantage, you’ll usually continue to pay your Part B premium as usual, but you’ll pay little or nothing extra for coverage. You usually have copays or coinsurance, but once you reach the out-of-pocket limit, the plan will pay 100% of your Medicare-covered medical expenses for the rest of the year. The out-of-pocket limit does not apply to prescription drugs or additional benefits.
To keep premiums low, Advantage plans generally require you to receive your care from a network of doctors, hospitals and other providers, and you often need prior authorization for specialty care.
Original Medicare does not have an annual limit on out-of-pocket costs, and for Part B services, you will have to pay 20% of the expenses after the deductible. That’s why many seniors with Original Medicare also buy a Medigap plan, which covers those out-of-pocket costs if they don’t receive supplemental benefits from a former employer. (You can’t have both an Advantage plan and a Medigap plan.) And most people with Original Medicare also buy a separate Medicare prescription drug plan.
Medigap plans also offer a flexible choice of providers, since coverage is accepted by any doctor or medical service that accepts Medicare – the vast majority do. In most states, you’re only guaranteed access to a Medigap plan when you first sign up for Medicare, as explained below.
With Medigap, you’ll pay more in monthly premiums compared to Advantage plans (see chart below). It will also take a little more work to choose your Part D plan.
Leave a Reply