Article at a glance
A Medicare Advantage plan is considered to be supplemental insurance to traditional Medicare which is why it is commonly called “Medicare Part C” or “MA Plan.”. MA plans help patients fill the gaps in their standard Medicare coverage along with providing additional benefits.
When it comes to MA plans, there are many advantages to consider such as convenient coverage options and unique plan types.
While Medicare Advantage plans possess many positive attributes, Medicare Advantage plans also have some disadvantages such as necessary referrals for certain plan types, annual plan alterations, and more.
Deciding which Medicare Advantage plan is best can be complex and confusing which is why it’s important to know which steps to take when deciding which plan to choose.
Medicare is a federal health insurance program that provides health care coverage for Americans age 65 and older, as well as younger people with disabilities or end-stage renal disease (ESRD). Original Medicare coverage is comprised of three parts: Medicare Part A (hospital insurance), Medicare Part B (medical insurance), and Medicare Part D (prescription drugs).
Another option for Medicare coverage is through a Medicare Advantage plan (Medicare Part C). Medicare Advantage is becoming an increasingly popular option. In fact, according to a survey by the Kaiser Family Foundation, one-third (34%) of those covered by Medicare are enrolled in Medicare Advantage plans. Throughout the past ten years, the rate of Medicare Advantage enrollment has nearly doubled, jumping from 11.1 million in 2010 to 22.0 million insured in 2019.
There’s a reason why Medicare Part C plans have become so popular. However, there are many advantages and disadvantages of Medicare Advantage plans to evaluate before patients dive into enrollment.
What Are Medicare Advantage Plans?
Medicare Advantage plans, otherwise known as “Medicare Part C” or “MA Plans,” are Medicare supplement plans that bundle Part A, Part B, and often Part D coverage through private insurance companies. Most Medicare Advantage plans even include coverage for services such as dental, vision, hearing care, and prescription drugs. Some MA plans Medicare Advantage coverage varies by plan so it’s important to check with your insurance provider before signing up.
When a patient becomes eligible for Original Medicare, they have the option to sign up for Medicare Part C.
Note: To learn more about Medicare Advantage plans, visit this source.
How Private Insurance Plans Function
While standard Medicare is funded by and provided through the U.S. federal government, Medicare Advantage plans are administered through private insurance companies with funding that’s a bit more complex.
When Medicare beneficiaries opt to join a Medicare Advantage plan versus Original Medicare, the federal Medicare Program gives the private insurer capitated payments to fund the chosen plan. These payments often cover one’s hospital insurance (Medicare Part A) and part of one’s medical insurance (Medicare Part B). The rest (prescription drug coverage, dental services, etc.) is financed through a monthly premium that is typically deducted from a patient’s Social Security income.
Note: To learn more about how Medicare Advantage is funded, how the insurance company plays a role, and the health care costs associated with private health insurance coverage, visit this source.
Medicare Advantage “Give Back Benefit”
Many Medicare Advantage carriers now offer what is called a Part B “give back benefit” or “Part B Premium Reduction Plan.” Essentially this reduction incurs that one’s carrier will pay for part or all of one’s Part B premium if they are enrolled.
Certain zip codes don’t offer this benefit, but most areas do through carriers such as Humana, Aetna, Cigna, and more. While this benefit does not make Medicare Advantage plans free most of the time, it will help patients save money. If patients enroll they will see a reduced fee reflected through the higher amount available on their Social Security check or through the reduced fee they must pay to Medicare monthly. Those enrolled in a dual eligible program are not eligible for the MA give back benefit.
Note: To learn more about the Medicare Advantage Part B Premium Reduction Plan, visit this source.
Types of Medicare Advantage Plans
When patients enroll in an MA plan, they are required to register for a certain plan type, e.g., Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Special Needs Plan (SNPs), etc. Each plan type is unique in what they provide and how they induce coverage for patients.
HMO plans are one of the most commonly chosen plan types because they typically offer lower monthly premiums. The HMO plan type requires patients to elect a primary care physician (PCP) who are healthcare providers that manage and coordinate the patient’s care.
Furthermore, HMO plans require patients to remain in-network for care and to receive referrals for any in or out-of-network care in order to avoid expensive co-payments and other fees.
Note: To learn more about MA HMO plans, visit this source.
PPO plans are the other most commonly chosen plan type as they also offer lower monthly premiums while allowing the patient more freedom with their health care. Neither medical referrals nor PCPs are required with PPO plans, leaving patients to fully decide who, where, and why they want to receive care.
Note: To learn more about MA PPO plans, visit this source.
Private-Fee-For-Service plans determine costs on a case-by-case basis. The private insurers that provide these plans decide how much they will pay doctors or hospitals and then how much the patient owes. PCPs and referrals are not required with this health insurance plan.
Note: To learn more about PFFS plans, visit this source.
Special Needs Plans (SNPs)
SNPs provide coverage for those with specific diseases or health characteristics. Due to their limited membership, SNPs tailor their plans to best provide service for those they cover.
Note: To learn more about SNPs and who is eligible for them, visit this source.
HMOPOS & MSA Plans
The least common category of MA plan types is Health Maintenance Organization Point of Service (HMOPOS) plans and Medicare Medical Savings Account (MSA) plans. To learn more about what these plans entail, visit this source.
Advantages of Medicare Advantage Plans
When it comes to Medicare Advantage plans, there is a lot to be desired.
Medicare Advantage plans are often called “Medicare Part C” because they fill most of the gaps sustained by original Medicare. Most MA plans include Part A, Part B, and Part D coverage in addition to insurance for dental, hearing, and vision services. Their coverage convenience is the main reason why MA plans have become so popular throughout the past decade.
Personalized Plan Types
Another advantage of MA plans is that they provide various plan types for patients to opt into, giving them a standard umbrella plan to adhere to. With different insurance plans such as HMO, PPO, PFFS, and more, patients can pick and choose which plan works for them and why.
Some plan types, like the HMO plan, require patients to select a PCP. Having a PCP is often viewed in a positive light as they help patients manage and organize their healthcare wants and needs. Having coordinated care takes the weight off the patient to find the providers they need and where they can access them.
When it comes to the health care services included in coverage for the price patients pay, many have come to view the Medicare Advantage plan as a cost-efficient choice in the world of Medicare. Not to mention, with the give back benefit, the Medicare Part B premium is being reduced even further to assist patients with their medical bills and out-of-pocket costs.
Disadvantages of Medicare Advantage Plans
Disadvantages of Medicare Advantage Plans
While Medicare Advantage plans offer many advantages, there are always disadvantages to highlight as well. Cons of Medicare Advantage plans include state-specific coverage, referral requirements and more.
Due to Medicare Advantage plans requiring patients to choose a specific plan type from private insurance companies, they are limited to receiving care solely within that plan’s network. Most often, a plan’s network solely covers providers within a patient’s state or region. Traditional Medicare coverage provides coverage to patients throughout the nation, meanwhile, MA plans keep patients restricted to the area they live in for care.
Another complaint that’s associated with MA plans is that some of their plan types require referrals in order for patients to seek care from certain providers. Requiring referrals can make patients feel limited in their healthcare options. It’s important to review each plan type before deciding so patients can ensure they are receiving the coverage that best fits them and their healthcare needs.
Increased Hospital Costs
According to a recent Kaiser Family Foundation study, MA enrollees would pay more for a five-day hospital stay in comparison with their original Medicare counterparts. To learn more about this study, visit this source.
Annual Plan Alterations
Due to the fact that Medicare Advantage plans are provided through private insurance agencies, the Centers for Medicare and Medicaid Services (CMS) allows insurers to alter their plans each year. Certain changes may include plan benefits, costs, and provider networks, enticing MA enrollees to review their plans annually and potentially re-select their plan type.
High Maximum Out-of-Pocket Limits
The average out-of-pocket limit is set to increase through 2021 and beyond due to the CMS setting a new maximum out-of-pocket limit of $6,700 to $7,550.
Note: To learn more about these limitations, visit this source.
Limited Additional Supplemental Coverage
Since Medicare Advantage plans are already viewed as supplemental coverage plans for standard Medicare, finding additional coverage may be difficult. Certain plans such as Medicaid-Medicare Dual Eligibles or MedSupp (Medigap) are not able to function in tandem with MA plans.
Steps for Choosing the Best MA Plan
When it comes to selecting the best Medicare Advantage plan for one’s healthcare needs and wants, there are a few steps to consider.
- Brainstorm: Prior to evaluating one’s options, patients should think through what they are desiring out of a healthcare plan. Write down all health care needs and speak with trusted family and friends about their experience with MedicareAdvantage plans if possible. Questions to think through:
Does the patient have any chronic conditions?
How many medications is the patient on?
Which types of medication is the patient taking?
Does the patient require a translator?
Does the patient require additional handicap assistance at their provider’s office?
What kind of coverage is the patient looking for (medical, dental, vision, etc.)?
Would the patient need care at specific times (on weekends, after hours, etc.)?
Would the patient need care at specific locations (nursing homes, in-home care, transportation services, etc.)?
Consider Cost: Finances are one of the biggest factors when it comes to selecting a healthcare plan and provider. It’s important for the patient to weigh out the costs of each MA plan type and evaluate what they can/want to afford.
Evaluate Provider Networks: Before electing a plan, patients should consider which providers are made available to them within a specific network. If patients have been visiting certain doctors, specialists, or hospitals for years, they should speak with their providers to ensure they are within the network of a patient’s MA plan.
Compare Plans: Before making any final decisions, patients should be sure to compare various MA plans and their benefits. Use the government’s Medicare comparison tool to analyze multiple plans simultaneously.
Tools for Finding MA Plans & Healthcare Providers
When it comes to finding the best plan for one’s healthcare needs and wants, it’s important for patients to evaluate all of their options. Those looking to become Medicare Advantage enrollees can use the links provided below to find a MA plan and/or provider in one’s area.