A Medicare Advantage plan is a private health insurance plan approved by Medicare. Medicare Advantage Plans include your Part A & Part B coverage and most will also include your Medicare Part D benefits as well instead of obtaining your Part & & B coverage through Original Medicare and purchasing a seperate Part D plan. These Medicare private insurance plans usually have an HMO with very few PPO network options.
It is important to mention that by joining a Medicare Advantage Plan you are opting out of Original Medicare and turning over your medical decision to a private medical group plan and Insurance Carrier.
Medicare Advantage plans were created as an alternative to Original Medicare and Medigap plans. By joining one of these plans, you direct Original Medicare to pay the Advantage plan a set monthly amount for your care. In return, the Medicare Advantage plan will manage your medical care on your behalf as related to your Part A & Part B services. In doing this these plan assume all of your medical risks based on the monthly compensation they receive from the Government.
While many Medicare Advantage plan include coverage at not additional monthly premium, you are required to pay your Medicare Part B premium while enrolled in an Advantage plan. You must be enrolled in both Medicare Parts A and Part B, plus your are required to live in the plan’s service area before you can enroll into a medicare advantage plan.
Medicare Advantage policies are NOT Medigap plans. They work differently because medicare advantage plan pay the hospital or doctor instead of Original Medicare paying their share and the Medicare Supplement plan paying the remainder of the cost up to the specific plan coverage you selected. Some Medigap plans cover up to 100% of the cost of your remaining medical bill which means you pay zero for your Hospital or Doctors visits.
Many of our clients have lots of questions related to Medicare when they are about to first enroll into Medicare. After we go over a few basics of Original Medicare, Medigap Plans, Part D, and Medicare Advantage plans they will ask us for the pros and cons of Medicare Advantage plans vs Original Medicare with a Medigap plan. The answer is not always a simple one but one of the major differences is in the way you access your benefits.
With Original Medicare (with no Medigap Plan), you will have a Part A & Part B deductible (Part A $1,484 & Part B $203 for plan year 2021) and a 20% coinsurance on Part B, and the possibility of excess charges equal to 15% of the total bill. You have the freedom to visit any doctor or hospital (without a need for a referral or prior authorization so long as it is deemed medically necessary by the treating Doctor and is a covered expense by Medicare) that participates in Medicare, and most do.
A Medigap policy fills in the gaps left behind in Original Medicare. We recommend you visit our site related to Medigap plans to learn more about these types of plans.
With an Advantage plan, you will use the plan’s network of providers depending on which ‘Network” you join, which is usually limited to a select number of local Doctors, Specialist, Medical Facilities, and Hospitals near your home address. These plans are designed as a pay as you go type of plan. You will typically pay deductibles, co-payments, coinsurance, and have an established max out of pocket when you receive healthcare services. Each plan will establish its own set of cost-sharing depending on the plans that are available in your local area. For example, you might pay a small copay for a primary care doctor visit, and perhaps a higher copay to see a specialist. Likewise, some plans will charge you a daily hospital copay, and other plans might charge a flat amount for the whole stay.
Perhaps one of the biggest differences is in changes to the plans. Original Medicare may have small changes to the Part A and B deductible, but the 20% coverage on outpatient services has never changed. Part C Medicare Advantage plans can change annually so it is important that you review your plan each year to see what may have been added or taken away.
The below image shows another comparison between and Advantage Plan and Original Medicare with a Medigap plan.
For more on what Medicare Advantage policies cover, see our Part C page.
Medicare Advantage plans were created for several reasons. One of those reasons was due to the fact that some Medicare beneficiaries were not able to afford their Medigap plan. They were left with only having Original Medicare which left these individuals with high medical bills if and when they ended up in the hospital due to the gaps in coverage. For those who could afford the Medigap policy they had fantastic coverage to take care of those hospital bills.
Once they experienced a health issue it was only then that they would try to apply for a Medigap plan and try to budget for this cost. However, now that they had a major health concern, they were not able to qualify for the Medigap plan after as they fell outside of the guaranteed issue period.
Medicare Advantage plans provided a solution for these individuals who were unable to afford the monthly insurance premiums above and beyond the Part B monthly premium.
Medicare Part C often provide lower upfront cost in the form of no additional premium or low monthly premium as compared to a Medigap policy. In additional Medicare Advantage plan don’t have pre-existing condition clauses attached to them. You are able to join these plans either during your Initial Enrollment Period or at other specific times of the year known as an enrollment periods.
Medicare Advantage plans include an out-of-pocket maximum cap which is regulated by Medicare. Medicare Insurance Carriers are not able to increase this max out of pocket cap beyond the approved amount $7,550 for 2021 plan year. While this is a very large number we can be thankful that under these plans at least the financial pain will end at this point. Even though your Part D coverage is included under your Medicare Advantage plan, Part D expenses are calculated separately from your medical bills which are part of your Part A and Part B benefits.
Speaking of your Part D coverage, this is another popular feature of Advantage plans in that bundle this coverage within together. By doing this it can create a pretty good overall coverage that includes some added value benefits.
When it comes to Medicare you have a lot of different options to decide on. There is no perfect one size fits all plan that meets everyone’s needs. What is right for you may not be right for your friend or family member. To put this in perspective in Los Angeles County there are 63 different Medicare Advantage plans, 32 Part D prescription Drug plans, and 33 Medigap plan options for plan year 2021.
If you are trying to decide which type of coverage is appropriate for you, many time it comes down to cost and need. If you are not able to find a Medicare Advantage plan that covers your “Must Have Doctors” then Original Medicare with the Medigap policy may be your only option. Or if you look at your personal finances and you can’t afford the monthly premiums on the Medigap policy then you will need to pick a Medicare Advantage plan that provides the greatest benefit for you.
Working with an independent Medicare Insurance Agency that specializes in all of these plans is a great way to ensure that you consider all the variables before choosing your insurance company. Our team is very familiar with how all of these Medicare plans work and we can research based on your medical and Doctor needs.
Want Medicare Advantage explained in a one-on-one setting? Get help from our Medicare insurance experts today at (562) 735-3553 x1