Understanding Medicare Advantage Plans

Medicare Advantage is referred to as “Medicare Health Plans” in most Medicare books

A Medicare Advantage Plan like an HMO or PPO, is a way to get your Medicare benefits. Unlike “Original Medicare,” in which the government pays for Medicare benefits when you receive them, Medicare Advantage Plans are offered by private companies approved by Medicare, and Medicare pays these companies to cover your Medicare benefits. If you join a Medicare Advantage Plan, the plan will provide all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage. In all types of Medicare Advantage Plans, you are always covered for emergency and urgent care. Medicare Advantage Plans must cover all of the services that Original Medicare covers except hospice care (that's covered by original Medicare).

Medicare Advantage plans are not free. It is important to remember that to get a Medicare Advantage plan, you must continue to pay your Part B premium, in addition any monthly premium the plan may charge you to be enrolled in it.

Medicare Advantage plans replace Medicare Part A & B’s deductibles and coinsurance with their own copays and coinsurance. For example, a routine procedure under Medicare Part B will require you to pay 20% of the approved cost. With a Medicare Advantage plan, you would be responsible for a pre-agreed upon amount: a copay of $50, as an example. All the plans are required to give you a list of some co-pays before you enroll, called a Summary of Benefits, so you can get a general idea of what your out of pocket costs would be before entering into the plan.

Most Medicare Advantage plans include Medicare Part D benefits. In addition to your Part B premium, you usually pay one monthly premium for the medical coverage and prescription drug coverage that the plan provides. Some, but not all types of Advantage plans allow you to select a separate Part D plan. However, with many of them, you are restricted to their drug coverage only, or lack of coverage. Before selecting your plan, you should check on the prescription drug coverage flexibility of the plan you are choosing from a knowledgeable insurance advisor or the insurance company’s plan representative.

Typically, a Medicare Advantage plan has a network of doctors and hospitals. Most plans are usually HMO’s, PPO’s, or Private Fee for Service Plans.

HMO: means that, except in emergencies, you are required to use their network of doctors and hospitals.

PPO: means you can choose doctors and hospitals outside of the network, but will pay higher copays if you do.

Private Fee for Service: allow you to choose any doctor or hospital that agrees to accept the plan’s terms and conditions of payment. Before enrolling in a plan, make sure the doctor you wish to see either is in the network, or agrees to accept the plan.