The popularity of Medicare Advantage plans is growing at a rapid pace. In 2020, more than 36% of all Medicare beneficiaries were enrolled in Medicare Advantage health care plans.
Whether you’re already in a Medicare Advantage plan, you’re curious about them, or you’ve never heard of them, this Medicare Advantage guide is for you.
In this in-depth Medicare Advantage guide, we’ll provide a Medicare Advantage overview that will answer your frequently asked Medicare questions and cover the following topics:
What is Medicare Advantage and who qualifies for it
The different types of Medicare Advantage plans and how they work
The difference between Original Medicare and Medicare Advantage
What Medicare Advantage plans cover
Who should consider getting Medicare Advantage
How much Medicare Advantage costs
Medicare Advantage and special scenarios
Medicare Advantage plan ratings
When to enroll in Medicare Advantage
How to enroll in Medicare Advantage
What Is Medicare Advantage?
Medicare Advantage, also known as Medicare Part C, is an alternative to Original Medicare. The Medicare Advantage program is a way for beneficiaries to access their benefits and rights under Original Medicare, but through a private insurance company instead of the Federal Government.
A Medicare Advantage plan is a contract between a private insurance company and the Medicare program. By law, every Medicare Advantage plan must cover everything covered by Original Medicare (Medicare Part A and Medicare Part B). This means that if you choose to enroll in a Medicare Advantage plan, you can be confident that you’ll receive all the benefits you’re entitled to under Original Medicare.
Who Qualifies For Medicare Advantage?
To qualify for Medicare Advantage, you must be enrolled in Original Medicare Parts A and B. You also must continue to pay your Part B premium in order to keep your Medicare Advantage coverage.
There are no age restrictions for Medicare Advantage plans. If you’re enrolled in Part A and B before age 65 due to a disability or chronic condition, you’re still eligible for Medicare Advantage coverage.
How Do Medicare Advantage Plans Work?
Medicare Advantage health care plans work like the employer-sponsored health insurance plans you may be used to from your previous or current job.
Medicare Advantage plans provide comprehensive coverage, and you usually need to stay in-network to receive care. You’ll typically have some out-of-pocket expenses when you receive services and procedures under your Medicare Advantage policy. These costs typically come in the form of copayments or coinsurance that you’ll pay to your provider when you receive care.
An important point to remember is that all Medicare Advantage plans have an annual out-of-pocket (OOP) maximum that limits the total amount you can spend in any year. But you do not have an OOP with Original Medicare.
What Types Of Medicare Advantage Plans Are Available?
There are 6 types of Medicare Advantage plans, including:
Medicare Advantage HMOs (Health Maintenance Organizations)
Medicare Advantage PPOs (Preferred Provider Organizations)
Medicare Advantage PFFS (Private Fee-For-Service Plans)
Medicare Advantage SNP (Special Needs Plans)
Medicare Advantage HMO-POS (HMO Point-Of-Service Plans)
Medicare Medical Savings Plans (MSPs)
In this Medicare Advantage guide, we’ll focus on Medicare Advantage PPO plans and Medicare Advantage HMO since they’re the most common types of MA plans.
The Difference Between Original Medicare and Medicare Advantage
The primary difference between these programs is that Medicare Advantage is an alternative to Original Medicare. When you join a Medicare Part C plan, you no longer receive your Medicare benefits through Original Medicare.
Medicare Advantage plans are offered and administered by private insurance companies. But these private insurance companies must comply with many rules and regulations set by the Medicare program.
Pros And Cons Of Medicare Advantage Plans vs. Original Medicare
Medicare Part C plans have many advantages when compared to Original Medicare.
The 3 biggest pros of Medicare Advantage plans are:
Annual Out-of-Pocket Maximum spending cap
Availability of prescription drug coverage*
Extra benefits for things not covered by Original Medicare
*Note: Some MA plans are available without prescription drugs.
These additional benefits from Part C make Medicare Advantage a more complete coverage option than Original Medicare.
MA plans can have their drawbacks in comparison to Original Medicare, depending on your healthcare needs.
The 3 biggest pros of Original Medicare are:
#1. You can see any doctor or go to any facility anywhere in the country, as long as they accept Medicare.
#2. There are no networks. Most Medicare Advantage plans have some kind of network restrictions.
#3. You don’t need referrals to see specialists. With some Medicare Advantage health care plans, such as HMOs and Special Needs Plans, you usually need referrals from your primary care physician to visit a specialist.
What Does Medicare Advantage Cover?
Medicare Advantage plans provide coverage that matches Original Medicare Parts A and B. Generally speaking, your Medicare Advantage plan will cover the same service or procedure as Original Medicare. But there is one exception to this rule, which we’ll cover below.
Medicare Advantage plans cover the following services.
Medicare Part A Services
Medicare Part A covers services that take place in healthcare facilities or institutions like:
Inpatient hospital stays
Skilled nursing services (not room and board)
Note: Hospice care is usually not covered by Medicare Advantage plans. Instead, hospice care is covered under Original Medicare, even if you’re enrolled in a Medicare Advantage plan. However, a new test program in 2021 will explore Medicare Advantage plans providing hospice benefits.
Medicare Part B Services
Medicare Part B services and procedures are considered more routine and non-emergency in nature than Part A. Common Medicare Part B services include:
Doctor’s visits, including specialists
Physical and occupational therapy
Lab and diagnostic testing services like blood work and x-rays
Durable medical equipment
Mental health services
Some cancer treatments, including chemotherapy
As mentioned, Medicare Advantage plans cover all of these services with the exception of hospice care.
Medicare Advantage And Prescription Drugs
Most Medicare Advantage plans offer prescription drug coverage. These plans are also known as Medicare Advantage Prescription Drug Plans (MAPDs), and they include Medicare Part D.
Medicare Advantage Extra Benefits
When considering Medicare Advantage pros and cons, it’s essential to take extra benefits that Medicare Advantage could offer to you. Many of these benefits are not provided through Original Medicare.
Medicare Advantage benefits may include:
Fitness programs: SilverSneakers, gym memberships, and fitness trackers.
Vision care: Eye exams, contact lenses, and sometimes eyeglass frames.
Hearing care: Exams and often discounted hearing aids.
Dental coverage: Some plans have basic dental benefits built in, others offer dental coverage for an extra premium.
Transportation: Rides to and from medical appointments.
Meal Deliveries: For qualified people returning home from the hospital or skilled nursing facility
Telemedicine services and virtual healthcare.
Note: Medicare Part C plans have the ability to choose which, if any, extra benefits to offer. These insurance companies may also make changes to their Medicare benefits and offerings each year.
Who Is Medicare Advantage Good For?
You should consider enrolling in Medicare Advantage if:
You want to put a cap on your total out-of-pocket spending under Original Medicare.
You want prescription drug coverage without paying for a separate Part D drug plan.
You need some of the extra benefits (vision, hearing, private home aides) that come with many Medicare Part C plans.
You don’t want to pay for Medicare Supplement (Medigap) plans.
You don’t mind using a network of doctors and facilities.
You don’t mind needing referrals to see specialists.
You don’t mind paying small copays each time you see a doctor.
How Much Does Medicare Advantage Cost?
Medicare Advantage plans have several costs associated with them. Before we dive into each cost, it’s important to remember that you always have to pay your Part B premium in order to have Medicare Advantage.
Now, some Medicare Advantage plans offer a benefit that covers part, or all, of your Part B premium. But check the plan benefits closely to see if this is offered by a specific Medicare Advantage plan.
Beyond this Part B premium, you might face the following Medicare Advantage plan costs:
You might have a monthly premium for your Medicare Advantage plan, but these premiums tend to be low. For example, the average Medicare Advantage premium was $23.63 per month in 2020. However, many Medicare Advantage plans do not have a monthly premium. In 2020, 60% of people enrolled in Medicare Advantage didn’t pay a monthly premium.
Some Medicare Part C plans have an annual deductible, but again, many do not. If your plan does have an annual deductible, this means you’ll have to pay a certain amount before the plan begins paying benefits. Note that there may be separate deductibles for drug coverage and medical benefits.
Beyond premiums and deductibles, the most common expenses you’ll have with Medicare Advantage plans are copayments and coinsurance. These two terms are referred to as “cost-sharing.” This is what you’ll pay out of pocket when you receive covered services. All the amounts you pay during the year count towards your annual out-of-pocket cap.
Examples Of Medicare Advantage Costs
Let’s look at 3 examples of how these Medicare Advantage costs work in a Medicare Advantage HMO plan.
(Note: These costs are not the actual costs for any specific plan, but rather, in the range of costs for plans that you may have access to.)
Scenario 1: Medicare Part B Services
You injure yourself shoveling snow on your property, and you go to the doctor for an examination.
You’ll pay a copay of $20 to see your primary care physician who then refers you to an orthopedic specialist.
Your orthopedic specialist charges you a $35 copay for the office visit and wants you to get x-rays.
You pay a $50 copay for the x-rays. Fortunately, nothing is broken or torn, so your specialist refers you to physical therapy.
You pay a copay of $40 for four physical therapy sessions.
Your total out-of-pocket spending for this injury is $265, spread out over a month-long period. All of these costs count towards your Medicare Advantage out-of-pocket maximum.
Scenario 2: Medicare Part A & B Services
You experience the symptoms of an irregular heartbeat, so you’re admitted to the hospital as an inpatient. You spend two nights in the hospital.
You pay a copay of $300 per day, which amounts to a total of $600.
After you’re released from the hospital, you continue to see a cardiologist, and you pay a $35 copay to see this specialist each time you visit.
Scenario 3: Cancer
You’re diagnosed with a treatable cancer, and you’re given chemotherapy.
The copay for this treatment is 20% of the Medicare-approved cost.
Although 20% amounts to more than $20,000, you hit your annual out-of-pocket maximum, so your costs are capped at $5,900 for the year.
When Can You Enroll In Medicare Advantage?
You can normally enroll in or change your Medicare Advantage coverage during 3 periods of time:
Your Initial Enrollment Period (IEP) when you’re first eligible for Medicare.
The Medicare Annual Enrollment Period (AEP), which runs from October 15 to December 7 each year.
The Medicare Advantage Open Enrollment Period from January 1 to March 31 each year - however, this MA open enrollment is only for those already in a Medicare Advantage plan.
Enrolling In Medicare Advantage For The First Time
If you’re turning 65, you can enroll in Medicare Advantage during your Initial Enrollment Period (IEP). Your IEP lasts for 7 months, which begins 3 months before your 65th birthday, includes that birthday month, and ends 3 months after you turn 65.
If you’re under 65, your first chance to enroll in Medicare Advantage starts:
After your 24th month of receiving Social Security disability benefits, or
At any age if you have Amyotrophic Lateral Sclerosis (ALS), also called Lou Gherig’s Disease, or if you have End-Stage Renal Disease (ESRD).
Changing Your Medicare Coverage During AEP
The Medicare Open Enrollment Period, also called the Medicare Annual Enrollment Period or Annual Election Period, is a good time to decide whether Medicare Advantage or Original Medicare is right for you.
Also keep in mind that Medicare Advantage plan benefits can change annually. So if you have a MA plan, you should check to make sure the plan still meets your needs.
Here are the actions you can take during AEP:
Change from Original Medicare to a Medicare Advantage plan.
Change from one Medicare Advantage plan to another.
Disenroll from your Medicare Advantage plan and go back to Original Medicare.
Change from one prescription drug plan (Medicare Part D) to another.
Enroll in a prescription drug plan.
Cancel your prescription drug coverage.
If you enroll in, or switch your Medicare Advantage insurance during AEP, your new coverage will be effective on January 1st of the following year.
You may also be able to enroll in a Medicare Supplement plan if you drop your Medicare Advantage coverage during AEP.
The Medicare Advantage Open Enrollment Period
If you’re enrolled in a Medicare Advantage plan, you have access to another enrollment period beyond AEP: The Medicare Advantage Open Enrollment Period (MA-OEP).
MA-OEP runs from January 1 to March 31 of each year. During the MA-OEP, you can:
Change from one Medicare Advantage plan to another.
Drop Medicare Advantage, and return to Original Medicare.
Add a Prescription Drug Plan if you return to Original Medicare.
It’s important to keep in mind that the MA-OEP is only for people who already have a Medicare Advantage plan. If you change plans during the MA-OEP, your new coverage will be effective on the first day of the month after you enroll.
Medicare Advantage & ESRD Coverage
For all years before 2021, there was an exclusion for people with permanent kidney failure, known as End-Stage Renal Disease (ESRD). ESRD patients could not get new Medicare Advantage coverage.
However, beginning January 1, 2021, ESRD patients will be able to enroll in or switch Medicare Advantage plans. Now the eligibility for Medicare Advantage and Original Medicare will be perfectly aligned.
Medicare Advantage And Other Special Scenarios
We mentioned earlier that Special Needs Plans (SNPs) are a type of Medicare Advantage insurance. Let’s take a look at some common types of SNPs, and how Medicare Advantage health plans are also helping people to get access to care and benefits during the coronavirus pandemic.
Medicare Advantage And Chronic Conditions
There are Medicare Advantage plan options for people with chronic conditions like diabetes and heart disease. These plans are known as Chronic Special Needs Plans (Medicare C-SNPs), and the benefits are tailored to help you treat and manage your chronic condition.
These health plans often provide you with a care coordinator to make sure your needs are being met. These Special Needs Plans have Special Enrollment Periods (often called SEPs), so if you qualify for a C-SNP, you can enroll in it at any time. You won’t have to wait for an annual enrollment window.
Medicare Advantage And Medicaid
Another kind of Special Needs Plan exists for “Dual Eligibles” – people who are eligible for both Medicare and Medicaid. These plans, called Dual Eligible Special Needs Plans (D-SNPs), have cost-sharing that conforms to the Medicaid program, which means that most costs are $0.
D-SNPs incorporate various prescription drug discount programs, depending on your income level - so you’ll save money on your prescriptions if you qualify. D-SNP plans also have more favorable enrollment windows, which allow you to access the benefits once you become eligible for Medicaid or extra help and at certain times during the year without waiting for an annual enrollment window.
Medicare Advantage And COVID-19
Medicare provides Coronavirus coverage to help people combat the virus, which includes:
No-cost lab testing.
All medically-necessary services and procedures, including hospitalizations and doctor’s visits.
Coronavirus vaccine coverage, when one becomes available.
Many Medicare Advantage health plans are waiving cost-sharing for these services. In this case, you wouldn’t pay a copayment or coinsurance for seeing a doctor or going to the hospital if you have COVID-19.
Medicare has also approved an expanded role for telehealth and virtual doctor’s visits. And many Medicare Advantage health care plans offer these no-contact services with no out-of-pocket cost to you.
Medicare Advantage Plan Ratings
Every established Medicare Advantage plan is given a Medicare Start Rating by the Centers for Medicare & Medicaid Services (CMS).
Star ratings range from 1 to 5, with 5 stars being the highest. Here’s a breakdown of what each rating means:
5-star rating: Excellent
4-star rating: Above Average
3-star rating: Average
2-star rating: Below Average
1-star rating: Poor
Medicare Advantage plans are rated on several different metrics and are given an overall rating. This Medicare star ratings system is designed to help you get a feel for the level of quality and satisfaction a MA plan offers.
Star ratings also give you an idea of how well a plan treats its members. Plans are rated on how quickly it responds to appeals and complaints and how they cover health screenings and preventative services. Plans are also rated for both medical benefits and prescription drug benefits, if the plan has drug coverage.
How To Enroll In A Medicare Advantage Plan
If you want to enroll in a Medicare Advantage plan, you’ll want to consider 3 things before joining:
Make sure you find a plan that’s available in your area. Most Medicare Advantage plans are restricted to specific counties or states.
Make sure your current doctors and medications are covered. This is especially important if you’re looking at a Medicare Advantage HMO plan. You’ll have to use the doctors that are in-network, and you’ll only get coverage for medications that are on the plan formulary. So make sure you investigate these before enrolling.
Pay attention to star ratings. This can help you compare the overall quality among different plans. But keep in mind that new plans are not given star ratings until enough data has been collected for CMS to calculate a rating.
Once you’ve found a plan, you have a few options to enroll, including:
Online, by phone, or paper enrollment directly with the insurance company.
Working with a licensed health insurance agent who can help you find, compare, and enroll in a Medicare Advantage plan of your choice.
Medicare Advantage Guide Conclusion
Medicare Advantage plans can be a great way to manage your out-of-pocket spending while enjoying extra benefits we covered, if you qualify. And they can offer some compelling advantages over Original Medicare, depending on your healthcare needs.
So if you'd like to learn more about Medicare Advantage plans in your area, call 800-620-4519 to reach a licensed insurance agent who may be able to guide you to the right plan for your needs. You can also try online Medicare plan comparison tool.