Medicare Advantage (MA) plans are private government regulated insurance plans that replace Medicare Parts A and B and usually have a drug plan as part of the package.
They can be purchased through an agent, broker, or insurance company but can also be purchased via the Medicare.gov database just like a Medicare Part D drug plan. MA plans receive the beneficiary’s Part B premium and may also charge extra premiums for the health care portion of the MA, the drug portion of the MA or both.
There are three basic types of Medicare Advantage (MA) plans: Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO) and Private Fee for Service (PFFS). Most of these will have a drug plan incorporated with them.
There are some MA’s that have no drug plans attached. The only MA that can have a stand-alone Medicare Part D drug plan added to it is the PFFS.
• Health Maintenance Organizations (HMO) – The only health care providers that you may use, other than in emergency, are in the HMO network. If you go outside of network, you can end up paying the whole bill yourself. You will generally need a referral to a specialist.
• Preferred Provider Organizations (PPO) – You are encouraged to use only network providers. If you go outside of network, you will pay more. Regional PPO’s tend to have wider networks and be more expensive.
• Private Fee for Service (PFFS) – You can use any health care provider that will accept the plan’s terms and conditions.
In all three cases, it is important to know which health care providers will accept the plan. In the case of an HMO or PPO, the network is a formalized group of providers, meaning that a provider cannot simply join a network at anytime.
It is not prudent to use the Medicare.gov website to determine which providers are in a network. You should check with your providers themselves.
It is possible that the network may not reflect the most recent additions and departures. Also providers may be able to add important information, such as their experiences with the plan.
Medicare Supplement insurance does not work with MA plans. With an MA, beneficiaries will have co-pays and coinsurance just as though they had Medicare Parts A and B without a Medicare Supplement.
If you have a Medicare Supplement plan, you can sign up for an MA for a year. If you decide after one year that you do not want to keep the MA, you can usually go back to the Medicare Supplement. If you keep the MA for more than a year, you may be denied a Medicare Supplement – even your old plan – or underwritten. This trial period is only once a lifetime.
MA’s have several good points. They cap out-of-pocket expenses whereas there is no cap on Medicare Part A and Part B expenses. This lack of cap is why you might buy a Medicare Supplement.
MA’s are available to under-65 disabled Medicare beneficiaries even though Medicare Supplement plans are not except at a very high price.
MA’s usually break the Medicare Part A hospital deductible down into several payments so that a beneficiary may pay less for a short hospital stay. Example: The Medicare Part A deductible is $1,316 for a benefit period whether a patient stays one day or 60.
An MA may have a daily payment of $295 or $325 for several days. Thus if a patient is in the hospital only one day, he may owe only $295 or $325 with an MA but would owe $1,316 with only Medicare Part A and B with no Supplement.
MA’s often offer dental and vision with a small extra premium so that you can get this coverage cheaper than a stand-alone dental or vision plan. MA’s often offer drug plans for lower premiums than the premium for a comparable Part D drug plan.
MA’s have some disadvantages as well. First of all, their networks can restrict the healthcare providers that you can use without penalty. Which providers are in network can change even during the year.
There are only two insurance companies that offer MA’s in the New River Valley, lessening your choices. Because drug plans usually accompany the MA, the lack of choice can affect the quality of your drug coverage as well.
It is tempting to sign up for an MA when you first turn 65 because it appears cheaper than a Medicare Supplement. The premium is less and you face the co-pays and coinsurance over the year. If you are healthy, this can be a bargain; however, if your health deteriorates, an MA out-of-pocket cap can be higher than you would be paying for a Medicare Supplement by thousands of dollars.
It is a good idea to have an understanding of how MA’s and the rest of Medicare compare before signing up for an MA.
Anyone needing help in signing up for Medicare or having questions regarding any aspect of Medicare can receive personalized assistance from the New River Valley Agency on Aging at 980-7720. The Virginia Insurance Counseling and Assistance Program (VICAP) at the Agency can help you find answers to specific Medicare questions.
Deena Flinchum is a retired IT professional who has lived in the New River Valley since 2002. She serves on the board of the NRV Agency on Aging and as an RSVP volunteer. She also serves the Agency on Aging as an insurance counselor.