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Medicare Advantage Plan - Understanding Medicare Part C

Medicare HMO and PPO Coverage and Options

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Updated August 17, 2013

Medicare Advantage Plan - Understanding Medicare Part C

Understanding Your Medicare Advantage Plan

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A Medicare Advantage Plan is offered by private health insurance companies that are approved by Medicare and have a contract to provide you with Medicare benefits.

What Does a Medicare Advantage Plan Cover?

If you join a Medicare Advantage Plan, the plan must provide all of your Part A (Hospital Insurance) and Part B (Medical Insurance) benefits, including emergency and urgent care. The only major benefit not covered by these plans is hospice care – this benefit is covered by Original Medicare even if you choose a Medicare Advantage Plan.

Many Medicare Advantage Plans offer extra coverage, such as vision, hearing, dental, and general checkups and other health and wellness programs. Most advantage plans include Medicare prescription drug coverage (Medicare Part D).

Most Medicare Advantage Plans are managed care plans, usually a health maintenance organization (HMO) or a preferred provider organization (PPO). These plans may require that you choose a primary care physician (PCP), get a referral from your PCP to see a specialist, and use only doctors, hospitals, and other medical facilities and services that are part of that health plan’s provider network.

Some private health insurance companies offer a Medicare Advantage Plan known as a Private Fee-for-Service (PFFS) Plan that may allow you to see any doctor or use any Medicare-approved hospital. However, unlike Original Medicare, you may have a copayment for doctor visits and not all providers may be willing to treat you. However, in a PFFS Plan you do not have to choose a PCP and you do not need a referral to see a specialist.

What Does a Medicare Advantage Plan Cost?

Each month, Medicare pays your advantage plan a fixed amount of money to provide your care. The advantage plan is then responsible for paying your doctor, hospital, and other providers of care.

Although your advantage plan must follow Medicare’s rules, it can charge you a premium and additional out-of-pocket expenses, such as a copayment for a doctor visit, coinsurance for durable medical equipment (such as a wheelchair), and an annual deductible for prescription medications.

You also are responsible for your Medicare Part B monthly premium, which is taken out of your social security check.

For example: George C. lives in Massachusetts and has a Medicare Advantage Plan through Fallon Community Health, one of the highest-rated health plans in the country. He has an HMO plan with drug coverage. His monthly premium cost for the plan is $208.40 (the Medicare Part B premium of $96.40 plus $112 charged by Fallon). Also, his out-of-pocket expenses include a $15 copay for each PCP visit, $20 for each specialist visit, 10% coinsurance for durable medical equipment, and an annual deductible of $310 for prescription medications.

How Do I Join a Medicare Advantage Plan?

Generally, you can join a Medicare Advantage Plan if you have Medicare Part A and Part B and you live in an area where there is an advantage plan that accepts new members. Some plans only cover certain counties within a state and you must live in one of those counties where the plan is offered.

Some Medicare Advantage Plans hold local seminars to introduce their plans and you can get and complete a paper application at that time. You also can enroll by calling the plan, visiting the plan’s website, or on www.medicare.gov. The Medicare site also lets you compare plans in your area. You also can join by calling Medicare at 800-633-4227.

If you are switching to a different advantage plan, all you have to do is join the new plan and you will automatically be disenrolled from your old plan. You will not have any lapse in your coverage.

Medicare limits when you can join, switch, or drop a Medicare Advantage Plan. You can join a plan when you first become eligible for Medicare. This is anytime beginning three months before the month you turn 65 and ends three months after the month you turned 65.

For example, if you turn 65 on April 28th, your eligibility period starts on January 1st and ends on July 30th.

If you are disabled and have Social Security Disability Insurance, you can join an advantage plan three months before to three months after your 25th month of disability.

You also can switch or drop your advantage during an enrollment period between November 15 and December 31 of each year.

For more details on Medicare Advantage Plan enrollment, visit the Medicare website.

What Else Do I Need to Know About a Medicare Advantage Plan?

It’s important that you understand the differences between Original Medicare and Medicare Advantage Plans. Some things to remember about advantage plans are:

  • You must follow the rules! For example, if you are in an advantage plan HMO, you must choose a PCP and only use network services.
  • You can join an advantage plan even if you have one or more pre-existing conditions. There is no waiting period.
  • If your advantage plan decides to no longer participate in Medicare, you can join another plan or return to Original Medicare.
  • If your advantage plan does not include prescription drug coverage, you can join a Medicare Part D plan in your state. However, according to Medicare: “If you are in a Medicare Advantage Plan that includes prescription drug coverage and you join a Medicare Prescription Drug Plan, you will be disenrolled from your Medicare Advantage Plan and returned to Original Medicare.”
  • As long as you are enrolled in a Medicare advantage Plan, you do not need to buy a Medicare Supplement Insurance policy (Medigap). In fact, it is illegal for anyone to sell you a Medigap policy if you are in an advantage plan. The benefits offered by a Medigap policy are covered by your advantage plan and the supplement does not pay for your plan's deductibles, copayments, or coinsurance.

Medicare Advantage Plans and Health Reform

Medicare Advantage plans cost the federal government more than traditional Medicare. Beginning in 2012, Medicare will start to decrease the subsidies to these plans.

If you are enrolled in a Medicare Advantage plan, you may have to pay a higher premium or deal with reduced benefits. However, these plans cannot reduce any of the benefits that you would normally receive from traditional Medicare. For more details read: Medicare and Health Reform.

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