Medicare Advantage plans (sometimes called Medicare Part C are offered by private insurance companies as an alternative to traditional Medicare. They offer the same servies and coverage as traditional Medicare but may have slightly different (usually lower) costs and out-of-pocket expenses. Depending upon the plan, there may or may not be an additional premium to be paid. Access may also be more restricted i.e. you may not be able to see all providers under a Medicare Advantage plan that you can under Medicare. First-time enrollees are automatically enrolled in traditional Medicare but may choose to switch to a Medicare Advantage plan at the time of enrollment or annually after that. As of 2013, roughly 1 in 4 seniors is enrolled in a Medicare Advantage plan.
Medicare covers Parts A (hospital coverage) and B (medical/physician coverage). Users must pay extra for Part D (prescription coverage).
Medicare Advantage is legally required to cover everything covered by traditional Medicare, but it may also offer other benefits. These plans typically include prescription drug coverage, and also cover emergency room and urgent care costs. Other benefits may include vision, dental, hearing, preventative care, and health and wellness benefits such as gym membership. However, these vary between plans. Medical history cannot be a barrier to enrollment in Medicare Advantage plans.
Medicare members pay standards rates for services, regardless of where they live. While Medicare Part A (hospitalization coverage) is usually covered for free, Part B (outpatient medical) costs $104.90 per month, or more if the individual’s annual income is more than $82,000. Benefits kick in after a deductible of $140 per year. In addition to the premium and deductible, there is a coinsurance of 20% i.e. members must pay 20% of medical costs for all services covered by Parts A and B, such as hospital and doctor visits. Home health care services and hospice care are covered for free. Part D, which covers prescription costs, varies in cost from plan to plan, but according to the federal government, the average cost in 2012 is $38 per month.
Medicare Advantage members usually pay a monthly premium, along with the costs associated with traditional Medicare. This can be less than the cost of traditional Medicare plus Part D plus Medigap, but varies from plan-to-plan. Medicare Advantage Plans have set co-payments with doctors, which are known in advance, making it easier to budget for doctor visits. However, they may have higher copayments for expensive elements such as hospitalization and chemotherapy.
edit Out of pocket expenses
For Part A and Part B of Medicare, members must pay 20% of costs out-of-pocket. For inpatient hospital visits, members must pay a $1,184 deductible for the first 60 days, and then $296 coinsurance per day until day 90. After day 90, members can have another 60 days at $578 per day in their lifetimes, after which they must pay all costs. The Part B deductible is $140 per year. Those who have Part D (prescription coverage) must also pay an average deductable of $325. After the deductible has been paid, members may either have a co-pay program, where they pay a flat fee for each drug, or co-insurance program, where they pay a percentage of the cost. However, members may face the “doughnut hole”: after the total cost of drugs exceeds $2,970, members must pay 47.5% of the cost of brand-name drugs and 79% of the cost of generic drugs. Once the cost of drugs has exceeded $4750, Medicare kicks in again, with 95% of drug costs covered.
Under Medicare Advantage, tests and procedures must also be deemed necessary by the private insurance company, rather than simply the physician, or else the expenses must be paid out of pocket. Just as monthly premiums vary between Medicare Advantage plans, the deductibles requires and out-of-pocket costs also vary, so be sure to check each individual plan, and see exactly which drugs and procedures it covers and how much they will cost you out-of-pocket. However, they cannot charge more than original Medicare for services such as chemotherapy, dialysis and nursing facility care.
edit Access to doctors
Those on traditional Medicare can access any Medicare-approved doctor or hospital, of which there are many.
Medicare Advantage users are limited to a network of specific providers. Some Medicare Advantage plans provide only limited coverage if the user travels out of state.
edit Pros and Cons
Medicare is more accessible than Medicare Advantage, as a wider range of doctors and hospitals accept it, and tests and procedures are covered if deemed necessary by a doctor. It includes both physical and mental health and hospital stays. However, it can be more expensive, as each part must be paid for separately, and many users find themselves falling into the “doughnut hole” of prescription coverage, where out-of-pocket costs are high.
Medicare Advantage plans are required to provide the same coverage as traditional Medicare, and may work out cheaper than paying for Part A, B, D and Medigap separately, and can include a range of benefits not found in traditional Medicare, such as emergency care cover and preventative care. However, they vary in their coverage of different treatments and conditions, so those with specific illnesses should investigate them carefully. They also only provide limited coverage if a user travels out of state or changes medical provider, which can be problematic for those who plan to travel a lot. Finally, all tests and procedures must be deemed necessary by the insurance company, rather than the physician, to be covered. This can slow down payment and leave individuals with higher out-of-pocket costs if the insurer decides that a treatment is unnecessary.
- Medicare Plan Finder (Medicare.gov)
- Decide how to get Medicare (Medicare.gov)
- Medicare Advantage Fact Sheet (Kaiser Family Foundation)
- Medicare Advantage 2013 Spotlight: Plan Availability and Premiums
- Choosing a Medicare Plan (AARP.org)
- Medicare Costs at a Glance (Medicare.gov)
- Medicare Advantage plans are often the better choice for people with disabilities