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When you enter the Medicare system, you soon discover that there are gaps in Coverage. There are two major ways to solve these gaps. You can purchase a Medicare Supplement Plan or a Medicare Advantage plan.

Much of our site has been dedicated to explaining the wide variety of Medicare Supplement plans, but there is another option: the Medicare Advantage plan.

This article is dedicated to explaining the pros and cons of Medicare Advantage.

Basics of the Medicare Advantage Plan

To really understand Medicare Advantage, you need to have some basics of Medicare. Medicare is made up of 4 major parts. Part A, B, C, & D. Part A of Medicare covers hospitalization. Part B covers primary care such as doctors and specialists. Part D is prescription drug. Part C is the Medicare Advantage plan.

Medicare Advantage allows you as a Medicare recipient to receive your health insurance benefits through a plan administered by a private commercial insurance company, rather than the government.

One way to think about Medicare Advantage is that it is an “all in one” plan, bundling Part A, B, and sometimes D into one policy.

Currently today, 33% of all Medicare Participants participate in a Medicare Advantage plan.

Within the plan itself there are a variety of options. The most common types of plans are:

Health Maintenance Organizations (HMOs)
Preferred Provider Organizations (PPOs)
Private Fee-For-Service (PFFS)

You may also see options for:

Special Needs Plans (SNPs)
Provider Sponsored Organizations (PSOs)
Medical Savings Accounts (MSAs)

If enrolled in a Medicare Advantage plan, you should still receive the same benefits offered by Original Medicare. Your plan may apply different rule, costs, and restriction on how care is delivered. Make sure you understand your policy and the changes that apply.

Some Medicare Advantage plans will offer benefits that Medicare does not cover such as dental and vision. Many plans will also bundle in Medicare D, the prescription drug coverage.

Medicare Advantage Compared to Original Medicare

A simple way to understand Medicare Advantage is to contrast it with original Medicare. Here’s a side by side comparison of Original Medicare and Medicare Advantage

Original Medicare:

  • Includes Part A and Part B. Drug Coverage must be purchased separately under Part D.
  • Out-of-Pocket costs such as your 20% coinsurance can only be covered through a Medicare Supplement plan
  • You can use any doctor or hospital in the US that takes Medicare
  • You can buy supplement coverage to make up for coverage gaps
  • Does not cover you outside of the US

Medicare Advantage:

  • Includes Part A, B, and sometimes D.
  • Out-of-Pocket costs are lower than Original Medicare
  • You will need to use the doctors in the plans network
  • Many plan offer extra benefits such as vision, hearing, and dental
  • You can’t buy or use separate supplemental coverage
  • Does not cover you outside of the US

Advantages and Disadvantages of Medicare Advantage Plans

Let’s talk about the various pros and cons and potential pitfalls of Medicare Advantage Plans.

Before getting into specifics, remember that individual Medicare Advantage plans may have different:

  • Networks of providers
  • Coverage rules
  • Premiums (in addition to the Part B premium)
  • Cost-sharing for covered services
  • Company Considerations. Even plans of the same type may have different rules depending on the individual insurance carrier.
Advantages:

Medicare Advantage Plans must offer at least the same level of coverage as Medicare Part A and B. Many Plans offer added benefits as well.

Medicare Advantage plans may cost you less. While you may pay more in premium for an Advantage Plan, your cost sharing may be less than Original Medicare. An Advantage policy also limits out-of-pocket expense for Part A & B services. In 2020, the max out-of-pocket costs for HMO plans is $6,700. While plans can’t charge higher copayments than Original Medicare for specific services, they can charge higher cost-sharing for other services.

Medicare Advantage plans can coordinate your health care among your medical providers. They can do this because many of the plans have networks of contracted providers such as their HMO option.

Medicare Advantage bundles all your coverage needs in one package. Plans combine medical and prescription drug coverage as well as offering such benefits as vision, dental, and hearing.

Disadvantages:

Medicare Advantage policies may limit your choice of health care providers. Inside of Original Medicare, there are no restrictions on which providers you can use as long as they accept Medicare.

Medicare Advantage may require doctor’s referrals and authorization for some services and procedures.

Medicare Advantage plans have specific service areas. These areas are regional networks, and you must reside in the service area at least 6 moths of the year. If you divide your time between regions, this could be problematic. Some rural areas may have limited availability for these plans.

Medicare Advantage plans limit coverage options. Under the MA plan you are locked into their system of providers and rules.

How to Determine Which is Best for Your Needs

This is a crucial question to answer. Think about your medical needs and your costs. Consider how much flexibility you need. Understanding network availability in your specific geographical area is important.

You can join an MA Plan if:

You are Medicare Parts A and B subscriber
You live in the plan’s service area

Many plans will include prescription drug coverage (Part D). However some plans such as an MSA or PFFS plan will not have drug coverage. In these cases, you can enroll in a stand-alone Part D plan to get prescription drug coverage.

Also, if you have health coverage from a union or employer when you become eligible for Medicare, you may automatically enrolled in an Advantage plan that the company sponsors. You do have the choice to stay with the automatic plan or switch to Original Medicare or enroll in a different plan.

Make sure you understand your company’s rules. They could reduce your health benefits if you switch to a plan that is not sponsored by them.

Other Options for Medicare Enrollees

If you are unsure about Medicare Advantage, you may wonder if there are other options. The other major option is to opt into Original Medicare and pair it with a Medicare Supplement policy along with a Part D plan.

This can be a more flexible option for many people because you can tailor your coverage to your exact needs and budgets.

FAQs

This article gave you a brief primer on Medicare Advantage and how it works, but it may not answer all the questions you have. Here are a list of the most common questions we receive around Medicare Advantage plans.

What is the highest rated Medicare Advantage plan?

Recently US News and World Report complied the list of top companies for Medicare Advantage per state. This link will go through the methodology they used to determine rankings. Depending on your state, you will find companies such as Cigna, Kaiser Permanente, Careplus, and UnitedHealthcare, etc.

Is Original Medicare better than an Advantage Plan?

Much of this question was answered above. There are advantages and disadvantages to each option. If you choose to stick with Original Medicare, there are other options to fill in coverage gaps and receive extra benefits. The Medigap policy is a good solution to find those extra benefits if you do not want to choose a Medicare Advantage plan.

Are Medicare Advantage plans free?

In some cases Medicare Advantage plans can be free depending on your qualifications. While you may not pay a premium for these plans if you qualify, this doesn’t mean you won’t have any healthcare costs. You may still pay deductibles and copays for covered services and you will still have to pay the Part B premium.

Is it better to have Medicare Advantage or Medigap?

There are advantages and disadvantages to both options. However, you can not have both. If you need more flexibility with your health coverage and your network options are limited a Medigap policy may be the best solution. To fully answer this question, it can help to speak with a Medicare specialist. A good agent can help assess your needs and find the best solution for you health care needs and your wallet.

How Much Does an Advantage Plan Cost?

This can vary depending on your geography and financial situation. In some cases the plan may be free, but there are still hidden costs you should consider such as copays and deductibles. Also you will have to pay the Medicare Part B premiums.

Are Medicare Advantage plans going away?

Because this is a government regulated and funded program, there are always rumors that these plans are disappearing. Especially in an election year, where there is uncertainty around government policy this is a concern. The simple answer to this question is NO. Medicare is not disappearing and neither are Advantage plans. However, because they are based on regional healthcare setups, they may be restricted or no longer available in your area.

If you find yourself in this situation, you can still get high quality and flexible coverage with other options such as the Medigap policies.

Is a Medicare Advantage plan worth it?

This depends on your needs. As you have seen there are many advantages to this plan including the bundle nature of coverage in one place. Like anything there are pros and cons, and you should discuss and weigh your medical needs to what is available to you.

Can I get a Medigap plan if I have Medicare Advantage?

No, the Federal government does not allow you to have both policies. You should weigh the differences between the plans to see which one is more advantageous to you.

Does Medicare Advantage come with prescription drug coverage?

Yes most will bundle Part D as part of the plan. However, some will not include it, so you will need to purchase a separate Part D policy. This is not a problem. If you determine Medicare Advantage is the right fit for you but the plan you need does not cover Part D, you can easily find that policy.

Is Medicare Advantage cheaper than Original Medicare?

Because the federal government subsidizes many of these plans, they can be cheaper than Original Medicare. However, there are other costs they might make the out of pocket costs more expensive.

How do I enroll in a Medicare Advantage plan?

This is fairly simple to do. If you have ever purchased any insurance product, it is as simple as filling out an application and enrolling in the program. Because there are multiple companies offering this plan, make sure you consider all your options and pick the plan that is best for you. It can help to contact an agent that offers all the options. We can help you with this legwork. We have contacted with multiple companies throughout the US and can provide you with quotes on a wide variety of plans, so you can make the best possible decision.

Summary

Hopefully, you feel more confident about what Medicare Advantages are along with all the pros and cons of the product. The good things about Medicare products in general is that you have a multitude of options. Don’t feel trapped by you choices. Contact one of your experienced agent to help you sort out which plan is best for you.

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