What is Medicare Advantage?

Medicare benefits come in two forms: Original Medicare and Medicare Advantage.

With Original Medicare, Medicare benefits are paid by the federal government. This is different than Medicare Advantage plans, which are also referred to as “Part C” or “MA Plans”. Instead of being offered by the government, these plans are offered by private companies that Medicare pays to cover Medicare-provided benefits.

Medicare.gov, the official U.S. Government site for Medicare, explains that there is generally at least some cost to participants for each service provided under Original Medicare, between deductibles and copayments, with no yearly limit per person for out-of-pocket medical expenses.

However, Medicare Advantage plans do limit out-of-pocket expenses, though these limits are generally high, though some plans may offer lower amounts.

Although Medicare Advantage plans provide both Part A (hospital) and Part B (medical) coverage to participants, Original Medicare still covers services related to hospice care and certain new Medicare benefits and clinical research studies for these individuals.

Regardless of which plan is chosen, Original Medicare or Medicare Advantage, all Medicare recipients are covered in emergency medical situations.

It’s important to understand which type of drug coverage you need, as well as which plan offers the best benefits regarding that particular prescription.

While most Medicare Advantage plans offer some type of drug coverage, participants also have the option of joining separate prescription drug coverage plans (known as Part D) if their plan does not provide these types of benefits. This is often the case with MSA and some PFFS plans.

That being said, it’s important to note that Medicare.gov does advise that if a participant enrolls in a Medicare Advantage HMO or PPO and joins a separate Medicare Prescription Drug Plan, he or she will be disenrolled in Medicare Advantage and returned to Original Medicare.

For this reason, it’s important to understand which type of drug coverage you need, as well as which plan (Original Medicare or Medicare Advantage) offers the best benefits regarding that particular prescription.

Choosing a Medicare Advantage plan has advantages and disadvantages.

Pros of Medicare Advantage

As for pros, in addition to providing the same services as Original Medicare, many Medicare Advantage plans offer extra coverage options for vision, hearing, and dental expenses. This is beneficial for participants who would like to purchase one or more of these additional insurances to help offset healthcare costs in other areas.

Another pro of Medicare Advantage is that participants can select the plan best suited for their physical condition and needs. For instance, if a chronic medical condition exists, a Special Needs Plan can be selected under Medicare Advantage. However, if the person has relatively few medical needs or is financially able to cover a majority of his or her medical needs and just wants protection in case something major happens, an MSA may make the most sense.

The fact that Medicare Advantage does have an out-of-pocket maximum whereas Original Medicare does not can be more appealing as well.

Cons of Medicare Advantage

One potential con of choosing this type of plan is that each provider can set its out-of-pocket costs and rules regarding healthcare providers and coverage limitations, making it important to research them all closely before deciding which one is for you.

Another con is that an insurance provider may decide to not renew its contract with Medicare in later years. This leaves the participant in a situation where a new plan must be chosen, potentially forcing him or her to change healthcare providers if the new plan isn’t accepted by the current healthcare professionals.

Medicare Advantage also has some limitations as to who can enroll. For instance, individuals with end-stage renal disease are generally not allowed to enroll in a Medicare Advantage plan.

Finally, when Medicare recipients choose Original Medicare, they can also purchase a Medigap policy, which is a supplemental policy designed to help pay for medical expenses Medicare doesn’t cover, such as copayments and deductibles. However, Medicare Advantage recipients do not have this same option as Medigap policies cannot be used in conjunction with these types of plans.

The DHHS indicates that “it’s illegal for anyone to sell you a Medigap policy unless you’re disenrolling from your Medicare Advantage Plan to go back to Original Medicare.” However, before canceling your Medigap policy, DHHS suggests that you speak with your State Health Insurance Assistance Program and the current insurance company because if you cancel your Medigap policy, you may not be able to reinstate it.

However, because of the variety of plans available under Medicare Advantage, your costs could be higher or lower and are largely dependent upon:

• Plan premium costs
• Plan deductibles
• Plan benefits and extras
• Copayment amounts
• Choosing healthcare providers who accept the plan

Additionally, these costs can change annually, depending on whether the insurance provider increases their premiums or modifies benefits.