10 Things to Know About Medicare Advantage Plans

checkmark Fact checked Reviewed by: Leron Moore, Medicare consultant - Published: May 31, 2021

 

It is important to have a good working knowledge of Medicare Advantage plans so you can make an informed choice about how you want to receive your Medicare insurance and benefits. Medicare Advantage (MA) plans, also referred to as Part C, are an alternative to Original Medicare Parts A (hospital insurance), B (medical insurance), and usually D (drug coverage). MA plans bundle these parts together so you receive your healthcare benefits under one plan.

What you should know

  • 1 You must be enrolled in Medicare Parts A and B in order to join a Medicare Advantage plan, which is an alternate way for you to receive your Medicare benefits.
  • 2 Medicare Advantage plans are administered by private insurance companies that contract with the federal government. MA plans must comply with federal rules, regulations and cost limits, but can choose how you receive your benefits.
  • 3 You can change your mind about your MA plan if it is not meeting your needs. There are specific enrollment periods during the year when you can make a switch.
  • 4 Types and costs of Medicare Advantage plans vary depending on where you live. Enrollment in MA is continuing to grow as private insurers offer more plans with extra benefits across the country.

MA plans are offered by private insurance companies that contract with Medicare to provide health insurance coverage to Medicare beneficiaries. Medicare’s initial goals in contracting with these companies were to offer beneficiaries a choice of health plans beyond fee-for-service Original Medicare, and to achieve efficiencies and cost savings by having these plans administered and managed in the private sector. Over the past decades, Medicare’s payment policies to private plans have shifted to focus on expanded access to more plans and extra benefits.

1) What Medicare Advantage plans cover

  • Medicare Advantage (MA) plans are required to cover the same benefits as Original Medicare, which are medical services and supplies in hospitals, doctors’ offices, and other health care settings.
  • In addition, MA plans offer some coverage for things like vision, hearing, dental, and prescription medications.
  • MA plans can choose to cover even more benefits, such as help with transportation to doctor visits, over-the-counter drugs, discounts on gym memberships, and other services that promote overall health and wellness.
  • MA plans can customize their packages to provide benefits to certain enrollees who have specific conditions or chronic illnesses.

In order to more fully understand what your MA plan offers, you can access the plan’s Evidence of Coverage (EOC) which provides details about what the plan covers, how much you pay, and more. For instance, you may be researching a plan that has “some coverage” for dental. The EOC will provide you with more specifics about your dental benefit costs in and out of network.

2) Who runs and regulates Medicare Advantage plans

The federal government establishes the rules and regulations that govern Medicare Advantage plans. Medicare approves and contracts with private insurance companies to administer MA plans. Medicare then pays these MA plans monthly capitated payments to provide all Medicare-covered services to their beneficiaries.

Each MA plan can set its own rules about how you receive services; for instance, whether you need a referral to see a specialist and which providers and pharmacies are available to you. The plan can change these rules every year and must provide you with an Annual Notice of Change (ANOC) each fall that includes any changes in coverage, costs, or service area that will be effective in January.  

3) How much Medicare Advantage plans cost

Costs for Medicare Advantage plans vary depending on the type of plan you choose. Many plans have a $0 or low monthly premium, but you will still typically have to pay all or part of your Part B premium ($148.50 per month in 2021). Most plans have deductibles and varying copays for primary doctors, specialists, medications, and other services.

All plans must adhere to an out-of-pocket maximum; that is, once you pay deductibles, copays, and coinsurance up to a certain amount in a year, your plan will pay for any other care and services you need that are offered by that plan.

The federal government sets these maximum limits each year for in network and out of network out-of-pocket expenses. For 2021, the limits are: $7,500 for in network and $11,300 for in and out of network combined.

Plans can set their out-of-pocket maximum amounts lower if they choose. According to the Kaiser Family Foundation, the average out-of-pocket limit for in network services in 2020 for MA enrollees was $4,925, and the average for out of network services was $8,828.

You may qualify to get help paying for your Medicare premiums through a Medicare Savings Program, depending on your income and resources.

4) How to figure your out-of-pocket costs for Medicare Advantage plans

Out-of-pocket costs include what you pay for deductibles, copays, and coinsurance for all of your MA plan benefits. Your MA plan pays the rest, as long as you follow the rules of the plan, such as seeing network providers and obtaining prior authorizations for medications and referrals for specialists.

It can be challenging to anticipate how much healthcare you will need in a given year, but there are some elements you know in advance, such as which medications you are currently taking, which doctors you typically see, and whether or not you routinely access dental and vision care.

Medicare.gov has a free tool available to you here where you are prompted to input your zip code (to see which MA plans are offered in your area) and your medications. You will be able to compare plans and maximum out-of-pocket costs associated with each plan.

Of note, MA plan premiums (if any) and monthly Part B premiums do not count toward your out-of-pocket maximum cost. If you add your monthly Part B premium for the year ($148.50 x 12 = $1,782) and your MA plan’s max out-of-pocket limit, you can figure the most you may have to pay for your healthcare, providing you adhere to the plan’s rules. Some MA plans help pay for your Part B premium.

5) Who qualifies for Medicare Advantage plans

If you are eligible for Medicare, either by age or disability, and you are enrolled in Medicare Part A and Part B, you qualify for a MA plan.

You must reside in the service area of whichever MA plan you choose. If you live in another state for part of the year, ask your plan representative if your plan will cover you there.

6) Medicare Advantage plan restrictions

You cannot have both Medigap, which is a Medicare Supplement plan, and a MA plan.

You cannot purchase a separate drug coverage plan (Part D) if you are enrolled in a MA that includes drug coverage.

You can only join MA plans that are offered in your area. Not all plans are offered in all counties across the country.

There are only certain times when you can join a MA plan:

  • Your initial enrollment period which lasts for seven months, including the three months prior to your 65th birthday, the month you turn 65, and the following three months.
  • October 15 – December 7. This is the only time you can switch from Original Medicare to a Medicare Advantage plan.
  • During MA Open Enrollment from January 1 – March 31 each year. During this period, you can switch to a different Medicare Advantage Plan or go back to Original Medicare.
  • During a Special Enrollment Period (SEP) if certain events happen in your life; for instance, if you lose coverage from your employer or Medicaid, or you move back to the U.S. after living outside the country, or if you want to switch to a plan with a 5-star overall quality rating.

7) In network and out of network providers in Medicare Advantage plans 

The most common types of MA plans are: 

  • Health Maintenance Organizations (HMOs)
  • Preferred Provider Organizations (PPO’s)
  • Private Fee-for-Service (PFFS)
  • Special Needs Plans (SNPs), including different types of SNPs such as DSNPs and CSNPs.

Other less common types of MA plans that may be available are:

  • HMO Point of Service (HMOPOS)
  • Medicare Medical Savings Account (MMSA)

If you are part of a HMO, you will need to receive your services from providers who are in network in order to get your benefits and have any out-of-pocket costs count toward your annual out-of-pocket limit. Most SNPs work this way too.

If you have a PPO you will have the option to receive services from in or out of network providers, but you will typically pay more when you go out of network. This option provides you with more choice, but costs more. The annual out-of-pocket max of $11,300 for in and out of network costs combined that is set by the federal government applies to PPOs, and any MA plans that allow for out of network services such as PFFS.

8) Switch to a different Medicare Advantage plan if you don’t like the one you are in  

You are allowed to change your mind about your MA plan if you determine that it is not the one best suited to your needs and priorities. Plans change each year, so you should always shop every year to make sure your current plan stacks up. There are two times per year, called enrollment periods, when you can make a change.

  • October 15 – December 7 (Changes will take effect on January 1)
  • January 1 – March 31 (You can only make one change during this period. Changes will take effect the first of the month after the plan gets your request).

9) What your options are if your Medicare Advantage plan leaves Medicare

Your MA plan will send you a letter explaining your options, but coverage will continue until December 31. You can:

  • Choose another plan between October 15 – December 7; your coverage will begin January 1.
  • Have a special right to join another MA plan through Feb.
  • Have the right to buy certain Medigap policies with 63 days after your plan coverage ends.

10) How many Medicare beneficiaries choose MA plans

According to 2020 data compiled by the Kaiser Family Foundation, enrollment in MA plans has doubled over the past decade. Although MA enrollment varies by state and county, nearly 40% of Medicare beneficiaries have chosen MA plans.

In 2020, 90% of the MA plans that were available in the country offered prescription drug coverage, and almost two-thirds of those plans did not charge a premium for their plan, other than the Medicare Part B monthly premium.

According to the Kaiser Family Foundation, about two in three people chose to enroll in an HMO Medicare Advantage plan in 2019. The next most common type of MA plan that Medicare beneficiaries continue to choose is a PPO.

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Contributing Expert:

Leron Moore, Medicare consultant

Leron Moore has guided Medicare beneficiaries and their families as a Medicare professional for nearly 15 years. First as a Medicare provider enrollment specialist, and now a Medicare account executive, Moore works directly with Medicare beneficiaries to ensure they understand Medicare and Medicare Advantage Plans.