Medicare Advantage, also known as Medicare Part C, is the private portion of Medicare. While this iteration of private plans for Medicare was authorized in 2006, versions of managed care plans have been around for over 40 years. They’ve been known as different names over the years, from Medicare Risk to Medicare+Choice, but the idea behind these plans is the same: to provide seniors with a private alternative to the government-run Medicare.
There’s nothing wrong with original Medicare, of course. It’s a good option for seniors and those living with certain disabilities. When it was created in 1965, it served a unique purpose in making sure that aging Americans gained access to comprehensive and affordable health insurance. But it doesn’t cover everything. It can be costly, too, when you consider that original Medicare (Parts A and B) requires significant cost-sharing from enrollees – including 20 percent coinsurance for Part B – and there’s no limit in place to cap your out-of-pocket expenses.
Sold via private insurance companies and operating similarly to how a regular health plan operates, Medicare Advantage gives you greater flexibility in choosing coverage that meets your needs. And because insurers still get funding from the federal government for these plans – since the plans must conform to at least the same standards as original Medicare – you likely won’t pay much, if anything, more for Part C coverage.
Medicare Part C is an increasingly popular choice among beneficiaries. Since 2010, enrollment in managed care plans has increased by about 7 percent, now representing nearly a third of everyone who’s enrolled in Medicare. Thanks to new proposals from the Centers for Medicare and Medicaid Services (CMS) and constant improvements to the program, enrollment numbers will likely continue to surge. Throughout the site, you’ll find articles on specific topics related to Part C. Here, we’ll introduce you to the program.
Types of MA Plans
Advantage plans fall into categories, similar to the way that regular health insurance – like the kind you buy on an Obamacare marketplace or the kind you get from an employer – is structured. You may find MA plans that are listed as the following:
- Health maintenance organization (HMO)
- Preferred provider organization (PPO)
- Special needs plan (SNP)
- Private fee-for-service (PFFS)
You’re more likely to come across PPO and HMO plans when you’re searching for coverage. That’s true of any health insurance type, Medicare Advantage or otherwise. While common, both are quite different from each other, so here’s what you need to know:
- HMOs: Health maintenance organizations require the use of a network for care. You must see doctors, specialists, nurses, hospitals, physical therapists and any other healthcare provider within the company’s list of approved providers. If you don’t see a network provider, you’ll likely have to pay for the full cost of care on your own. The plan won’t cover it. Also, HMOs typically require you to have a primary care doctor who must refer you to see other doctors. You would need a referral for things like back surgery, dental work or medical weight loss. Restrictive networks have an advantage, though, in that plans that have them tend to cost less. Since the carrier saves money by limiting its coverage to a strict network, it passes on the savings to you in the form of lower premium costs or lower cost-sharing amounts.
- PPOs: While pricier than HMOs, preferred provider organizations give enrollees more freedom in choosing providers and in seeking medical care. With a PPO, you still benefit from staying inside the plan’s network. Your costs are lower if you see an in-network provider. But you do have the option to go outside the network as long as you’re okay footing more of the bill. It may cost twice as much to see a non-network provider, but at least you won’t be stuck with the whole bill. Also, PPO plans usually don’t require you to get referrals if you need to see a doctor who isn’t your primary – you likely won’t even need a designated primary doctor under this plan type (though, as an aside, it’s a good idea to have a primary doctor).
Other plan types within Medicare Advantage are less common, but if you need to know more about them, check out the Medicare.gov overview. Part C plans, like other insurance, require some level of cost sharing from members. You pay a monthly premium (although some plans do have zero-dollar premiums), plus copays and/or coinsurance depending on your plan. You might pay $20 to see your doctor for a sore throat, for example, or 10 percent of your knee replacement surgery after meeting a deductible. If you’ve had health insurance before, then you’ll be more comfortable transitioning to Medicare Advantage since you’ll likely know how the process works already.
Pros and Cons to Part C
Whether a health plan works for you will depend on your situation. Since each person’s health needs and budget vary, it’s not always easy to say whether Medicare Advantage is necessarily better than original Medicare. Health insurance is a subjective topic in terms of its benefits and drawbacks. But for the sake of comparison, we’ll highlight a few pros and cons of Medicare Advantage here.
- Wider range of benefits
- No extra cost for some plans
- Prescription drug coverage (typically)
- Cap on annual spending
- Limited network of providers
- May require additional monthly premium
- Might require a referral for specialists
- Contracts can be canceled
Advantage plans usually offer a host of additional benefits that original Medicare doesn’t cover. Standards include dental, vision, hearing and prescription drugs. That’s not a guarantee that all MA plans cover these services (or anything else), but because companies are competing for business, you’ll likely find more benefits and services included in Advantage policies. You might think that all these extra services mean a costly copayment, but many MA plans have no added premiums. With zero-dollar premium plans, you’ll only pay whatever you already pay for original Medicare (typically just the Part B premium). There’s also a cap in place with MA plans to limit your out-of-pocket spending for the year (upper limit is $6,700 in 2018, but some plans have lower caps).
No plan is perfect, though. Medicare Advantage does have some downsides that might be deal breakers for you. Because these plans are managed care plans, that means your healthcare company is in charge of your care. That also translates into limited networks, especially if you choose an HMO plan. Original Medicare is accepted nationwide; MA plans require you to see network providers, and the network may be as a small as your zip code. HMO plans also may require you to see a primary care doctor for referrals, which could delay treatment. Not every plan has a zero-dollar premium, either, and contracts with Medicare can be canceled at any time. That means you could lose your health plan for the next year and have to find a new one.
We talk more about the pros and cons of Medicare Advantage elsewhere, but we wanted to touch briefly on them here. When researching your health options for retirement, consider the whole picture. Advantage is a good choice for lots of seniors, but it isn’t the only choice.
How and When to Enroll
The best time to enroll in Medicare Advantage is when you first become eligible for original Medicare. Unless you’re enrolled automatically because you’re already receiving Social Security benefits or Railroad Retirement benefits, you can sign up for Medicare during a 7-month window known as your initial enrollment period (IEP). It starts three months before the month you turn 65 and runs for three months after your birthday month. So, for instance, if your birthday is June 13, your IEP would run from March through September. You must be enrolled in Medicare Parts A and B to sign up for Advantage.
Outside of your IEP, there’s a chance each year for you to switch from original Medicare to a Medicare Advantage plan, one with or without drug coverage depending on your needs. This period is known as the Medicare open enrollment period, and it lasts from October 15 through December 7. The open enrollment period allows you to sign up for a new MA plan, change from one to another, choose a different Part D drug plan, sign up for a new Part D plan or switch from Advantage back to original Medicare. Coverage then starts January 1 of the following year.
You can sign up for a Medicare Advantage plan once you’ve signed up for Parts A and B, which you’ll do through the Social Security Administration. Contact your local Social Security office, check out the SSA’s website or call to learn more about enrolling. Some enrollees get original Medicare automatically.
If you decide that Advantage is a better fit, you can enroll in a plan directly via the company you like, through the Medicare.gov website (which offers a plan finder for comparing options), or through a site like this one.