Everything You Need to Know
Many things have changed since Medicare Part C was formally introduced by legislation in 1997. Medicare Advantage plans have evolved and with one third of all Medicare recipients enrolled in Part C, it is important for individuals approaching Medicare eligibility, or those who are reconsidering their coverage during the Annual Election Period or a Special Enrollment Period, to understand their options.
When you qualify for Medicare, you can choose to get your benefits from Original Medicare or through Medicare Advantage. Let’s review the basics of each program:
Original Medicare is the federal fee-for-service program consisting of two parts: Part A (Hospital Insurance) and Part B (Medical Insurance). Most people get premium-free Part A benefits because they have worked and paid taxes for 40 quarters, but most people pay a premium and yearly deductible for Part B. While Part B is optional, most people choose to enroll when they are first eligible to avoid incurring late enrollment penalties if they decide to enroll later on.
Original Medicare allows you to visit any physicians and providers that “accept assignment.” To “accept assignment,” a medical provider must agree to be paid directly by Medicare, to accept the payment amount Medicare has approved for the service, and not to bill you for any more than the Medicare deductibles and coinsurance. Medicare pays a share of the Medicare-approved amount of a service or supply, and you pay your share (generally 20%) in deductibles or coinsurance.
While Original Medicare does help cover many costs, many Medicare beneficiaries find the out-of-pocket expenses overwhelming. Many people who have Original Medicare choose to supplement their coverage by purchasing a Medigap policy that helps cover the costs that Original Medicare does not, including deductibles, coinsurance or copayments.
Medicare Advantage is an alternative to Original Medicare. Medicare Advantage plans are offered by private insurance companies that contract with Medicare to provide your Part A and Part B benefits. Medicare Advantage plans can include:
- Health Maintenance Organization (HMO)
- Preferred Provider Organization (PPO)
- Private Fee-for-Service Plans
- Special Needs Plans (SNP)
- Medicare Medical Savings Account Plans
Health Maintenance Organizations (HMOs) usually require you to visit providers and suppliers within the plan’s network in order to be covered, and you generally need to visit your primary care physician to get a referral before seeing a specialist.
Preferred Provider Organizations (PPOs) allow you to visit specialists without a referral from a primary care physician as long as you visit a provider within the plan’s network. You may see providers outside of the plan’s network for a higher cost.
Special Needs Plans (SNPs) are Medicare Advantage plans that cater to individuals with specific diseases or conditions. Medicare tailors the benefits, provider choices, and drug formularies that will best meet the needs of its enrollees.
Why Choose Medicare Advantage?
Why do millions of Medicare beneficiaries choose to enroll in a Medicare Advantage plan? Let’s review some of the key differences between Original Medicare and Medicare Advantage.
Additional Benefits. Medicare Advantage plans are required to provide at least the same benefits as Original Medicare, but many offer additional benefits at little to no additional cost, such as:
- Vision care (exams, eyeglasses)
- Dental care (exams, cleanings)
- Hearing exams
- Wellness (yearly check-ups, weight management counseling, fitness club memberships)
- Prescription drug coverage
These benefits vary from plan to plan and costs can differ.
- Prescription Drug Coverage. Original Medicare and Medigap policies do not include prescription drug coverage. If you have Original Medicare and want help paying for prescription medications, you will have to enroll in a stand-alone Prescription Drug Plan (PDP). Instead, many people choose to enroll in a Medicare Advantage plan that includes prescription drug coverage (MA-PD). Each MA-PD will have its own tiers of cost based on brand-name, generic or mail-order drugs, and its own formulary. A formulary is the plan’s list of covered drugs. If you already depend on specific medications to improve or maintain your health, check the formularies of the plans you are considering before enrolling to make sure they will be covered. Do you need prescription drug coverage? Many people who are first eligible for Medicare may question their need for drug coverage, especially is they are relatively healthy. It is important to note that if you do not enroll in prescription drug coverage when you are first eligible and you decide to enroll later on, you will likely have to pay a late enrollment penalty.
- Out-of-Pocket Expenses. If you have Original Medicare, you will likely be responsible for 20% of Medicare approved services and supplies. There is no limit to your out-of-pocket expenses. Medicare Advantage plans, on the other hand, will have an annual maximum out-of-pocket limit. For instance, if your Medicare Advantage plan’s out of pocket maximum is $6,700, once you spend that much in a year, you will pay $0 for the reminder of the year for your in-network covered medical expenses.
- All-in-One. Many Medicare Advantage enrollees appreciate the all-in-one package of healthcare coverage, instead of managing separate plans, identification cards, and carriers. Medicare Advantage plans may also be more cost-effective than a combination of Original Medicare, Medigap, PDP, and other ancillary insurance.
- Traveling Abroad. Many Medicare recipients, especially retirees, travel outside of the United States frequently and need coverage they can take with them. Many Medicare Advantage plans include healthcare coverage for medical needs you may have while traveling abroad. If you travel often, compare MA plans to find the one that fits your lifestyle.
Turning 65? Enrolling in Medicare Advantage
If you are approaching Medicare eligibility for the first time and choose to get your Part A and Part B benefits through a Medicare Advantage plan, there are a few things you should know. Let’s review some basic enrollment information:
Initial Enrollment Period When you are enrolling in Medicare for the first time, you will have a seven-month Initial Enrollment Period. The Initial Enrollment Period starts three months before your 65th birthday, includes the month you turn 65, and ends three months after you turn 65. If you miss this enrollment period, you can enroll during the following Open Enrollment Period from January 1 through March 31, but you may have to pay late enrollment penalties.
Plan Comparison Take the time to review Medicare Advantage plans in your area to find the one that’s right for you. Online comparison tools are free to use and can help you narrow down plans based on your own personal needs and preferences. For instance, you can decide what types of plans and carriers you’d like to review. You can choose the price range you are comfortable paying for premiums and copayments and find plans that meet your specific budgetary needs. If you plan to enroll in a Medicare Advantage plan with prescription coverage (MA-PD), compare the formulary and costs of drugs in each plan you consider. If you already take certain medications, make sure the drugs and dosages you currently take will be covered by the plan you choose.
Ask Questions Speak with a licensed and knowledgeable sales agent who can answer your questions and guide you through the enrollment process. If Medicare is new to you, you may benefit from an agent’s expertise.
Online Enrollment Most Medicare Advantage plans will allow you to enroll online, but if you are more comfortable with a paper application, all plans are required to provide that option.
Under 65? Choosing a Medicare Advantage Plan
Some individuals under the age of 65 are eligible for Medicare due to certain disabilities. If you have been receiving benefits from Social Security or the Railroad Retirement Board for 24 months, you may be eligible to enroll in a Medicare Advantage plan. A Medicare Advantage plan may be a cost-effective option. Review your options and compare plans. You may even find a Special Needs Plan in your area that will meet your specific needs.
Making Changes – Enrolling in Medicare Advantage
If you are already enrolled in Original Medicare and want to consider joining a Medicare Advantage plan, you will have certain times of the year when you can make changes to your coverage.
Annual Enrollment Period (AEP)
If you are already enrolled in Original Medicare and have decided to drop that coverage and enroll in a Medicare Advantage plan, you will probably have to wait until the Annual Election Period. The Annual Election Period (AEP) starts October 15 and ends December 7. During this time, you can:
- Drop Original Medicare and enroll in a Medicare Advantage plan (with or without prescription drug coverage)
- Change from one Medicare Advantage plan (with or without prescription drug coverage) to another Medicare Advantage plan (with or without prescription drug coverage)
Special Enrollment Period (SEP)
You may qualify to make changes to your Medicare coverage at different times of the year if you experience certain life events, including but not limited to:
- You move outside of your plan’s service area
- You moved back to the United States after living abroad
- You just moved into or out of a skilled nursing or long-term care facility
- You were just released from jail
- You lost coverage from an employer or union
- Medicare terminates your plan’s contract
- You are enrolled in a Special Needs Plan (SNP), but no longer have the condition served by that plan
If you are approaching Medicare eligibility or want to make changes to your current Medicare coverage by enrolling in a Medicare Advantage plan, consider your options. Medicare Advantage plans will include your Part A and Part B benefits, but the additional benefits and costs can vary. Take the time to review the plans available to you, and compare the details of each plan. You deserve coverage that meets your individual needs and preferences. Find the Medicare Advantage plan that will provide the right coverage at the right price.