Medicare Advantage demystified: understanding Medicare Part C

Maryalene LaPonsie | October 20, 2010

Medicare is a health insurance program run by the federal government for seniors age 65 or older. Younger individuals who have certain disabilities or permanent kidney failure requiring dialysis are also eligible for Medicare.

Originally, Medicare benefits were only available through government-sponsored plans. Then in the 1970s, private health insurance companies were given the option to provide Medicare benefits. These plans, known as Medicare Part C, Medicare Advantage or MA Plans, allow seniors to bundle benefits and receive health care through a health insurance company of their choice.

Health insurance coverage through Medicare Advantage

Original Medicare is split into Parts A and B. Medicare Part A covers hospital expenses, while Medicare Part B includes medical coverage for other care such as doctor visits and preventive services. There is also separate coverage, called Medicare Part D, which provides prescription drug coverage.

Medicare Advantage plans can allow you to get all these benefits in one health insurance package. By law, Medicare Advantage insurance must cover everything included in Medicare Part A and Part B--except for hospice care, which is covered by Original Medicare. Therefore, Medicare Advantage policies provide the same coverage for hospital care and outpatient care. In addition, many policies may include additional benefits such as:
  • Prescription drugs
  • Dental
  • Vision
  • Hearing
  • Health and wellness
Many Medicare Advantage plans are offered as HMOs and PPOs, but you can also buy this Medicare Coverage as a fee-for-service (FFS) or special needs plan. Because of the structure of these health insurance plans, you may have to use a hospital or doctor that is part of the insurance company's network. Additionally, many plans are specific to a certain geographic region and only cover those who live in a specific service area. As a result, out-of-pocket costs can vary depending on the policy.

Shopping for Medicare Advantage

Medicare Advantage plans are provided by private health insurance companies. It is important to compare plans carefully and shop around to ensure you are enrolling in a plan that is the best fit for you. When comparing Medicare Advantage plans, be sure you know the answer to the following questions:
  • What is the monthly premium?
  • Does the plan have a deductible--required out-of-pocket expense--that I must meet?
  • How much are co-payments?
  • Does the plan include prescription drug coverage or will I need to buy a Medicare Part D policy?
  • Does my doctor participate in the plan?
  • Will I need a referral to see a specialist?
  • Is there a yearly limit for total out-of-pocket costs?
  • Does the plan serve my geographical area?
If you want to switch from Original Medicare to Medicare Advantage, you can purchase a plan during the open enrollment period, November 15-December 31.

If you are just becoming eligible for Medicare, your initial enrollment period spans seven months. Your open enrollment period begins three months prior to turning 65, includes the month you turn age 65, and ends three months after you reach the Medicare eligible age. Keep in mind, once you've enrolled, in most cases, you are required to remain with your Medicare Advantage plan for the calendar year.

Medicare Advantage is not the same as Medigap

With so many different ways to access Medicare benefits, the various health insurance choices available are often misunderstood or confused. It is important to know that Medicare Advantage and Medigap are two different types of insurance plans. Medicare Advantage is a health insurance policy that allows you to access your Medicare benefits, whereas Medigap is a type of health insurance that supplements your Medicare benefits.

Medigap is supplemental health insurance sold by private health insurance companies. Medigap helps you pay for Medicare-covered services; for example, a Medigap policy can help you pay for your Medicare Part B copayment or coinsurance.

If you select a Medicare Advantage plan, you cannot be sold a Medigap supplemental health insurance policy. Because Medigap policies cannot pay for your Medicare Advantage co-payments, deductibles or premiums, it is illegal for a health insurance company to sell a Medigap policy to an individual enrolled in Medicare Advantage.

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