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What is Medicare Advantage?

A recent article in the Record Searchlight by Dr. Ronald Reece attempted to explain Medicare Advantage. In general, the cautions about choosing the plan were helpful, but the actual description of Medicare Advantage was inaccurate.

Medicare Advantage is technically Medicare Part C, not Part B as was stated. If one chooses a Medicare Advantage Plan, you are choosing to give up Original Medicare and option for an alternate plan known as Part C.

First a quick review of the Medicare alphabet soup.

Part A is the inpatient hospital facility benefit. Medicare-covered inpatient hospital services include: Semi-private rooms, meals, general nursing, drugs, other hospital services, and supplies as part of your inpatient treatment, Skilled Nursing facility care subject to limitations and conditions and some acute long-term care hospital stays.

Part B covers professional services in and out of the hospital, diagnostics, lab, x-ray, and some supplies and Preventive Services

Part D is the outpatient prescription drug benefit.

Part C (Medicare Advantage or MA) is then where the government effectively outsources the traditional Medicare benefits to an insurance company. They may or may not include a Part D prescription drug benefit. Be sure to ask if those benefits are included and make sure how your current Rx is covered.

All Medicare Advantage (Part C) plans must have benefits at least as good as Original Medicare. An important nuance is that Original Medicare benefits are subject to a myriad of deductibles and copays. These out-of-pocket expenses for the Medicare Beneficiary have no out-of-pocket maximum limits, like a traditional insurance company.

This is the reason that folks will consider a Medi-gap or Medicare Supplement plan; to fill in the gaps and cover the deductibles, copays, and coinsurance.

Medicare Advantage (Part C) plans typically have a myriad of copays and deductibles as well, but most of them include an out-of-pocket maximum exposure limit for the insured, typically in the $6500 range.

Provider Choice

With Original Medicare and a Supplement, the beneficiary simply has to be sure the provider takes Medicare. There may be a Preferred Provider Network involved, but that is unusual.

With Medicare Advantage, there will likely be restrictions on providers that will accept the plans. It will be either a Preferred Provider Option (PPO) or a Health Maintenance Organization (HMO). With a PPO, the insured will be able to use providers outside the network but with higher copays and/or deductibles and lower coinsurance coverage.

An HMO is typically a closed network and if one goes out of the network there are no benefits.

An important consideration in choosing these plans is always the network. You must do a deeper dive and be sure that your doctor is taking the plan and/or taking new members from the plan. Just because s/he is your doctor now and taking the plan does not mean they are taking more Medicare Advantage members. Look closely at the full network so you can feel comfortable that if you need specialty care in the future that there is a comprehensive list of specialists.

I recently enjoyed chatting with a group of local men at their breakfast group. They inquired about Medicare Advantage. I stressed that Medicare Advantage plans are not inherently “bad”. I have enrolled folks in them in the past. One of the fellows in this group was quite happy with his MA plan. He has had it for several years.

His experience has been positive, even during a rather serious illness. Premium payments are low enough that it has allowed him to accumulate additional funds to cover the deductibles and copays and he had satisfactory access to care.

Should one disenroll from a Medicare Advantage Plan within 12 months of joining the Medicare Advantage Plan, it is possible to purchase a Medigap or Medicare Supplement Plan without underwriting. It is important to note that generally speaking this is a one-time opportunity. Should one make the change and return to Original Medicare after the first 12 months, the insurance company may require the applicant to answer health questions in order to qualify for a Supplement or Medigap plan.

The challenge is that one never really knows how good the plan is until it’s time to use it. So if you don’t have many usages in the first year, you might not really know how well the plan works. Taking advantage of the plan benefits in the first year is probably one of the best tests to see how the plan works.

 

Margaret R. Beck

Margaret Beck CLU, ChFC, CEBS started her insurance practice in Redding in 1978. She founded Affiliated Benefit Services.

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