Understanding Medicare Advantage Plans

By Terrance Palmer posted 10-07-2020 22:16


Medicare is a government health insurance program, particularly for older Americans. Medicare allows for various plans and coverage terms. Upon enrolling in Medicare, there are two significant options from which to choose. They include the Original Medicare and Medicare Advantage Plan.

Original Medicare encompasses hospital insurance (Medicare Part A) and medical insurance (Medicare Part B). For drug coverage, this plan includes the Medicare prescription drug plan (Medicare Part D).

A Medicare Advantage Plan is an alternative way to obtain Medicare coverage. Alternatively known as Part C, Medicare Advantage Plan is all-inclusive. This plan covers Part A, Part B, and often, Part D.

Essentially, Medicare Advantage plans cover everything covered in the Original Medicare except the hospice care. However, Medicare Part A inherently covers hospice care. Unlike Original Medicare, some Medicare Advantage plans come with additional benefits.

Medicare Advantage provides an effective platform to acquire Medicare Insurance from approved private insurance companies. Moreover, Medicare Advantage plans can either be Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs). Under HMO, you identify a primary care doctor who will oversee your care. PPOs entail various doctors and facilities.

How Medicare Advantage Plans Work

Once you join this plan, Medicare covers a fixed insurance amount for you. Usually, Medicare channels this fixed amount to the company offering the plan. Private companies in the Medicare Advantage plans must be in line with Medicare’s rules of coverage.

The Medicare Advantage Plans establish annual contracts with Medicare. The terms of coverage change yearly. This plan informs you of any adjustments before a new enrollment year begins.

Most time, Medicare Advantage Plans vary cost-wise from the Original Medicare. However, the two plans offer equal rights and protections for all individuals covered.

What Medicare Advantage Plans Cover

Medicare Advantage caters for the insurance benefits that are covered by Medicare Part A and Part B. Hospital insurance (Part A) benefits include:

  • Skilled nursing facility care
  • Inpatient hospital care
  • Home healthcare under specific conditions

On the other hand, Medicare Part B covers the following services:

  • Ambulance Services
  • Doctor visits and appointments
  • Medical equipment, including wheelchairs and walkers
  • Limited prescribed outpatient medication, e.g. chemotherapy

Coverage costs and limits differ for various Medicare Advantage plans. Some plans contain yearly limits, while others cover unlimited days. Copayments also vary from one plan to another.

Prescription Drug Coverage

Often, Medicare Advantage plans comprise Medicare Prescription Drug Coverage (Part D). For plans without drug coverage, you may enroll to a separate Medicare Prescription Drug Plan.

In some Medicare Advantage Plans, you may incur a prescription drug deductible. Other plans may not charge the prescription drug deductible. The copayment costs highly vary depending on the tier of the prescription drug. The lower the tier, the less the amount of copayment.

Additional Benefits

Medicare Advantage Plans also cover extra benefits, which are not catered for by Original Medicare. These benefits vary for different Medicare Advantage plans. Such benefits include:

  • Hearing services, e.g. hearing aids
  • Regular dental services
  • Vision services, including eye checkup, contact lenses, frames, and lenses

How Medicare Advantage Plans Relate to Medicare Supplement

Usually, Medicare supplement plans cater for out-of-pocket costs. These costs include deductibles, coinsurance, and copayments. Over the past few years, the cap on out-of-pocket costs has been $6700. However, most plans had their out-of-pocket caps way below this value.

The Medicare Advantage Plans 2021 have established an allowable rise in the out-of-pocket caps. For 2021, the maximum limit stands at $7,550. The maximum allowable deductible for Part D is set at $445 in 2021.

Medicare Advantage Plan Costs

Premiums: While choosing a Medicare Advantage Plan, the most significant determinant is the monthly premium. The premium range varies from $0 to about $95, based on the plan’s features.

Deductibles: Deductibles refer to the out-of-pocket payment you incur before the plan initiates payment.

Copayments and Coinsurance: These terms refer to the charges you incur for services offered by Medicare Advantage Plans.

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