Medicare Advantage 101

Over 58 million Americans were enrolled in Medicare in 2018. Of those, more than one out of every three were enrolled in a Medicare Advantage plan.1

How do Medicare Advantage plans work, and why are they so popular? This guide will help you learn the answers to these and other questions.

Couple walking with dog

What is Medicare Advantage?

Medicare consists of four distinct parts, Part A, Part B, Part C and Part D:

  • Part A and Part B are known as “Original Medicare” and account for hospital insurance and medical insurance, respectively. 
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  • Medicare Part D offers coverage exclusively for prescription drug costs.
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  • Medicare Part C is what is often also called “Medicare Advantage.”

Medicare Advantage plans are sold by private insurance companies. Each plan is unique in that they each come with their own costs and coverage. However, by law, all Medicare Advantage plans must offer at least the same basic benefits as those covered by Medicare Part A and Part B. 

Beyond offering Part A and Part B benefits, a Medicare Advantage plan may also cover some additional benefits. Some of the more common extra benefits some Medicare Advantage plans offer include coverage for dental, hearing, vision and prescription drugs. Some plans even offer perks such as gym memberships. 

In 2019, more covered services may be added to the list of approved additional Medicare Advantage benefits, including transportation, home-delivered meals, bathtub grab bars and more.

Why Medicare Advantage?

The Medicare Advantage program first debuted in 1997 and has skyrocketed in popularity ever since. One possible reason for its popularity is that many of the health care services that are needed by seniors are not well-covered by Original Medicare. Many seniors find that they may be able to find those desired benefits in a Medicare Advantage plan that is available where they live.

For instance, approximately 80 percent of people over the age of 65 are reported to take at least two prescription drugs on a regular basis.2 Original Medicare, however, does not provide coverage for most prescription medications.  

Also consider that one out of every three Americans will develop some form of vision-impairing eye disease by the age of 65, but Original Medicare doesn’t cover routine eye care.3

Medicare beneficiaries in need of such coverage are left to either pay out of pocket for those services or enroll in a Medicare Advantage plan that covers them.

Types of Medicare Advantage plans

Medicare Advantage plans come in several different forms. The different types of Medicare Advantage plans include:

Health Maintenance Organization (HMO)

A Health Maintenance Organization plan (HMO), typically requires you to select a primary care doctor from whom you need a referral to see a specialist. These plans generally include a network of health care providers. Any medical care or services you receive may not be covered if received outside of the plan’s network, except in the case of an emergency.

Nearly 12 million of the 19 million Medicare Advantage beneficiaries in the U.S. in 2017 were enrolled in an HMO plan.1

Preferred Provider Organization (PPO)

A Preferred Provider Organization (PPO), may also include a network of providers. You generally may receive medical care from any provider, but you will likely save money by staying within the plan’s network. A PPO plan typically does not require the use of a primary care doctor or referrals to see specialists.

An HMO Point-of-Service (HMO POS) is a slight blend of an HMO and PPO and can potentially offer a more flexible network than a traditional HMO.

Private Fee-For-Service (PFFS)

A Private Fee-For-Service plan (PFFS) determines how much it will pay health care providers for various services and how much the beneficiary will be responsible for. Providers who accept these plans have agreed to the plan terms in advance of you receiving their services.

Special Needs Plans (SNP)

A Special Needs Plan (SNP) is a plan that is designed specifically for the needs of a person with a particular health condition or circumstance. For example, a Special Needs Plan designed for people with Alzheimer’s will include benefits specific to the health care needs of people living with the disease.

Medical Savings Account (MSA)

Less popular than some other types of Medicare Advantage plans, a Medical Savings Account (MSA) combines a high-deductible health plan with a savings account. Money is deposited in the account by Medicare, which can then be used to pay for care.

Man doing finances

Costs of a Medicare Advantage Plan

The types of costs associated with a Medicare Advantage plan can be similar to what you’ll find in Original Medicare or in a traditional health insurance plan, such as deductibles, premiums and copayments.

For starters, you will continue to pay your Medicare Part A and Part B premiums. Most people receive Medicare Part A without a premium, in fact, but if you are required to pay Part A premiums, you will continue to do so along with your Medicare Advantage plan premium and Part B premium. The standard Part B premium for 2019 is $135.50 per month.

Other costs that may be part of a Medicare Advantage plan can include: 

  • Premiums
    Most Medicare Advantage plans include a monthly premium, which is the cost required to belong to the plan. In 2019, the average premium for a Medicare Advantage plan that offers prescription drug coverage will be $40 per month.1

    Some Medicare Advantage plans may come with a $0 premium, though $0 premium plans may not be available in all locations.
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  • Deductibles
    The deductible is the amount which beneficiaries must pay out of their own pocket before the Medicare Advantage plan begins providing coverage.
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  • Copayments/coinsurance
    Once your deductible is met, you may pay a flat fee (copayment) or percentage of the bill (coinsurance) when medical treatment, services or products are provided.
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  • Out-of-pocket maximum
    An out-of-pocket maximum is the maximum amount of money you will be required to pay out of pocket during one year’s time. Once your out-of-pocket limit is reached, the plan will pay 100 percent of the costs for covered care.

Eligibility

The eligibility requirements for Medicare Advantage enrollment include meeting each of the following: 

  • Have both Medicare Part A and Part B coverage
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  • Reside in the area serviced by the Medicare Advantage plan for which you want to enroll (not all plans are available in every area)

Medicare Advantage plans can be available to people under the age of 65 if they qualify for Original Medicare because of a disability and receive disability payments from either Social Security or the Railroad Retirement Board.

Having End-Stage Renal Disease (ESRD) can prohibit many people from qualifying for a Medicare Advantage plan. There are, however, some Special Needs Plans that are available to people with ESRD.

65 birthday cake with candles

When You Can Enroll

As there are with Original Medicare, there are certain times of the year in which you may enroll in a Medicare Advantage plan.

Medicare IEP graphic

  • Initial Enrollment Period (IEP)
    The first time you may enroll in a Medicare Advantage plan is during your Initial Enrollment Period (IEP). For most people, this is the 7-month period that begins three months before your 65th birthday, includes the month of your birthday and continues for three more months after you turn 65.

Medicare AEP graphic

     
  • Annual Election Period (AEP)
    If you choose not to sign up for a Medicare Advantage plan during your IEP, your next opportunity will likely be the Annual Election Period, which is also referred to as the Open Enrollment Period. This enrollment period lasts from October 15 to December 7 each year.
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  • Special Election Periods (SEP)
    A Special Election Period may be granted to people under certain circumstances. These special circumstance can include moving to a new area that isn’t covered by your current Medicare Advantage plan, residing in a long-term care facility, losing your current coverage and more. During a Special Election Period, which may be granted at any time of the year, you may join, switch or disenroll from a Medicare Advantage plan. 
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  • Medicare Advantage Disenrollment Period
    The Medicare Advantage Disenrollment Period does not provide an opportunity to enroll in a plan, but it does present an opportunity for current plan members to disenroll from Medicare Advantage and return to Original Medicare. This period lasts from January 1 to February 14 each year.

How to enroll in Medicare Advantage

Medicare Advantage plans are sold by private insurers, and plan costs and benefits can vary greatly from one plan to the next.

With such a variety of options, one way to go about shopping for a Medicare Advantage plan is to contact a licensed insurance agent who can help you find a plan in your area that suits your health care and budgetary needs. Call  TTY Users: 711 24 hours a day, 7 days a week to speak with a licensed insurance agent who can help you get started.   

 

1 Kaiser Family Foundation. Medicare Advantage 2019 Spotlight: First Look. (Oct. 16, 2018.) Retrieved from www.kff.org/report-section/medicare-advantage-2019-spotlight-first-look-data-note.
2 Schwarz, Casey. AARP Survey Highlights Prescription Drug Use Among Older Adults. Medicare Rights Center. April 28, 2016. Retrieved from https://blog.medicarerights.org/aarp-survey-highlights-prescription-drug-use-among-older-adults/
3 Vision Screening Recommendations for Adults 40 to 60. American Academy of Ophthalmology. March 3, 2014. Retrieved from  https://www.aao.org/eye-health/tips-prevention/midlife-adults-screening

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MedicareAdvantage.com is a website owned and operated by TZ Insurance Solutions LLC. TZ Insurance Solutions LLC and TruBridge, Inc. represent Medicare Advantage Organizations and Prescription Drug Plans having Medicare contracts; enrollment in any plan depends upon contract renewal.

Plan availability varies by region and state. For a complete list of available plans, please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.

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