The Ultimate Guide to Medicare Advantage Plans: Everything You Need to Know

You've likely heard of Medicare Advantage if you're over a certain age. But do you really understand what it is and what it covers? If the answer is 'no,' this article's for you. It'll tell you all you need to know about these increasingly popular plans.

Ultimate Guide to Medicare Advantage Plans

If you're an American and you're anywhere near the age of 65, you've probably heard of Medicare Advantage plans.

But what are they, exactly? How are they different from "regular" Medicare? What do they cover? Who can get them? And how much do they cost?

This article answers all of those questions and many more.

Medicare Advantage: What is it?

To begin with, private insurance companies contract with the U.S. government to offer Medicare Advantage plans to Americans.

These plans provide people with all of their Medicare Part A and Part B coverage--and usually a little bit more. Some cover vision, hearing, or dental care. Some cover prescription drugs, a la Part D. Some cover copayments and deductibles like Medicare Supplement (aka MedSup or Medigap) do for Original Medicare enrollees. And some offer all of that coverage in one convenient package.

So, if Medicare Advantage plans offer a lot of the same kinds of coverage as Medicare Parts A, B, and D, why are they an option at all? And how long have they been an option for people who are eligible for traditional Medicare?

The answer to that second question is Medicare Advantage plans have been around since the 1970s.

Actually, that's not completely accurate. The U.S. government introduced something like a shell of what's now known as Medicare Advantage back then. Various pieces of legislation passed in the 1980s and 1990s expanded the program's scope and formalized it as "Medicare Part C." The Medicare Modernization Act of 2003 gave it its current name.

As for why anyone bothers to choose a Medicare Advantage plan over Original Medicare coverage, the most likely answer is some folks just like having all of their Medicare coverage--Parts A, B, D, and Medigap--in one place.

Other people like that Medicare Advantage can provide coverage through private health plans, such as Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). And then there's the fact that some Medicare Advantage plans are cheaper than comparable Medicare Part A, B, D, and Medigap offerings.

Whatever the reasons, more Americans than ever are choosing Medicare Advantage plans over Original Medicare and its add-ons. According to a recent report from the Henry J. Kaiser Family Foundation, Medicare Advantage plans now cover one-third of all Medicare enrollees. That's 19 million people, in raw numbers. Back in 2004, only 5.3 million Americans--or 13 percent of those on Medicare--turned to Medicare Advantage rather than Medicare Parts A, B, and D for health coverage.

Other Frequently Asked Questions

With the most basic Medicare Advantage questions answered, let's move on to a number of others that will broaden your understanding of this Original Medicare alternative.

Q: How many Medicare Advantage plans are HMOs? How many are PPOs? How many are other types of plans?

A: According to the same 2017 Kaiser Family Foundation report mentioned earlier:

  • 63 percent of Medicare Advantage plans are HMOs
  • 26 percent are local PPOs
  • 7 percent are regional PPOs

Regional PPOs cover entire states or multi-state regions, by the way. They exist to provide rural beneficiaries greater access to Medicare Advantage coverage.

Insurance companies offer other types of Medicare Advantage plans, too, although enrollment in them is low. For example, just 1 percent of Medicare Advantage plans are of the Private Fee-for-Service (PFFS) variety this year. And about 3 percent are cost plans, PACE plans, medical savings accounts, or some sort of pilot program.

On a related note, just under 20 percent of people enrolled in Medicare Advantage are part of a group plan. Unions and other employers sponsor these kinds of plans for retirees.

Q: Which insurance companies sell Medicare Advantage plans?

A: A number of private insurers contract with the U.S. government to offer these policies to Americans. Here are some of the largest and best known:

  • Aetna
  • Anthem
  • BCBS affiliates
  • Cigna
  • Humana
  • Kaiser Permanente
  • UnitedHealthCare
  • WellCare

Combined, these insurance companies and their affiliates cover nearly 80 percent of people currently enrolled in Medicare Advantage policies.

Also, BCBS, Humana, and UnitedHealthcare alone account for about 60 percent of all Medicare Advantage plans in 2017.

Q: Do Medicare Advantage plans have to follow Medicare guidelines?

A: Yes. Not only do private insurance companies have to get the government's approval to sell these plans, but they have to follow the government's Original Medicare guidelines, too.

What does that mean for your average American who is eligible for Medicare? For starters, it means Medicare Advantage policies have to provide all the same benefits as Medicare Parts A and B.

Also, all of these plans have to include at least a minimum number of physicians covering 26 medical specialties. And they have to include a certain number of chiropractors and hospitals as well. The goal: to ensure enrollees have adequate access to care providers.

Q: Can anyone join a Medicare Advantage plan?

A: Almost everyone who is eligible to enroll in Medicare Part A and Part B can join a Medicare Advantage plan. The only people who can't are those who have been diagnosed with End-Stage Renal Disease (ESRD). (If you have ESRD, visit medicare.gov to learn more about how you can get Medicare coverage.)

Note: you have to live within the service area of the Medicare Advantage plan you want to join. This is especially important for people who live in different states over the course of a year, as not all of these plans cover out-of-state care.

To learn more about Medicare eligibility, read our article, "Everything You Need to Know About Medicare."

Q: How do you enroll in or join a Medicare Advantage plan?

A: According to cms.gov, you must be eligible for Medicare Part A and already enrolled in Medicare Part B before you can join a Medicare Advantage plan. After that, you have to find a plan that fits your health-care needs and serves your city, state, or region.

If you need assistance with that second step, visit the Medicare Plan Finder. It helps people find and compare plans in their area.

Once you settle on a provider, be prepared to share your Medicare number as well as the date your Part B--and Part A, if applicable--coverage started when you go to sign up. (Your Medicare card contains this information.)

Q: When can I enroll in Medicare Advantage?

A: Your first opportunity to join one of these plans is during your Initial Enrollment Period (IEP). The IEP begins three months before you turn 65 and ends three months after your birthday month.

If you don't join a Medicare Advantage plan then, you have to wait until the next Medicare Open Enrollment Period, which takes place between Oct. 15 and Dec. 7 every year.

Q: How much does Medicare Advantage cost?

A: The first thing you need to know about how much you'll pay for one of these plans is, even after you join one, you still have to pay your monthly Medicare Part B premium. At the moment, the standard Part B premium is $134.

Some Medicare Advantage plans pay all or part of this premium for you. Some don't pay any of it. Keep that in mind as you weigh your options. Plans that don't cover your Medicare Part B premium may look cheaper than ones that do at first glance.

Even if your Medicare Advantage plan pays your Part B premium for you, you'll still likely be responsible for other costs. A few examples:

  • an additional monthly premium (for the plan)
  • a yearly deductible or any other deductibles
  • copayments and coinsurance
  • charges tied to any extra benefits you need

Note: Medicare Advantage premiums, deductibles, copayments, and coinsurance costs very from plan to plan. Also, if yours is an HMO plan, you'll likely pay more if you receive care outside your network.

Also, you'll probably come across more than a few "zero-premium" plans while researching Medicare Advantage. Sounds great, right? Unfortunately, many of these plans make up for the lack of a premium with higher out-of-pocket costs.

Something that can help keep these costs down is that Medicare Advantage plans have to limit how much enrollees pay out of pocket for services covered under Parts A and B. At the moment, that limit is $6,700 per year. Insurance companies can and do lower this limit, however, so shop around if you want your out-of-pocket payments to be as low as possible.

Q: Can I switch from a Medicare Advantage to Original Medicare? Or can I switch from Original Medicare to Medicare Advantage?

A: Yes. You can make either of these changes during the annual Medicare Open Enrollment Period. You can change from one Medicare Advantage plan to another during this period, too.

If all you want to do is drop your Medicare Advantage plan and return to Original Medicare, you can do so at one other time of the year as well. The Medicare Advantage Disenrollment Period begins on Jan. 1 and ends on Feb. each year.

By the way, if you switch to Original Medicare during the Medicare Advantage Disenrollment Period, you'll have until Feb. 14 to add drug coverage through a Medicare Part D plan.

Q: What if my Medicare Advantage plan decides to stop participating in Medicare?

A: Although plans can leave the Medicare program at the end of every year, few do so. Still, it's possible yours will at some point--so what are you supposed to do if that happens?

If you don't join another Medicare Advantage plan within a certain amount of time, you'll return to Original Medicare.

To retain your prescription drug or supplemental coverage, you'll have to join a Medicare Part D plan and buy a Medigap or MedSup policy.

Q: Can I buy Medigap or MedSup coverage if I have a Medicare Advantage plan?

A: No. In fact, it's illegal for an insurance company to sell you MedSup or Medigap if you're enrolled in a Medicare Advantage plan. The only time this isn't true is when you're switching back to Original Medicare.

If you have a Medigap policy and decide to get a Medicare Advantage plan, drop the supplemental coverage. You can't use it to pay Medicare Advantage deductibles, copayments, or premiums, so there's no reason to keep it.

Check out our Medigap and MedSup FAQ for more information about these plans. Or read: "When Does it Make Sense to Get a Medicare Supplement Plan?"

Q: Do Medicare Advantage plans cover prescription medications?

A: Most Medicare Advantage plans provide at least some amount of drug coverage. Not all do, though, and not all provide the same amount of coverage. If this is important to you, do your homework and make sure any plan you're considering covers as many of your medications as possible.

Q: Do Medicare Advantage plans cover any kinds of preventive care?

A: Medicare Part B covers a number of preventive and screening services, including:

  • cardiovascular disease, diabetes, Hepatitis C, and HIV screenings
  • breast, cervical, colorectal, lung, and prostate cancer screenings
  • flu, Hepatitis B, and pneumococcal shots

Medicare Advantage plans offer at least the same benefits as Medicare Part A and B, so they cover these services, too.

To learn more about how Medicare and other health plans cover preventive care in the article, "Health Insurance and Preventive Care."

Q: Do Medicare Advantage plans cover dental or eye care?

A: Medicare Advantage plans don't have to provide dental, hearing, or vision coverage, but many do.

As is the case with most of the coverage options discussed here--preventive care, mental health care, weight-loss treatments, and more--thoroughly research any plan that appears to meet your needs before signing on the dotted line.

Q: Do Medicare Advantage plans cover mental health care?

A: Medicare Parts A and B, as well as Medicare Advantage plans, cover some mental health treatments and services, too.

Medicare Part A helps pay for certain inpatient hospital stays. Medicare Part B helps pay for services provided outside of a hospital, including:

  • Psychiatrist or other physician appointments
  • Clinical psychologist or clinical social worker visits
  • Doctor-ordered lab tests

Your Medicare Advantage plan may also cover prescription drugs related to your care. Some don't cover any medications, though, and others may cover them but not the ones you take, so look closely at a plan's formulary (list of covered drugs) before you enroll.

To learn more about how Medicare does and doesn't cover mental health care, see this article, "What Kinds of Mental Health Care Do Medicare and Medigap Cover?"

Q: Do Medicare Advantage plans cover weight-loss surgery and treatments?

A: Both Medicare Part B and Medicare Advantage plans should cover counseling sessions that will help you lose weight.

They also should cover some types of weight-loss surgery, such as the gastric bypass and lap band procedures. For Original Medicare to pick up some or all of the costs tied to these treatments, though, you have to meet certain requirements. As for Medicare Advantage plans, they don't have to cover treatment and services that aren't medically necessary, so don't assume the one you have your eye on covers weight-loss surgery.

As for weight-loss medications, some Medicare Advantage plans cover them and some don't. If it's important to you that a particular plan covers one or more of these drugs, check its formulary. Or contact the insurer offering the plan.

To learn more about how Medicare does and doesn't cover this kind of care, read our article, "Does My Health Insurance Cover Weight-Loss Treatments?"

Q: Do Medicare Advantage plans cover cosmetic surgery?

A: These plans don't have to cover treatment and services that aren't medically necessary. As such, some--possibly many--won't pay for cosmetic surgery.

That said, Medicare Part A covers this kind of surgery when it's "needed because of accidental injury or to improve the function of a malformed body part." And it also covers breast reconstruction if an enrollee has a mastectomy due to breast cancer. So look for Medicare Advantage plans to offer at least this sort of assistance.

Q: Do Medicare Advantage plans cover medical care received outside the U.S.?

A: Some plans do cover overseas care. Some don't. This mostly depends on whether or not a plan provides supplemental coverage. If it does, it'll probably cover at least certain kinds of care you receive while abroad. If it doesn't, it's unlikely to pay for such treatments and services.

If a policy's documentation doesn't make it clear that it will or won't cover medical treatments or services performed outside the U.S., contact the provider.

For more information on this topic, check out: "Do Medicare, Medicare Advantage, or Medigap plans pay for medical treatments in foreign countries?"

Q: What are some of the things Medicare Advantage plans don't cover?

A: One of the main services these plans don't cover is hospice care. Don't worry, Original Medicare steps in to pay these costs even when you're enrolled in a Medicare Advantage plan.

Other than that, here are some services Medicare Advantage plans don't always cover. Many do, but not all.

  • Dental, hearing, or vision care
  • Prescription drug coverage
  • Services that aren't "medically necessary"
  • Treatments performed outside the U.S.
  • Wellness programs

Q: What are the pros and cons of choosing Medicare Advantage over Original Medicare?

A: Considering Medicare Advantage plans tend to offer benefits and coverage that go above and beyond what Original Medicare offers, it's easy to assume they're always the way to go.

In fact, there are pros and cons to joining one of these plans, just like there are pros and cons to sticking with Medicare Parts A, B, and D. Here are a few of each.

Pros

  • Some Medicare Advantage plans pay your Medicare Part B premium
  • Some come with no additional premium (for the plan itself)
  • Many include prescription drug coverage
  • Many also include various kinds of supplemental coverage, too
  • Medicare Advantage plans must limit yearly out-of-pocket payments (to no more than $6,700)
  • You're still in the Medicare program and you're still covered by its rights and protections when you enroll in one of these plans

Cons

  • Premiums, deductibles, copayments, and coinsurance costs often vary from plan to plan
  • If yours is an HMO, you may have to deal with networks and referrals and the like
  • Many Medicare Advantage plans only cover a specific state or region (so you could run into problems if you move around throughout the year)
  • These plans can charge more for certain services, like home health and inpatient hospital care, than Original Medicare does

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