Medicare Part C | Medicare Advantage overview
While original Medicare provides health insurance benefits directly from the government, beneficiaries can also select to receive their insurance from a private health plan. This option, known as Medicare Part C, was formally created in 1997 with the introduction of Medicare+Choice plans. In 2003, the law was updated, and Part C health plans were renamed Medicare Advantage.
Understanding Medicare Advantage
Under Medicare Advantage, beneficiaries can combine the different parts of Medicare into one health plan. By law, Part C plans must include almost all the same coverage as Part A and Part B, which are collectively known as original Medicare. Part C plans may also offer coverage for additional services not included under original Medicare, such as a dental or vision benefits. In addition, many Medicare Advantage plans offer Part D coverage for prescription drugs.
While Medicare Advantage plans must operate within guidelines set forth by the government, private health insurers are allowed to set their own out-of-pocket costs and terms of service. For example, some plans may require their members to use only in-network physicians while others may stipulate that specialists can only be seen after a referral. Medicare beneficiaries should fully understand how a policy is structured, as well as the costs involved, before enrolling.
Types of Medicare Advantage plans
There are six types of Medicare Advantage plans available.
- Health Maintenance Organization: One of the most popular plan types, HMOs limit members to using in-network providers except in the case of an emergency. In addition, HMOs generally require a referral from a primary care doctor before receiving specialty care.
- Preferred Provider Organization: PPOs are another popular option for Medicare Advantage plans. Like HMOs, these plans maintain a list of in-network providers. Using a health care professional or facility outside the list may result in higher out-of-pocket costs.
- Private Fee-for-Service Plan: These plans allow the patient to receive treatment from any health care provider or facility who agrees to accept the plan's reimbursement structure and conditions. Not all providers accept these plans, so patients should be sure their preferred doctors are willing to participate.
- Special Needs Plan: These are specialty plans that apply to specific situations. For example, a SNP may be appropriate when an individual has both Medicaid and Medicare coverage, has certain chronic illnesses or lives in a nursing home.
- HMO Point-of-Service Plan: A less common option, HMOPOS policies may allow members to use out-of-network providers but require higher co-payments or co-insurance for those visits.
- Medical Savings Account Plan: Another less common Medicare Advantage plan is a MSA. These plans combine high deductible health insurance with a bank account. Medicare deposits money into the bank account that individuals can use for health care costs.
Enrolling in Medicare Part C
Unlike original Medicare, which is administered by the federal government, Medicare Advantage plans are offered by private health insurance companies. Beneficiaries enroll directly with the insurer offering the policy.
There are two enrollment periods for Medicare Part C. The first is the initial enrollment period, which runs from three months before an individual's 65th birthday to three months after the birthday month. For those receiving Medicare because of a disability, the initial enrollment period runs from three months before the 25th month of disability to three months after that month.
There is also an annual open enrollment period in which Medicare beneficiaries can change plans or switch from Medicare Part C to original Medicare or vice versa. The open enrollment period runs from October 15th through December 7th of each year.
The cost of Medicare Advantage
Since Medicare Advantage plans do not have a standard set of benefits, there is no standard premium for Medicare Part C. Beneficiaries pay the Part B premium, which varies depending on income, plus whatever the private insurer charges for any additional coverage. In addition to comparing premium costs, beneficiaries should consider deductibles, coinsurance and co-payment amounts before enrolling in a Medicare Advantage plan.
Medicare Part C coverage
Medicare Advantage plans must cover all services included in original Medicare except hospice. However, all beneficiaries receive hospice coverage from original Medicare, even those enrolled in a Medicare Advantage plan. In addition to hospital and medical insurance, Medicare Advantage plans may also pay for other health care services.
- Prescription drugs
- Health and wellness programs
Not all Medicare Advantage plans pay for all these services, so beneficiaries should carefully review a plan's coverage before enrolling.