Medicare 101: How To Evaluate Your Medicare Enrollment Options: Advantage Plans
With the Medicare Annual Enrollment period right around the corner, it is time to start thinking about your elections for next year. Whether you are new to enrollment or a veteran, it is important to take some time to evaluate the type of plan that will be best for your health and your wallet.
We teamed up with Medicare expert Shirley Van Nostrand who recently took over for the wonderful Cheri McDonald at Advantage Insurance Benefits to bring you a series that delves into the nitty-gritty of Medicare coverage. Due to her expertise, we were able to bring you this blog series.
This series will cover three topics: Medicare Advantage Plans, Medicare Supplement plans, and Prescription drug plans. Each of these three concepts are important to understand as you navigate selecting the right plan for you. We are kicking off the series with the ins and outs of Medicare Advantage Plans.
Before we dive into the many intricacies of Advantage plans, let’s go back to square one and take a look at what Original Medicare is and what it entails.
Upon its conception, Medicare was divided into two parts: A and B, otherwise known as Original Medicare. Original Medicare was designed to cover both hospital expenses (Part A) and medical insurance (Part B).
But there are many common expenses that Medicare does not cover including:
- Annual Physical
- Long-term care
This gap in coverage led to many other developments in the healthcare industry to help make these and other benefits available to those enrolled in Medicare. The two most popular are Medicare Advantage Plans and Medicare Supplement Plans. Today, we are going to look at Advantage Plans: what they are and how they operate.
What is a Medicare Advantage Plan?
A Medicare Advantage plan, also known as Medicare Part C, is a Medicare enrollment election through a private insurance company. How it works is that a private insurance provider is contracted with Medicare, with all of the benefits being managed through the insurance company, not Medicare. This administration and handling of benefits and also dollars allow them to offer more services and benefits to their customers.
With an Advantage plan, those who are enrolled receive all of the benefits of Original Medicare (A and B) but also have access to other important medical benefits, namely prescription medication coverage (Part D). This can be convenient for customers as all of their benefits are managed under one plan.
It is important to note that while an Advantage Plan could offer prescription drug coverage, not all do. It is also important to check what type of medication is covered. Some plans ration certain prescriptions, especially those that are high-cost. Double-check with your potential provider about what is and isn’t included before moving forward.
Each plan is different, but many of them include additional benefits such as:
- Naturopathic and Chiropractic benefits
- Gym memberships/health and wellness programs
- Worldwide emergency healthcare coverage
Remember, not all Medicare Advantage plans are created equal. Each will have its own set of benefits and costs. There are two types of plans that you should be aware of, HMO and PPO.
What is the difference between HMO and PPO plans?
A Health Maintenance Organization, or HMO, Medicare Advantage Plan can offer great benefits such as a low or even non-existent monthly premiums. But it is important to know that whenever you need to see a doctor or specialist, your insurance provider will need to review and approve the referral before you can make an appointment. This can hinder you from getting into the doctor you need in a timely fashion. No matter where you go to receive care, though, the doctor will need to be in-network.
Preferred Provider Organization, or PPO, plans work a bit differently. Many of them do not have a monthly premium and while they do require you to stay in-network, the insurance provider will not need to authorize your visit. This allows you more freedom and flexibility for when you are able to be seen.
The Costs of Advantage Plans
On the surface, Medicare advantage plans seem to be an ideal situation. They offer more benefits in an all-inclusive setting streamlining the process for many customers. But there are some important caveats to keep in mind before enrolling in an Advantage Plan.
While most Medicare Advantage plans don’t charge an additional premium (you’ll still have your Part B premium), many have quite high out-of-pocket maximums, ranging from $4,000 to $7,000 for some plans. Most plans will have numerous out of pocket expenses, in the form of copays or deductibles, until you reach the maximum spending limit for the year including office visits, lab tests, emergency room visits, and more. This can lead many people unaware of the limitations of their plans until they get sick.
So while you may be saving more money each month, should something happen, you could be on the hook for a much bigger bill than expected. For many retirees, the likelihood of requiring medical attention increases. This could mean that when you need to go to the emergency room you are stuck paying thousands of dollars because of the out-of-pocket maximum associated with your current plan.
With Medicare Advantage plans, it is important to read the fine print of your plan. Be sure that you know your co-pays, deductibles, out-of-pocket maximums, and any other expenses you could have before signing on to a plan. It is also good to check which doctors you can go to and which aren’t covered to see if your current provider is in-network and if you are happy with those who are. Remember to also understand exactly what is and is not included in your plan including prescription coverage, vision, dental, and other benefits.
The high out-of-pocket expenses required for Advantage Plans often leave people looking for a different option, which leads us to our topic for next time, Medicare Supplement Plans.
Thank you for tuning into our Medicare series. It is of the utmost importance to us that you receive the best information to help you make your decision about your healthcare plan. Navigating Medicare can be a tall order. If you would like personalized advice on how to financially prepare for your healthcare in retirement, schedule a time to talk to us.
Thanks again everyone, and we will see you back here for Part II coming up shortly!