How Does Medicare Advantage Work? 

As of 2022, there were approximately 64 million people enrolled in Medicare health care insurance in the United States. Twenty six million of them were enrolled in a Medicare Advantage plan. 

Medicare Advantage isn’t a substitute for Original Medicare insurance, but rather an alternative way for eligible beneficiaries to get their Medicare coverage. Medicare Advantage – or Medicare Part C – plans are sold by Medicare-approved private insurance companies that work with the federal Medicare program. Medicare pays the provider a certain amount of money per month and per enrollee to cover their health care services. 

All Medicare Advantage plans are required by federal laws to provide at least all the benefits that Original Medicare Parts A (hospital insurance) and B (medical insurance) provide. Part C plan providers have the option to include extra benefits and additional coverage bundled in the same plan, but they must cover the basic benefits of Medicare first. 

If you’re considering enrolling in a Medicare Advantage plan, the following information can help you understand what types of plans are available and how they may cover your health care needs.  

How does Medicare Advantage insurance work? 

As mentioned above, all Medicare Advantage plans must cover all health care services that Original Medicare (Parts A and B) do, except for hospice care services. If you need hospice care, your coverage reverts to Original Medicare Part A. 

On the other hand, Medicare Advantage plans have the option to cover health care services that aren’t covered by Original Medicare (A and B). Many MA plans offer extra benefits such as routine dental, hearing, and vision care. Some plans offer monthly memberships to fitness programs, transportation services to and from doctors’ visits, over-the-counter drug allowances, and more. 

Most Medicare Advantage plans also include prescription drug (Part D) coverage. As with stand-alone Medicare Part D plans, insurance providers can choose what drugs they cover (apart from some standard Medicare requirements) and how much they charge for premiums, deductibles, and cost-sharing. 

What types of Medicare Advantage plans are there? 

Medicare Advantage (MA) plans aren’t standardized like Medigap plans are. Every insurance provider offering MA plans has different coverage options, network requirements, out-of-pocket charges, and rules. 

There are different types of Medicare Advantage plans to choose from depending on what type of coverage you want:

  • HMO (Health Maintenance Organization) plans that usually require you to choose your primary care physician, get referrals to see specialists, and use network providers. These requirements help you coordinate your care more efficiently and keep your out-of-pocket costs lower.
  • PPO (Preferred Provider Organization) plans allow more flexibility regarding in-network providers. You can lower your costs by using providers within the plan’s network, but you’ll still get some coverage if you use other providers. PPOs don’t require primary care physicians or referrals. 
  • PFFS (Private Fee-for-Service) plans allow beneficiaries to get care from any health care provider or medical facility that agrees to the PFFS plan’s terms for payment. These plans are convenient if you use health care providers that aren’t within a network, but costs are higher. You can use in-network providers to lower your costs. 
  • SNP (Special Needs Plans) are only available for those who have certain circumstances, illnesses or disabilities. Enrollees can maximize care and lower costs by using providers in the plan’s network. They must choose a primary care physician and get referrals to see specialists. All SNPs include prescription drug coverage. 
  • MSA (Medicare Savings Account) plans are high-deductible plans with allocated health savings accounts. These are the least common of the Medicare Advantage plans and might not be available in your service area. 

What monthly charges do Medicare Advantage plans have? 

How much you pay for your Medicare Advantage plan depends on the type of plan, the provider, your service area, and other factors. Even if you have Part C coverage, you must still cover the Medicare Part B monthly premium. Most Medicare Advantage plans bundle all monthly premiums into one amount, so you don’t have to pay them separately. A plan representative can explain all the details about your charges and coverage before you enroll. 

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