If you are approaching your 65th birthday, you should start thinking about what kind of Medicare coverage you will need. There are two options—Original Medicare, the government-run program that includes Part A hospitalization coverage and Part B doctor and outpatient services; or a Medicare Advantage plan, which combines Parts A and B and, in most cases, Part D prescription drug coverage.
According to the AARP, enrollment in Medicare Advantage plans has been steadily increasing for nearly 20 years, with 42% of Medicare beneficiaries enrolled in Medicare Advantage plans in 2021.
As an alternative to Original Medicare, Medicare Advantage plans are offered by private insurers under contracts with the federal government to provide health insurance benefits to people who qualify for Medicare. In this article, we’ll explain how Medicare Advantage plans work and how you can choose the best plan for you.
What is a Medicare Advantage Plan?
The Medicare Advantage Plan is another way to get your Medicare Part A and Part B coverage. Medicare Advantage Plans, also known as “Part C,” are provided by Medicare-approved private companies that must adhere to Medicare’s rules.
The majority of Medicare Advantage Plans include drug coverage (Part D). Medicare Advantage Plans are classified into several types. Each of these Medicare Advantage Plan types has its own set of rules regarding how you receive your Medicare-covered Part A and B services, as well as your plan’s supplemental benefits.
If you select a Medicare Advantage Plan, you’ll still have Medicare, but most of your Part A and Part B coverage will be provided by the Medicare Advantage Plan, not the Original Medicare. To access your Medicare-covered services, you’ll need the card from your Medicare Advantage Plan. It’s important to keep your red, white, and blue Medicare card in a safe place in case you need to switch back to Original Medicare.
The Medicare Advantage Plan: How do they work?
When you enrol in a Medicare Advantage Plan, Medicare pays a set amount to the company that provides your coverage each month. Companies that provide Medicare Advantage plans must abide by Medicare’s rules.
However, each Medicare Advantage Plan may charge different out-of-pocket costs and have different rules for how you obtain services (such as whether you require a referral to see a specialist or whether you must go to doctors, facilities, or suppliers in the plan’s network for non-emergency or non-urgent care).
These rules are subject to change each year. Any changes to the plan must be communicated to you before the start of the next enrollment year. If you enrol in a Medicare Advantage Plan, you will have the same rights and protections as people who have original Medicare.
What Are the Differences Among Medicare Parts A, B, C, and D?
Part A of Medicare (Hospital Insurance)
Part A of Medicare covers inpatient hospital or skilled nursing facility care, but not custodial or long-term care. Part A also contributes to the cost of hospice care and some home health care.
Part A of Medicare has a deductible ($1,556 in 2022) and coinsurance, which means patients must pay a portion of the bill. For example, there’s no coinsurance for the first 60 days of hospital care, but patients will typically pay $389 per day from the 61st to 90th days of hospitalization in 2022, and more afterward.
Part B of Medicare (Medical Insurance)
Part B of Medicare covers doctor visits as well as other medically necessary services and supplies. Preventive services or health care to prevent illness are included, as are ambulance services, durable medical equipment, mental health coverage, and a few types of outpatient prescription drugs.
As of 2022, Medicare Part B has a monthly premium starting at $170.10 per month. Single people and married couples with adjusted gross incomes over $91,000 and $182,000, respectively, pay higher premiums. Medicare Part B has a deductible of $233 in 2022. After that, you typically pay 20% of the Medicare-approved amount for services and supplies.
Part C of Medicare (Medicare Advantage)
Medicare Advantage, also known as Medicare Part C, is a type of health plan provided by private insurers that includes the benefits of Parts A and B, as well as Part D (prescription drug coverage). A Medicare Advantage plan may require that you pay a separate premium to the insurer, along with your Part B premium. However, many Medicare Advantage plans are offered at no premium to the policyholder.
A bundled plan may include additional coverage, such as some cost benefits for vision, hearing, and dental care. In contrast to Original Medicare, Medicare Advantage plans have an annual out-of-pocket cost cap. In 2022, you could pay as much as $7,550 out of pocket. HMOs and PPOs are the most common types of Medicare Advantage plans.
Part D of Medicare (Prescription Drugs)
Part D of Medicare covers the cost of prescription drugs, both generic and brand name. Plans are provided by private insurers and require a monthly premium of $33 in 2022. Beneficiaries with higher incomes pay more.
Medicare Advantage Plans: How to Choose the Best One
It is important to understand your health care needs and to consider what each Medicare Advantage plan offers before comparing them. If you have a chronic medical condition and want to continue seeing the same doctor or facility, you’ll need health insurance that they accept. Some plans may offer lower out-of-pocket costs than others if you take prescription drugs.
As you evaluate Medicare Advantage plans, you should ask the following questions:
- What is the Medicare star rating of the plan?
- Do you require a referral to see a specialist?
- Do you have coverage for your doctors?
- What are the costs of all your prescription drugs? Are they all covered?
- What are the benefits of each plan? (Do you require vision or dental care, and if so, are these services included?)
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