When it's time to sign up for Medicare, one choice you have is whether to stay with original Medicare or opt for one of the healthcare plans offered under Medicare Advantage (Part C of Medicare). Medicare Advantage plans provide a Medicare-approved private alternative to original Medicare (Parts A and B) and/or Medicare supplemental insurance (Medigap). (For more on the differences between Medicare Advantage and Medigap see: Medigap Vs. Medicare Advantage: Which Is Better?) Currently more than 16 million Medicare beneficiaries (about 30% of the total) participate in Medicare Advantage (MA) plans.

If you have decided that Medicare Advantage is right for you, here’s what you need to know to choose the best plan.

Eligibility

To be eligible to sign up for a Medicare Advantage plan you must:

• Already have Medicare Part A and Part B.

• Live in the service area of the Medicare Advantage plan you want to join.

• Not have end-stage renal disease (ESRD).

What’s Included

All Medicare Advantage plans provide Part A and Part B Medicare equivalent coverage. This includes hospital stays, skilled nursing care, home healthcare, doctor visits, outpatient care, screenings, immunizations and lab tests. The only Part A benefit not provided is hospice care. However, hospice care coverage continues under Medicare Part A – even though other Part A benefits are provided by your Medicare Advantage plan.

Your out-of-pocket maximum is capped with Medicare Advantage. The limit varies by plan and by provider but the maximum is $6,700. Finally, all Medicare Advantage plans include nationwide emergency, urgent care and dialysis coverage.

What’s Optional

Many Medicare Advantage plans also include Medicare prescription drug (Part D) coverage. Depending on the plan, other services may include dental, vision, hearing and wellness programs. (For more on the features of Medicare Advantage, see Five Distinct Features of Medicare Advantage. For more on prescription drug coverage under Medicare, read Getting Through the Medicare Part D Maze.)

The 6 Types of Plans

Following are the six kinds of Medicare Advantage plans from which you can choose.

1. Health Maintenance Organization (HMO) Plans An HMO plan typically requires that you use doctors, hospitals and other services within the plan’s network. It also often stipulates that you must choose a primary care physician (PCP) and get a referral from your PCP if you need to be treated by a specialist. HMO plans often include Medicare prescription drug (Part D) coverage. The main benefit of Medicare Advantage HMO plans is that your out-of-pocket costs will likely be lower than with other Medicare Advantage plans.

2. HMO Point of Service (HMO POS) Plans An HMO Point of Service Plan is an HMO plan that provides some out-of-network services. This feature can be especially helpful to seniors who winter in a different state (snowbirds) or who travel frequently outside the network coverage area of their current plan. Out-of-pocket costs for HMO POS plans are typically higher than those of regular HMO plans.

3. Preferred Provider Organization (PPO) Plans In a Medicare Advantage PPO plan, you can use any doctor, healthcare provider or hospital but you will pay more when you use a doctor or provider outside the plan’s network. Usually, you don’t need a referral to see a specialist. Prescription drug coverage is provided by most PPO plans. However, if you join a PPO that does not provide this coverage, you do not have the option to join a Medicare prescription drug (Part D) plan.

In general, PPO plans provide more benefits than original Medicare but at a higher cost. In addition, PPO plans carry higher out-of-pocket costs than HMOs or HMO POS plans.

4. Private Fee-for-Service (PFFS) Plans A less common Medicare Advantage plan is the Private Fee for Service (PFFS) plan. PFFS plans aren’t the same as original Medicare or Medigap. These plans determine, in advance, how much they will pay doctors, other healthcare providers and hospitals, along with how much you will pay to receive care.

Although PFFS plans typically allow you to go to any doctor, other healthcare provider or hospital, those providers must accept the plan’s payment terms and agree to provide treatment. Some PFFS plans have a network of providers who have already agreed to always treat plan members. You do not need to choose a PCP or get a referral to see a specialist in a PFFS plan. If you join one of these plans, you can also go to an out-of-network provider who accepts the plan’s terms, but your out-of-pocket costs will likely be higher. If your chosen PFFS plan does not provide prescription drug coverage, you have the option to join a Medicare prescription drug plan.

5. Special Needs Plans (SNPs) Another less common Medicare Advantage plan is called a Special Needs Plan (SNP). SNPs limit membership to certain groups of people. Benefits are tailored to meet the needs of each of these groups of beneficiaries. You can qualify to join a SNP if you:

• Live in a nursing home or require nursing care at home, OR

• Qualify for both Medicare and Medicaid, OR

• Have a specific chronic or disabling condition including diabetes, end-stage renal disease, HIV or AIDS, chronic heart failure or dementia.

Services must be provided by members of the Medicare SNP network – except for emergencies, urgent care or a sudden illness or injury. SNPs are required to provide Medicare prescription drug coverage. As a member of an SNP, you must select a PCP or special care coordinator and are required to get a referral to see a specialist. You can join an SNP at any time.

For those with both Medicare and Medicaid there would likely be no cost associated with being a member of an SNP. Others would pay the average basic cost of a regular Medicare Advantage plan.

6. Medical Savings Account (MSA) Plans The final type of Medicare Advantage plan is the Medical Savings Account (MSA) plan. MSA plans are high deductible healthcare plans attached to a bank account. They are similar to Health Savings Account (HSA) plans provided by many employers. There are two parts to a Medicare MSA plan – high-deductible health insurance and a medical savings account. You have flexibility in choosing your healthcare services and providers, and once you reach the deductible, regular Medicare services are fully covered. However, Medicare Advantage MSA plans do not cover Medicare Part D prescription drugs.

Visit Medicare.gov

Once you understand the makeup of all six types of Medicare Advantage plans, your next step is to determine which plans are available where you live. Visit the home page at Medicare.gov and click on the button that says, “Find health & drug plans.” You will be asked to list any drugs you take. If you don’t want to do this, the software will provide an average cost at the end. It is better, however, to take the time to list your medicines exactly as you take them to get the best comparison.

After you answer all the questions, a page will come up that says “Refine your plan results.” Click on the box to see “Medicare Health Plans with drug coverage" followed by the box that says, "Continue to Plan Results.” You will now be on a page entitled “Your Plan Results.” This is where you can review and compare the various Medicare Advantage plans available to you. There are several columns containing information you can use to make comparisons.

• Estimated Annual Health and Drug Costs: This column gives you an idea of the annual cost of each healthcare plan. You can compare it with other plans as well as with original Medicare, which will be listed at the top of the page. Although it might seem tempting to use overall cost as the only criterion, it’s important to consider all factors before making a choice.

• Overall Star Rating: Medicare rates health plans with anywhere from one to five stars. Ratings include everything from customer satisfaction to quality of care. Plans with four or five stars receive additional funds from the government, which could indicate a higher level of care or more benefits for you as a member.

• Deductibles and Drug Copay/Coinsurance: A short version of deductibles appears in this column. If you click on the name of the plan, you will see more detail. The listed annual out-of-pocket limit is the most you would have to pay out-of-pocket each year.

• Provider Network: On the detail page, farther down, a caption entitled “Provider Network” tells you how many doctors actually accept patients in this plan. This information is important because if you are forced to go out-of-network for service, in most cases, you will pay more.

• Additional Coverage: A number of Medicare Advantage plans include dental, vision and hearing coverage. A few (not many) have a nationwide presence, which could be important to you if you travel or spend part of the year away from home. Small circles on the details or main page indicate what additional coverages are provided.

Call with Questions

The information on Medicare.gov isn’t always complete. If you like a plan but are not sure if it provides a specific service – such as nationwide coverage – call the provider’s toll-free number and ask. If you are unsure what questions to ask when you call, Medicare Interactive has a helpful, extensive listing.

Once you have decided which plan best fits your needs, you can enroll online or by calling 1-800 MEDICARE. You can also enroll through the insurance company you have chosen or through an insurance broker.

The Bottom Line

Spend time on the Medicare.gov website and plug in your specifics, including medicines you take on a regular basis, to see all available options in your area. Review these options at length before choosing a plan. Don't forget to check the costs, drugs and available healthcare providers from your chosen plan against what you might get with original Medicare, plus a Medigap plan and Medicare Part D (original Medicare alone will not match the coverage of an Advantage plan).

Once you're on a Medicare Advantage plan, be sure to check back with the Medicare.gov website each year during the open enrollment period. Terms can change and you need to see if the plan you have now is the still best one for you moving forward.

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