Medicare Advantage

What Is Medicare Advantage?

Medicare Advantage (MA) is a Medicare plan offered by private insurers who contract with the program. Medicare Advantage plans, also known as Medicare Part C, provide hospital, outpatient, and, usually, prescription drug coverage, supplanting benefits under Medicare parts A, B, and D.

Anyone who joins an MA plan still has Medicare, and must continue paying Medicare Part B premiums in addition to any charged by the plan. Medicare Advantage plans typically have lower out-of-pocket choice than traditional Medicare and may offer additional benefits, while requiring members to receive care from providers in their network, and to obtain referrals to see specialists.

Key Takeaways

  • Medicare Advantage, also known as Medicare Part C, are Medicare-approved plans offered by private insurers.
  • Medicare Advantage plans replace hospital, outpatient, and, typically, prescription drug benefits under parts A, B, and D of traditional Medicare, with the exception of hospice care.
  • MA plans often require patients to see providers in their network or charge higher out-of-pocket costs for outside providers, and require referrals to see specialists
  • Medicare Advantage providers receive a fixed fee from the program for each participant, and may charge policyholders out-of-pocket fees for some services.

Watch Now: Medigap vs. Medicare Advantage

How Medicare Advantage Works

Medicare is generally available for people age 65 or older, younger people with disabilities, and people with end-stage renal disease—permanent kidney failure requiring dialysis or transplant—or amyotrophic lateral sclerosi (ALS).

Medicare Advantage plans are Medicare-approved policies offered by private companies as an alternative to traditional Medicare coverage. MA plans provide hospital and outpatient coverage that replaces that under parts A and B of Medicare, with the exception of hospice care. Most MA plans also include Part D prescription drug coverage.

More than 28 million people, about 48% of those receiving Medicare benefits, were enrolled in a Medicare Advantage plan in 2022. Medicare Advantage plan providers receive a fixed fee from the program for each enrolled health plan participant. The plan providers also collect out-of-pocket costs from policyholders, and may limit coverage to providers in a network while requiring referrals to see specialists.

Some Medicare Advantage plans cover additional costs not covered by traditional Medicare, including vision, dental, and hearing-related expenses. Medicare Advantage plans don't work with Medigap, which is also called Medicare Supplement Insurance.

The average Medicare Advantage monthly premium was expected to decline to $18 in 2023, from $19.52 in 2022. Medicare Advantage participants pay any MA plan premium in addition to the monthly Medicare Part B premium, which is set at $164.90 for 2023, down from $170.10 in 2022.

Regional preferred provider organizations (PPOs) were established to provide rural beneficiaries greater access to Medicare Advantage plans and cover entire statewide or multi-state regions. Regional PPOs accounted for 5% of all Medicare Advantage enrollees in 2020.

Types of Medicare Advantage Plans

The most common Medicare Advantage plan is a health maintenance organization (HMO). HMOs enroll the majority of Medicare Advantage participants. Other Medicare Advantage plans are structured as PPOs, private fee-for-service (PFFS) plans, and special needs plans (SNPs). HMO point-of-service (HMOPOS) plans and medical savings account (MSA) plans are less common.

To join any Medicare Advantage plan, you must live within its service area and have Medicare parts A and B.

People with end-stage renal disease became eligible to enroll in any local Medicare Advantage plan in 2021.

People with end-stage renal disease (ESRD) became eligible to sign up for any Medicare Advantage plan in their area in 2021. ESRD patients should compare the costs and benefits of Medical Advantage plans with those of traditional Medicare coverage, and make sure their doctors and hospital are in the plan's provider network.

Special Considerations

Medicare’s online plan-finder tool includes information about Medicare Advantage plans. To enroll in a Medicare Advantage plan, a consumer must provide the information on their Medicare card, including their Medicare number along with the dates when their Part A and Part B coverage began. People can change their Medicare Advantage plans during a specified open enrollment period in the fall, typically running from mid-October to early December.

Like other types of health insurance, each Medicare Advantage plan has different rules about coverage for treatment, patient responsibility, costs, and more. Joining a Medicare Advantage plan may make someone ineligible to continue receiving health care coverage through their employer or union, so if employer-based coverage fits a person's needs, they may want to hold off on enrolling in Medicare.

All Medicare Advantage plans have an annual limit on out-of-pocket costs, which may make them more cost-effective for certain beneficiaries. The out-of-pocket maximum for single coverage rose to $9,100 for 2023, from $8,700 in 2022. For family coverage, the 2023 out-of-pocket maximum is $18,200, up from $17,400 in 2022.

What is Medicare Advantage?

Medicare Advantage, also known as Medicare Part C, is a category of privately run health plans contracted by Medicare to provide an alternative to traditional Medicare coverage for program participants. Medicare Advantage plans typically replace coverage under Medicare parts A, B, and D. They often offer lower premium costs and cover more services than traditional Medicare, while limiting care to in-network providers and requiring referrals for consultations with specialists.

What Are the Disadvantages of Medicare Advantage?

Medicare Advantage can become expensive if you're sick, due to co-pays. The enrollment period is limited, and you won't be eligible for Medigap coverage if you have Medicare Advantage. Additionally, providers can leave and join your network at any time.

Can I Sign Up for Medicare Advantage with a Preexisting Condition?

Yes. Medicare Advantage offers coverage for individuals with preexisting conditions.

Article Sources
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