Medicare Advantage Explained

If you are getting close to Medicare age, you may be hearing about Medicare Advantage plans. You may also hear them called Part C plans.

Medicare Advantage can be confusing at first because it is part of Medicare, but it does not work the same way as Original Medicare. Understanding the basics can help you ask better questions and feel more prepared as you review your options.

What Is Medicare Advantage?

Medicare Advantage is another way to receive Medicare benefits. These plans are offered by private insurance companies approved by Medicare.

With Original Medicare, your coverage comes directly through the federal Medicare program. With Medicare Advantage, you still have Medicare, but your Medicare-covered benefits are provided through a private health plan.

Medicare Advantage plans must cover the services that Original Medicare covers. Many plans also include prescription drug coverage and may offer extra benefits that Original Medicare does not usually cover.

How Medicare Advantage Fits Into Medicare

Medicare has several parts. Part A generally helps cover hospital-related care. Part B generally helps cover doctor visits, outpatient care, preventive services and other medical services.

Medicare Advantage is also called Part C. It combines your Part A and Part B benefits into one plan. Many Medicare Advantage plans also include Part D prescription drug coverage.

This means a Medicare Advantage plan may bundle several types of coverage into one plan structure. However, each plan has its own rules, costs, provider network and covered drug list.

Medicare Advantage Is Not Medicare Supplement Insurance

Medicare Advantage and Medicare Supplement Insurance are not the same thing.

Medicare Supplement Insurance, also called Medigap, works with Original Medicare. It helps pay some of the out-of-pocket costs that Original Medicare does not pay.

Medicare Advantage is different. It is an alternative way to receive your Medicare benefits. You generally cannot use a Medigap policy to help pay costs from a Medicare Advantage plan.

This is one of the most important distinctions to understand when comparing Medicare coverage options.

How Medicare Advantage Plans May Work

Medicare Advantage plans can vary depending on where you live and which insurance companies offer plans in your area. Common plan types may include health maintenance organization plans, preferred provider organization plans and other plan structures.

Some plans may require you to use doctors, hospitals or pharmacies in the plan’s network. Some may require referrals to see certain specialists. Some services or supplies may require prior authorization before the plan agrees to cover them.

These rules are not necessarily good or bad. They are simply part of how many Medicare Advantage plans are structured. The key is knowing the rules before you enroll.

What Medicare Advantage May Include

Medicare Advantage plans must provide Medicare-covered Part A and Part B benefits. Many plans also include prescription drug coverage.

Some plans may offer additional benefits These extra benefits vary by plan and service area. They may also have limits, network rules or other conditions.

Because benefits can differ from plan to plan, it is important to review the specific details of any plan you are considering. Do not assume that all Medicare Advantage plans work the same way.

Provider Networks Matter

A provider network is a group of doctors, hospitals, pharmacies and other health care providers that work with a plan.

With some Medicare Advantage plans, using in-network providers may help keep your costs lower. Going outside the network may cost more or may not be covered except in certain situations, such as emergencies.

Before choosing a plan, check whether your preferred doctors, hospitals and pharmacies are in the network. It is also wise to check this directly with the plan and the provider because networks can change.

Prescription Drug Coverage Matters Too

Many Medicare Advantage plans include prescription drug coverage. If you take medications, review the plan’s drug list before enrolling.

A drug list, sometimes called a formulary, shows which medications the plan covers. It may also show different cost levels, pharmacy requirements or rules for certain drugs.

A plan may look appealing based on medical benefits, but your prescription needs are still an important part of the decision.

Medicare Advantage and Costs

Medicare Advantage plans can have different types of costs. These may include monthly premiums, copays, coinsurance, deductibles and out-of-pocket limits.

A plan with a lower monthly premium is not automatically the lowest-cost option overall. Your total costs can depend on how often you use care, which doctors you see, what prescriptions you take and whether you stay in the plan’s network.

When comparing plans, look at the full picture rather than one cost item.

Original Medicare vs. Medicare Advantage

Original Medicare and Medicare Advantage are two different ways to receive Medicare coverage.

Original Medicare generally gives you broader access to doctors and hospitals that accept Medicare. Many people who choose Original Medicare also consider a separate Part D plan and may look at Medigap coverage.

Medicare Advantage usually offers a more plan-based structure. It may include bundled coverage, provider networks, extra benefits and plan-specific rules.

Neither option is right for everyone. The better question is which structure fits your health needs, prescriptions, providers, travel habits and budget.

Questions to Ask Before Choosing a Medicare Advantage Plan

Before enrolling in a Medicare Advantage plan, consider asking:

• Are my doctors and preferred hospitals in the plan’s network?
• Are my prescriptions covered by the plan?
• Does the plan include drug coverage?
• What costs could I pay when I use care?
• Do I need referrals to see specialists?
• Are prior authorizations required for certain services?
• What happens if I travel or spend part of the year somewhere else?
• Are the extra benefits useful for my situation?
• What rules apply if I use care outside the network?

These questions can help you compare plans based on how you actually use health care.

Glossary of Common Terms

Medicare Advantage: A Medicare-approved plan from a private insurance company that provides another way to receive Medicare benefits.

Part C: Another name for Medicare Advantage.

Original Medicare: Medicare coverage through the federal government. It includes Part A and Part B.

Provider network: A group of doctors, hospitals, pharmacies and other providers that work with a health plan.

Referral: Approval or direction from a primary doctor to see another provider, such as a specialist.

Prior authorization: Approval from a plan before certain services, items or medications are covered.

Formulary: A plan’s list of covered prescription drugs.

Copay: A set amount you may pay for a covered service or prescription.

Coinsurance: A percentage of the cost you may pay for a covered service.

Out-of-pocket limit: The most you may have to pay for covered services during a plan year, according to the plan’s rules.

The Bottom Line

Medicare Advantage is one way to receive Medicare benefits. It is offered by private insurance companies approved by Medicare and is also known as Part C.

For some people, Medicare Advantage may be appealing because it can combine hospital, medical and prescription drug coverage into one plan. Some plans may also offer extra benefits. For others, provider networks, referrals, prior authorization rules or travel considerations may be important factors to review carefully.

The right choice depends on your personal situation. Before deciding, review your doctors, medications, health needs, budget and comfort with plan rules. You can also use official Medicare resources or speak with a licensed insurance professional for educational guidance.

This article is for educational purposes only and does not provide personalized insurance, legal or financial advice.

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Sources:

https://www.medicare.gov/publications/12026-understanding-medicare-advantage-plans.pdf

https://www.medicare.gov/publications/12026-understanding-medicare-advantage-plans.pdf

https://www.medicare.gov/health-drug-plans/health-plans/your-health-plan-options/compare

https://www.medicare.gov/publications/11941-understanding-your-medicare-advantage-plans-provider-network.pdf