Medicare is a federally sponsored medical insurance offered by the government to U.S. citizens that are 65 years or older. It is also offered to those that are under 65, but have a qualifying disability. If you are 65 and receiving Social Security benefits, you are eligible for Medicare.
Disabled persons under the age of 65 must wait 24 months after receiving Social Security Disability benefits to be eligible for Medicare. Citizens that have certain chronic and terminal illnesses qualify for Medicare immediately. For example, amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s disease) and End-Stage Renal Disease are two qualifying illnesses that warrant immediate Medicare eligibility. Approximately three months before you turn 65 years old, you will receive a Medicare card in the mail.
Medicare is made up of four different parts:
- Part A (hospital insurance) covers inpatient hospital services, long-term care facilities, skilled nursing facilities, home healthcare, hospice care and other therapies and medical equipment.
- Part B (medical insurance) primarily covers doctor visits, tests, preventive care, outpatient services and many other services not covered under Part A.
- Part C of Medicare is also known as Medicare Advantage (MA) plans.
- Part D covers prescription drug coverage.
Private insurance companies approved by Medicare provide medical coverage to those eligible for Original Medicare. A Medicare Advantage plan or MA is a private insurance alternative to Original Medicare.
When you choose a Medicare Advantage plan, your Part A or hospital coverage will be provided through your MA. Your Part B or doctor visit coverage will also be provided through your MA.
The most common MA plans are health maintenance organizations (HMOs). With the HMO option, the main premise is that by utilizing a primary physician and through preventive care, the Medicare beneficiary will have less need for medical care. This will reduce the HMO’s costs.
The preferred payment option (PPO) is significantly different than a HMO. This plan allows beneficiaries the choice to choose between in-network and out-of network providers. Although choosing out-of-network providers will result in additional expense, the beneficiary can make that choice. The PPO will cover all medically necessary care, regardless of whether the provider is within the network or outside the network; however, the care will generally cost more.
There are regional PPO plans and there are national PPO plans. The regional plan is generally limited to your geographic location and surrounding areas. In contrast, the national plan offers greater flexibility.
Original Medicare generally pays an MA a fixed rate per Medicare beneficiary. This is not dependent on the type or amount of care the beneficiary actually requires. Fortunately, in 2003, Congress decided to increase the amount paid to these private insurance companies that provide Medicare Advantage. This has been an incentive for more private insurance companies to offer MA plans. HMOs are required by the government to provide all of the coverages that Original Medicare provides but they must also provide some services that are over and beyond the scope of Original Medicare.
When you join an MA plan, you are still in the Medicare program. However, your medical services are covered through this plan and not Original Medicare.
Advantages of a Medicare Advantage plan or Part C
These plans are convenient for some, because you get all of your medical coverage from one source. In some cases, the premium for an MA plan may be more cost-effective than if you pay for Medigap and Part C coverage.
Oftentimes, you can receive some services not provided by original Medicare; for example, vision, dental and wellness coverage.
Disadvantages of a Medicare Advantage plan or Part C
There are disadvantages and advantages with Medicare Part C. Many people are extremely happy with the MA plan . However, it is up to you to do your own research and decide if this plan is for you.
There is a limited provider network with some MA plans. For these, the plan must determine if a specialist visit is necessary. There can be some issues with physical therapy or home healthcare if the plan does not approve it. Coverage by Medicare Part C is generally limited to the geographic region you live in. So, if you travel, there may be some coverage issues
It is important that you know that although you have chosen a Medicare Part C plan, you are still in the Medicare program. Thus, you still have rights and legal protections. Your Medicare Advantage plan still provides complete Part A and Part B coverage. You can only join or change a plan at one time during the year. Most plans require that you enroll for one year. You are eligible to join a MA plan, even if you have pre-existing conditions. However, the exception is End Stage Renal Disease (ESRD). If you have ESRD, you may not join a MA plan.
It is always a good idea to check with your plan’s customer service or administration departments to find out if a certain service is covered and what your financial responsibility will be. It is essential that you follow all of your plan’s rules to avoid problems with paying unnecessary costs and having coverage denied. As a consumer, you must take the time to educate yourself fully on the MA plan. You should know it inside out. This is your health coverage.
Staying within the plan’s network is important. However, if you make a decision to go outside the network, make an informed decision. Please keep in mind, providers can choose to leave the network at any time during the plan year. Additionally, your MA plan can choose to change providers within the network at any time during the year, so it is important to stay abreast of whatever changes are going on.
Medicare Advantage plans are limited, as they must follow certain rules. For instance, they cannot charge more for certain services that are offered by original Medicare. Chemotherapy, dialysis and skilled nursing facility care must be charged at the same rate as Original Medicare. An additional advantage is that MA plans limit your out-of-pocket expenses. Once you reach this number, you will not have to pay additional expenses.
Please keep in mind that your particular Medicare Advantage plan can choose to leave the program. If this happens, you will need to go back to Original Medicare or join another MA plan. Most importantly, please choose wisely. It is important not to make a rash decision when choosing a Medicare Advantage.
You must weigh the pros and cons of your specific health need to determine if a particular MA is going to work for you. It may be in your best interest to stick with Original Medicare and choose a Medigap plan. Medigap refers to Medicare supplemental coverage. These plans provide insurance coverage for the costs of actual medical services that Medicare does not cover. You must reach out and find out the information, as it can be complex and confusing. So, don’t be afraid to seek out the answers to your questions from Medicare and the private insurance companies that offer MA plans.
Look before you make a leap into any MA plan. Remember, you may be stuck with this plan for a year. Choosing a Medicare Advantage plan will bridge the gap between what Original Medicare pays for and the 20 percent you are responsible for. You just have to choose the plan that will give you the most bang for your buck.