Medicare is a federally sponsored medical insurance policy offered by the government to U.S. citizens aged 65 years or older. It is also offered to those that are under 65, but have a qualifying disability or receive Social Security or Railroad Retirement Board (RRB) benefits.
Disabled persons under the age of 65 must wait 24 months after receiving Social Security Disability benefits to be eligible for Medicare. Citizens with certain chronic and terminal illnesses qualify for Medicare immediately. For example, amyotrophic lateral sclerosis (AMS, 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 or receive your 25th month of disability benefits, you will receive a Medicare card in the mail if you qualify for automatic enrollment.
Medicare is made up of four different parts. Medicare Part A covers inpatient hospital services, long-term care facilities, skilled nursing facilities, home healthcare, hospice care and other therapies and medical equipment. Medicare Part B primarily covers doctor visits, tests, preventive care, outpatient services and many other services not covered under Part A. Medicare Part C is also known as Medicare Advantage. Medicare 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 policy that is an alternative to traditional or Original Medicare. When you choose a Medicare Advantage plan, both your Part A (hospital) coverage and your Part B (doctor visit) coverage are provided through your MA.
Medicare Advantage is so important because it offers Medicare beneficiaries a choice as to how they receive their healthcare. 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. Therefore, this will reduce the costs.
The preferred provider organization (PPO) option is significantly different from an HMO. This plan allows beneficiaries to choose between in-network and out-of-network providers, without restriction. Although choosing an out-of-network provider could result in higher copays, 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 of the network; however, the care will generally cost more outside the network.
There are regional and 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. 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. It also helped decrease the overall cost of a Medicare Advantage plan for the participant.
Medicare Advantage plans are required by the government to provide all of the coverage that Original Medicare provides. They also provide some services that are above and beyond the scope of traditional Medicare benefits.
When you join an MA plan, you are still within the Medicare program; however, your medical services are covered through this plan, which is administered by a private insurer and not Original Medicare. The only exception to this rule is with hospice care claims. Any necessity for hospice care will be covered by Medicare Part A, even though the person is not enrolled in 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 paid for Original Medicare coverage and Medigap. Medigap health insurance plans, which are sold by private companies, supplement some costs not paid by Original Medicare only. People on an MA plan may not enroll in a Medigap plan too.
Oftentimes, you can receive some services not provided by Original Medicare with your Medicare Advantage plan. For example, vision, dental and wellness coverage may be included automatically in your MA plan or for a small additional monthly charge.
Disadvantages of a Medicare Advantage plan or Part C
The provider network for Medicare Advantage plans may be limited in some states. It is not a requirement for every insurance company to offer an MA plan in every state they participate in. Only those providers that were approved by the Medicare program can offer MA plans to the public.
Additionally, some MA plans require prior approval to determine whether a specialist visit is necessary. There can be some issues with physical therapy or home healthcare services 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.
Although there are disadvantages and advantages with Medicare Advantage, it is up to you to do your homework and decide if this plan is for you.
It is important to know that although you have chosen a Medicare Advantage 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 during a particular period of time during the year. This period of time is called the open enrollment period. Most plans require that you enroll for one year. Whether you switch your MA plan or join an MA plan and drop Original Medicare, the open enrollment period runs from October 15 to December 7 each year.
Additionally, thanks to the Affordable Care Act, you are eligible to join an MA plan even though you may have preexisting conditions. The exception to this rule is if a person becomes qualified for Medicare due to being diagnosed with End-Stage Renal Disease (ESRD). If you have ESRD, you may not join an MA plan and are confined to Original Medicare. If you were already enrolled in a Medicare Advantage plan before you were diagnosed with ESRD, you may keep that plan.
It is always a good idea to check with your plan’s policy book, customer service department or administration department to find out if a certain service is covered and what your financial responsibility will be. It is essential that you follow all of the rules of your plan in order 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 that providers can choose to leave the network at any time during the plan year. Additionally, your Medicare Advantage 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 required to follow certain rules as well. 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 with MA plans is that they limit your out-of-pocket expenses. Once you reach this number, you will not have to pay additional expenses. Please also be aware that your particular MA plan carrier can also choose to leave the program entirely at any point. If this happens, you will need to go back to Original Medicare or join an MA plan through another carrier.