Medicare Advantage Plans (Medicare Part C)
Medicare Advantage plans, sometimes called Part C plans, are a type of Medicare health plan offered by private companies that contract with Medicare to provide you with all your Part A and Part B benefits. They are Medicare replacement plans.
Medicare Advantage Plans take over your Medicare benefits and require provider networks as defined by the insurance company offering the plan. These include HMO, PPO and Private Fee-for-Service Plans. If you’re enrolled in a Medicare Advantage Plan, all Medicare services are covered through the plan but claims are not paid for by Medicare, but by the Advantage plan. Most Medicare Advantage Plans include prescription drug coverage.
Rates for Medicare Advantage plans are relatively low but you still must have Part A and pay for Part B before you can purchase a Medicare Advantage plan.
Friends and clients who have turned 65 all tell us the same story. They were inundated with advertising letters, postcards and even phone calls promoting the virtues of Medicare Advantage plans. No one is happier about our upcoming 65th birthdays it seems, than the private insurers who sell Medicare Advantage plans and Part D drug plans.
Advantage plans are marketed and sold aggressively because they are very profitable to insurance companies that sell them. The average insurance company will get roughly $10,000.00 from Medicare for each person who buys an Advantage plan. Most of the Advantage plans require members to use only the health care providers within the plan’s network, and the insurance company picks the doctors and other providers you can use. If your doctor is in the network, then the Advantage plans may offer you great coverage for less money, but if you need to visit providers outside of the network, it can be very costly.
How do Medicare Advantage plans work?
Advantage plan premiums
Premiums are usually very low. In fact, the rates range from $0 for some HMO plans to just over $100.00 per month. Rates and plan designs vary for each state and county, so finding the best plans in your county requires research. (That’s where your insurance agent or Medicare advisor can help.)
Advantage plans do not pay 100% of your medical costs, but you are not usually subject to paying the 20% that Medicare Part B does not pay for most services. Instead you pay copays and coinsurance for most services. Copays can range from $5.00 for a primary care doctor visit to $400.00 a day for a hospital visit. Each plan will have specific copay amounts for every medical service and those plans and benefits must be approved by Medicare.
One of the strongest selling points for Advantage plans is they place a cap on how much you can spend on covered health expenses during a year. Those out-of-pocket amounts vary by plan, but the maximum is (in 2017) $6,700.00 per year. Having an Advantage plan with a maximum out-of-pocket limit is far better than original Medicare.