Medicare Advantage Plans

Introduction to Medicare Advantage Plans

Thanks to Medicare reform over the past several years, there's now a greater diversity of Medicare health insurance plans to choose from. This allows for greater flexibility of coverage, but it can be confusing!

When describing Medicare plans, the traditional government-based coverage that most people think of is referred to as Original Medicare. Contrasting with Original Medicare are the Medicare Advantage Plans. These Advantage Plans are operated by private health organizations and overseen by the government.

Medicare Advantage Plans can offer specialized and extensive medical coverage that is comparable to the coverage offered by Original Medicare. In fact, Medicare Advantage Plans are required to cover everything covered by Original Medicare. They are selected by consumers because they also offer additional features.

However, getting into and out of a Medicare Advantage Plan can be more difficult and time-consuming than working with Original Medicare. It is important to understand the differences between the two forms of coverage before making a decision on what kind of care you need. You may not be able to alter your decision for up to a year after you enroll.

Comparing the Coverage of Original Medicare and Medicare Advantage Plans

Both Original Medicare and Medicare Advantage Plans consist of several parts. You will have to understand each one and how it relates to your medical needs in order to make an informed decision about your insurance.

Part A: "Part A" is hospital insurance. Hospital insurance covers services provided on an in-patient basis. That includes hospital stays, which make up the majority of Part A Medicare claims. It also includes some services offered by hospices, nursing facilities, and can include a degree of medically necessary home health care.

Part B: "Part B" is medical insurance. This medical insurance mainly covers outpatient issues. For example, it can cover outpatient treatment, medical supplies, and preventative healthcare. Note that the standards for coverage of preventative healthcare are stricter than those for doctors' services or medically necessary supplies.

Medicare Advantage Plans offer what is known as "Part C" coverage. "Part C" coverage is an umbrella that includes both Part A and Part B. You might wonder what difference it makes whether you choose Original or Medicare Advantage, considering that "Part C" is equal to "Part A" and "Part B." The difference is in what role the government plays and your relationship to private medical providers as a Medicare Advantage patient.

Contrasting the Differences of Original Medicare and Medicare Advantage Plans

There are several key differences between Original Medicare and the Advantage Plans.

Under Original Medicare, Medicare itself -- an entity sponsored and supported by the government -- provides the insurance. Under a Medicare Advantage Plan, you can work with your choice from a select group of private insurance companies, and the one you choose will be responsible for providing all coverage.

With Original Medicare, you are free to choose from any doctors and hospitals that are eligible to accept Medicare and make Medicare claims. This gives you access to the widest range of healthcare options. Virtually all established medical facilities are able to process Medicare claims and must maintain strict reporting standards to do so.

With a Medicare Advantage Plan, you are usually restricted to the list of doctors and facilities approved by the Plan. This will be a much smaller subset of providers than is available under Original Medicare. If you choose to have a procedure from a doctor or a medical facility not covered under your Advantage Plan, it is very likely that none of the expenses you incur will be covered by the Plan -- so choose wisely.

Patients covered by Original Medicare will pay deductibles and co-insurance costs either out of pocket or through supplement insurance. The "deductible" is a part of your total cost of treatment that you must pay before you insurance "kicks in" and pays remaining costs. "Coinsurance," measured as a percentage, is a share you might be expected to pay after the deductible amount is already paid in full.

Those who opt for Medicare Advantage Plans will still pay a part of all of their medical costs, known as the copayment. However, Medicare Advantage patients will also pay a monthly premium which is figured in to the cost of any out-of-pocket expenses that you, as a patient, may be liable for following your treatment.

Both Original Medicare and Medicare Advantage Plans require a monthly premium for Part B insurance. Medicare Advantage Plans have greater variability in terms of costs and the additional kinds of coverage that might be available.

Medicare Advantage Plans may offer you coverage for treatments never or rarely covered by Original Medicare. Advantage Plans stand out because many of them insure hearing and eye care procedures -- these are almost never covered by Original Medicare.

About Medigap Insurance and Medicare Advantage Plans

"Medigap" is the name for supplemental coverage that fills gaps in Original Medicare insurance. Medigap will provide additional coverage so that you pay less out of pocket for treatment that might not otherwise be fully covered.

Medigap will reduce the amount of your copayment and deductible amounts, but will not usually extend coverage far beyond what is offered by Original Medicare. If you choose a Medicare Advantage Plan, you are not eligible to receive Medigap coverage. When you choose Original Medicare, you may seek Medigap coverage from a private insurer.