In the world of Medicare, and health insurance in general, there are an overwhelming number of options. One of the options you’ve probably heard a lot about recently is Medicare Advantage. There’s a good reason for that, too. It solves many of the original Medicare’s shortcomings, and it provides more options for policyholders. 

That doesn’t really answer your most burning question, though. 

What is Medicare Advantage?

Medicare Advantage: Overview

The Medicare Advantage program is designed to offer older Americans more options when it comes to their Medicare plans, as part of their healthcare planning.

The original Medicare plan simply split the provided health insurance into two sets of coverage: Medicare A and Medicare B. These plans are still around, and they’re part of Medicare Advantage. 

However, while Medicare is run by the federal government, Medicare Advantage is a separate program, run by private providers, and this program must be held to Medicare’s standards while also offering a larger variety of premium prices, services, general coverage, and more. You should know what to choose between medicare vs medicaid.

In short, it’s a far more flexible insurance plan that helps individuals find coverage based on their needs instead of taking a one-size-fits-all option, which is how Medicare typically works. 

What is Medicare Advantage? 

Medicare Advantage is a newer approach to the Medicare system. Like Medicare, it is for individuals age 65 and older, and all Medicare Advantage plans exhibit the same general traits as either Medicare part A or part B. 

However, thanks to the involvement of private suppliers, Medicare Advantage plans can offer a much more impressive variety of coverage. Depending on the plan and the provider, policyholders may enjoy coverage for gym memberships, elective procedures that otherwise weren’t covered, low or completely free premium payments, and a multitude of other possibilities. A good thing to know is why is medicare supplement insurance important.

Since this is an extension of Medicare, the Medicare system pays into your Medicare Advantage plan to help cover, or completely cover in some cases, the costs associated with your coverage.  So you’re able to fund your Medicare Advantage plan from Medicare, which you as a tax paying citizen have paid into while you’ve been working. 

It is worth noting that this doesn’t mean Medicare Advantage is for everyone. Like normal Medicare, many providers require policyholders to seek care within the approved network.  Obtaining specialist care from outside of the network often requires an approved referral, and certain plans may not cover necessary costs that would be covered by a Medigap supplemental insurance plan; which is incompatible with Medicare Advantage. 

Who is Medicare Advantage For?

First and foremost, Medicare Advantage is only for individuals age 65 or older. This is in line with traditional Medicare’s age requirements. However, not every 65-year-old looking for health coverage will benefit from it. 

The exact pros and cons of Medicare Advantage will be outlined later for you to determine whether or not it’s a good choice for you, but in general, Medicare Advantage is most beneficial for those who can’t afford to get Medicare and a supplementary plan such as Medigap; as that option typically provides more coverage, but it also comes with a much higher price tag. 

Medicare Advantage Plans

In general, there are four main types of Medicare Advantage plans that you’ll be able to choose from. 

• PPO
• HMO
• Private Fee-For-Service Plans
• Special Needs Plans

The first two plan types on that list are the most common, while the second two are typically reserved for special cases. Beyond these four options, you may qualify for some more unique plans if your chosen provider offers them, but you are unlikely to deal with that outside of very specific circumstances. 

HMO plans are the most common and as “Health Management Organizations.” These are typically standard coverage plans that usually require you to use an in-network service provider for any care you receive. Although, some variants do allow you to seek service outside of the network with a few caveats. 

PPO plans are also known as “Preferred Provider Organizations”. These are plans that utilize doctors the insurance provider has negotiated set rates with. These reduced rates guarantee policyholders lower prices when using an in-network care provider. 

Private fee-for-service plans tend to offer more freedom of choice when it comes to care providers, but they also pay doctors for every service rendered. This can have undesirable effects that will be touched on later. 

Finally, special needs plans are specifically meant for individuals suffering from one or more certain illnesses. Rather than providing very general care, these plans focus on the areas of coverage that are most necessary to meet the policy holder’s needs. It is also called Medicare Part C in some instances; despite being a Medicare Advantage plan. 

What are Medicare Advantage Plans? 

Here are some in-depth facts you need to know about Medicare Advantage. 

Definition: 

A privately-provided insurance plan connected to Medicare parts A and B that may or may not come with extra features and more desirable prices. 

Understanding Medicare Advantage Plans:

Medicare Advantage plans aren’t as straightforward as traditional Medicare. With traditional Medicare, it’s easy to tell what is covered and what isn’t because all of the plans are provided by the Medicare system. 

Medicare Advantage is much more complicated. Yes, a Medicare Advantage plan is required to cover the core features of traditional Medicare, but since private insurers are in control of issuing the policies, all other aspects are handled by the insurer. 

This gives you a lot of options, but it also means that you may get overwhelmed or end up with a plan that isn’t quite what you need. That’s why it’s recommended to seek the help of a professional insurance agent before committing to any sort of Medicare Advantage plan. They can walk you through the ins and outs of each plan, weigh the pros and cons against your needs, and generally help you find the most optimal plan possible. 

It is not recommended to attempt to understand a plan by yourself; as there are often less obvious pros and cons related to such a diverse group of plans. 

Key Advantages of Medicare Advantage Plans: 

In general, there are several key advantages Medicare Advantage has over traditional Medicare, Medigap, and other insurance policies. Policy-specific advantages are so varied that you will need the help of a professional insurance agent to help you understand which ones will come with your plan. 

Here are the general benefits you can expect. 

Lower Premiums: 

By and large, Medicare Advantage plans have much lower premiums than the combined premiums of Medicare and Medigap, and they’re also extremely competitive with private insurance prices. In some instances, you may pay $0 in premiums for a Medicare Advantage plan. 

Out of Pocket Caps:

If you frequently need to use your insurance to lower the cost of prescription meds or ongoing treatments, you’ll probably get a lot of use out of the mandatory out-of-pocket limits Medicare Advantage plans have. This means that once you spend a certain amount of your money within a year, your insurance provider takes the full financial burden for the remainder of the year. 

For example, perhaps your policy comes with a $10,000 out-of-pocket limit. If you suffer through multiple hospital visits in a month and reach that limit early in the year then for the rest of the year, your insurance has to pay the full price instead of what’s leftover after you pay a deductible. 

Emergency and Hospital Coverage Guaranteed: 

When you have a Medicare Advantage plan, your emergency care is automatically covered. If you fall, get into an accident, or experience some other sort of emergency, you don’t need to worry about approvals, references, or anything besides potential deductible payments or copays. 

Expenses: 

While your costs may vary from plan to plan, you will generally have a few expenses you’ll have to pay regardless of plan. 

Premiums

This is the monthly price you pay for coverage. With most Medicare Advantage plans, your premiums will be fairly low. 

Deductibles

If you receive care or treatment, you will likely have to pay a deductible. This is a portion of the overall bill that you must pay before your insurance provider covers the rest. Be warned: Medicare Advantage plans often have high deductibles. This means that you will likely have to pay a larger percentage of your bill than with other plans unless you hit your annual out-of-pocket limit. 

Drug Prices

Medicare Advantage plans don’t provide coverage for your prescription drug costs automatically. At least, most of them don’t. So, you will have to pay for your medications in a lot of situations. Luckily, there is a Medicare Advantage Drug Coverage plan that will provide you with coverage, and you will only have to pay a small copay.