Medicare Advantage is an excellent choice that many Medicare beneficiaries use to supplement their coverage under Parts A and B of Original Medicare. There are quite a few ins and outs to these plans, but they offer many benefits at low costs if you take the time to understand them.
What Is Medicare Advantage?
Medicare Advantage plans, also known as Part C of Medicare, are private insurance plans that are offered to Medicare beneficiaries. They are one of two ways to supplement the benefits from Original Medicare. (The other way is with a Medicare supplement insurance plan.)
If you have looked at Medicare supplements, you know that their coverage is pretty straightforward. There are a few plans to choose from, and those plans never change. Medicare Advantage plans are not as easy to understand because there are many choices, but they provide great value and are an excellent choice for many individuals.
How Do Medicare Advantage Plans Work?
A Medicare Advantage plan is an alternative way to get your benefits from Parts A and B of Original Medicare. The federal Medicare program must approve private companies to offer these plans, and the plans must follow the program’s rules. The Medicare program pays the insurance companies a fee in exchange for offering the plan.
Part C plans take the place of Original Medicare. If you enroll in one of these plans, all of your benefits will come directly from the insurance carrier, not the government. Instead of having Parts A and B, all of your coverage will be rolled into one Part C plan. However, you are still responsible for paying the Part B premium. (Most individuals receive premium-free Part A, but you will also be responsible for the Part A premium if yours is not premium-free.)
Since private companies offer Part C plans, each can be quite different. You may need to follow their rules when receiving care, see doctors in a specific network, and submit reauthorization requests for procedures. Each plan will also have different premiums and out-of-pocket costs. In addition, all of that can change each year.
All Advantage plans have an annual out-of-pocket maximum. The amounts change each year, but in 2022 the maximum for in-network services is $7,550, and out-of-network services is $11,300. (We’ll talk more about networks later.)
What Do Medicare Advantage Plans Cover?
All Medicare Advantage plans must include the benefits found in Parts A and B. Most of them offer additional benefits, which is one reason these plans are so appealing.
Part C plans might include extra coverage for:
● routine and restorative dental care
● vision exams and eyeglasses or contact lenses
● hearing exams and hearing aids
● gym memberships
● transportation to doctor’s visits
● meal delivery
● over-the-counter medications
● prescription drug coverage
In addition, individuals can sometimes choose to add benefits to their Part C policy. One type of Medicare Advantage plan tailors its benefits for chronically-ill beneficiaries. These are called Special Needs Plans, which we will discuss later.
Types of Medicare Advantage Plans
The type of Medicare Advantage plan you choose is an important decision. Each plan has its own network, so you’ll need to understand the rules of each to make the most of your benefits.
Health Maintenance Organizations (HMO)
Medicare Advantage HMOs are one of the most popular Part C plans because of their low premiums. You can often find these plans for as little as $0 per month. However, it’s important to remember that no Medicare Advantage plan is free. There are other out-of-pocket costs associated with these plans.
An HMO is a type of managed-care insurance plan. Providers who participate in an HMO are paid set fees based on how many HMO patients they have in their practice. In return, they agree to provide whatever services are necessary to the subscribers. HMOs focus on preventive care, which is one way they try to keep healthcare costs low.
If you enroll in an HMO plan, you must follow a few rules. First, you’ll need to receive your care within the plan’s network. You must utilize providers and facilities who participate (contract) with your HMO plan. If you receive care outside the network, you will be responsible for the entire cost of services. The only exception is for emergency care.
You will also need to designate a primary care physician (PCP) who will manage your treatment. To see a specialist, your PCP must submit a referral, and the specialist must also be part of the plan’s network. Seeing a specialist without a referral will result in no payment from your insurance.
Out-of-pocket costs within the plan will vary based on your specific plan. For example, you may have deductibles, copays, and coinsurance costs. This is true of all Part C plans. To find out more about out-of-pocket expenses, you should consult the plan’s summary of benefits.
Preferred Provider Organizations (PPO)
Medicare Advantage PPOs are another popular type of Part C plan. They also have low monthly premiums but are typically a little more than HMO plans. Again, you’ll still have out-of-pocket costs like deductibles, copays, and coinsurance, but the specific amounts vary by plan.
PPOs operate similarly to HMOs with some minor differences. First, their networks are usually larger than HMO plans. In addition, these plans have out-of-network benefits. Both of these features give the member more freedom to choose their providers.
While PPOs allow their members to receive care from non-contracted providers, the member will pay higher out-of-pocket costs if they choose to do so. For example, if a service is covered at 80% for an in-network provider, it may only be covered at 50% for an out-of-network provider.
PPO members do not have to designate a PCP, nor do they have to obtain a referral to see a specialist.
Point-of-Service Plans (HMO-POS)
Point-of-Service plans are a great mix of the HMO and PPO options and also enjoy low premiums.
POS plans utilize the HMO network they are associated with. However, like PPO plans, they offer out-of-network benefits, just at a lower rate than in-network. Unlike PPO plans, there will be a separate deductible for in-network versus out-of-network services.
You’ll still need to designate a PCP in a Point-of-Service plan, but you will not need to get a referral to see a specialist.
Private Fee-for-Service Plans (PFFS)
Private Fee-for-Service plans are not very common – some states do not have any PFFS plans.
Insurance carriers who offer PFFS plans determine the fees they will pay providers. A provider does not have to be “contracted” with a PFFS plan, but they do have to agree to accept their fees. They can choose to accept or deny the fees at any given time.
PFFS plan members will pay a fee for services set by the insurance carrier, as long as the provider also accepts that fee. Members do not need to choose a PCP or obtain a referral for a specialist.
It’s important to check with your provider each time you require treatment since they can choose to stop accepting the plan’s terms at any time.
Special Needs Plans (SNP)
Medicare Advantage Special Needs Plans are unique and designed to fit certain individuals’ needs. There are three types of SNP plans: C-SNP, D-SNP, and I-SNP. You must meet the eligibility requirements of each one to enroll.
Institutional SNP (I-SNP)
I-SNPs are for individuals who live in institutions (such as nursing homes) or require nursing care in their own homes. To be eligible, you must have had or are expected to have long-term care needs for 90 or more days.
Some of the facilities included in an I-SNP are:
● Skilled nursing facility (SNF)
● Long-term care (LTC)
● LTC nursing facility (NF)
● Intermediate care facility (ICF)
● Inpatient psychiatric facility
Chronic Condition SNP (C-SNP)
C-SNPs are for Medicare beneficiaries who have disabling or severe chronic conditions. These conditions require coordination of care among healthcare providers and facilities.
Some of the chronic conditions included in a C-SNP are:
● Chronic alcohol/drug dependence
● Autoimmune disorders
● Cardiovascular disorders
● Chronic heart failure
● Chronic lung disorders
● End-stage liver disease
● End-stage renal disease (ESRD) requiring dialysis
● Hematologic disorders
● Mental health conditions
● Neurological disorders
Dual Eligible SNP (D-SNP)
D-SNPs are available for individuals who qualify for both Medicare and their state’s Medicaid program. Some states will cover the Medicare costs in certain instances.
There are several Medicaid programs available to those who qualify:
● Full Medicaid
● Qualified Medicare Beneficiary (QMB)
● QMB Plus
● Specified Low-Income Medicare Beneficiary (SLMB)
● SLMB Plus
● Qualifying Individual (QI)
● Qualified Disabled and Working Individual (QDWI)
Medical Savings Accounts (MSA)
Medicare Advantage MSAs are the last type of Part C plan we’ll discuss. These plans combine a high-deductible policy with a medical savings account. You may be familiar with Health Savings Accounts (HSAs), and these work similarly.
Many insurance carriers who offer MSAs include a yearly deposit into your MSA account. You can use that deposit to pay for services prior to reaching your deductible. However, the insurance company will never deposit enough to cover the entire deductible, so you will be expected to pay a large portion out-of-pocket. If you do not use the deposited amount, it rolls over to the following year.
Unlike HSAs, you cannot contribute to your MSA or invest the funds.
Once your deductible has been met, the MSA plan will pay for covered services at 100%.
Do All Medicare Advantage Plans Include Prescription Drug Coverage?
Most Part C plans include prescription drug coverage, otherwise found under Medicare Part D. Advantage plans that include drug coverage are referred to as MAPD plans.
If a Medicare Advantage plan includes drug coverage, you will need to make sure your current medications are included in the drug formulary. A drug formulary lists prescriptions included in the plan and their coinsurance costs. You will also have a separate deductible for prescriptions. (Although not all plans include a deductible.)
Medicare Savings Account plans do not include prescription drug coverage, and many Private Fee-for-Service plans choose not to include Part D coverage. You’ll need to enroll in a stand-alone Part D plan in these instances. If you are enrolled in any other type of Medicare Advantage plan, and that plan does not include drug coverage, you are not allowed to enroll in Part D. Doing so will automatically disenroll you from your Advantage plan.
When Can I Enroll in a Medicare Advantage Plan?
To enroll in a Medicare Advantage plan, you must first meet all of these basic eligibility requirements:
● Have Medicare Parts A and B
● Be a U.S. citizen or permanent U.S. resident
● Live within the service area of the plan you’d like to join
If you are enrolling in a Special Needs Plan, they have their own additional requirements.
There are several specific enrollment periods for individuals who want to apply for a Part C plan. These enrollment periods apply to other aspects of Medicare as well.
Initial Enrollment Period (IEP)
Your IEP begins three months before your 65 birthday and ends three months after it, giving you a 7-month enrollment window. For example, if your birthday is on July 15, your enrollment begins on April 1 and ends on October 31. During this time, you can enroll in Parts A and B and any supplemental plan, like a Medicare Advantage plan.
Special Enrollment Period (SEP)
Certain events can qualify you for a SEP. In Medicare, the most common reason individuals enroll during a SEP is that they continued working past the age of 65 and were covered under their employer’s group health plan.
As long as that plan is credible, the individual will qualify for a Special Enrollment Period when they terminate their coverage under the group policy. They have eight months following the last day of coverage to enroll in Original Medicare and choose a Medicare Advantage plan or a Medicare supplement plan.
There are other instances when a SEP would apply to those with Medicare Advantage plans specifically. You’ll have the opportunity to choose a new Advantage plan if:
● Your plan leaves the service area
● You move from the service area
● Your plan becomes insolvent
● You move out of or into an institution
● Medicare terminates your plan
Open Enrollment Period (OEP)
OEP and the General Enrollment Period (GEP) are often confused because they occur at exactly the same time: January 1 – March 31.
During the GEP, anyone who did not enroll in Medicare during their IEP and did not qualify for a SEP can enroll in Parts A and B. They can also choose a Medicare Advantage plan, but none of their coverage will be active until July 1.
The OEP applies specifically to individuals who already have a Medicare Advantage plan. During OEP, you may make a one-time change to your plan. You can:
● Switch to a different Advantage plan
● Switch back to Original Medicare (and add a Medigap and Part D plan if eligible)
If you make any changes during OEP, they will be effective the following month.
What Is the Annual Enrollment Period?
One more enrollment period is very important for Medicare Advantage plan members: AEP. AEP occurs annually from October 15 to December 7.
AEP is so important because Part C (and Part D) plans can change each year. They almost never stay the same. Prior to AEP, your current plan will send a document called the Annual Notice of Change (ANOC). This document outlines the changes that will go into effect the upcoming year. If you don’t mind the changes, you don’t have to do anything – your plan will automatically renew.
However, if you find some of the changes are not agreeable, you can shop for a new Part C or D plan during the AEP. Even if the changes will not negatively impact your coverage, it’s always a good idea to look for new plans. Medicare Advantage is growing rapidly, and you may find a plan that has recently been added and offers even better coverage or lower premiums. It never hurts to look!
If you choose a new plan during the AEP, it will be effective on January 1 of the upcoming year.
How Much Do Medicare Advantage Plans Cost?
We’ve said that the cost for a Medicare Advantage plan in Texas will depend on which plan you choose. Humana offers several plans at affordable premiums.
We have plans as low as $0 per month with other plans going up to $92 per month
How Do I Choose a Medicare Advantage Plan?
As you can see, there is much to consider if you’ve decided Medicare Advantage is the right choice for you. There are many options for Humana Medicare Advantage in Texas, and it can be hard to know where to start when choosing a specific plan. Here are six questions to ask yourself as you get started.
- What are the premiums, deductibles, and copays?
- Do I have current medical conditions? If so, how well are they covered?
- Do my current providers participate in the plan? If they don’t, would I mind switching providers?
- How will I be covered if I travel?
- Are my prescriptions covered?
- Do I qualify for any of the Special Needs Plans?
We’ve given you a lot of information about Medicare Advantage plans. It’s not always easy to choose a plan, but our licensed insurance agents at CoverMile can help you wade through your options to find one that meets your needs. Give us a call today and schedule a complimentary consultation.