Medicare Advantage Plans
Medicare Advantage Plans are managed health programs that serve as a substitute for both “Original Medicare” Part A and B benefits. There are a number of types of Advantage plans. The majority are either HMO or PPO plans. Medicare Part A provides payments for in-patient hospital services and stays. Part B provides coveage for outpatient services. Doctors visits, lab work, scans and x-rays all fall under part B. Original Medicare claims are processed through the Centers for Medicare and Medicaid Services (CMS). Medicare Advantage plans are offered by commercial insurance companies. They receive compensation from the federal government, to provide all Part A and B benefits to enrollees, but do not pay claims through the CMS.
Most Medicare Advantage plans (sometimes referred to as “Part C”) include the Part D prescription drug benefits, and are known as a Medicare Advantage Prescription Drug plan (MAPD). The government makes seperate payments to the plans offering drug benefits with the advantage plan. Medicare pays the insurance company a set amount every month for members enrolled in the plans.
Medicare Advantage plans
must offer a benefit that is at least equal to Medicare’s and covers what Original Medicare covers. They do not have to cover every benefit in the same way. Plans that require higher out-of-pocket costs than Medicare for some benefits, can balance it out by offering lower copayments for doctor visits or other benefits. CMS limits how much the Medicare Advantage plans can vary from benefits under Original Medicare. Many plans offer benefits which are not covered by Original Medicare. They do this as a value added benefit to entice more people to enroll in the plan.
All Medicare Advantage plans must have out of pockets maximums for medical services.
The limit for 2016 is $6,700 medical out of pocket. This applies to in-network services only. Once the out of pocket maximum is obtained, the plan will pay all additional costs. This assumes the services received are in network. Medicare advantage plan have networks. This means the enrollee must use in network doctors to be covered. There are exceptions to this such as with a PPO plan.
Other ways to get care out of network would be for an emergency or urgent care situation. Enrolling in a PPO plan provides the ability to go out of network. PPO plans permit a subscriber to use any physician or hospital, but at a somewhat higher expense. Certain PPO plans can lead to much higher costs for going out of network. The combined out of pocket max goes up to $10,000 on a PPO. The total is for in and out of network usage.
People can enroll in a Medicare Advantage plan
when first eligilble for Medicare A and B. They must enroll in A and B prior to enrolling in an advantage plan. Under most situations, the member can change plans every January during AEP. There are exceptions to this rule however. Many states have multiple Advantage plans offered by various companies. Some states have over 20 different plans to choose from. Companies will also offer plans by county. They may offer a plan in one county but not another within the same state.
People with low medical utilization tend to migrate towards advantage plans. If someone is going to the doctor a few times a year on average, they tend to look at the low Advantage premiums as a way to save money. Those with higher medical utilization will have a tendency to go with a Medicare supplement plan of some type. Supplements tend to have higher premiums and less out of pocket costs which appeals to someone utilizing care more often. Supplements are also attractive to those that do not want to abide by a network of doctors. Others tend to go with a supplement to avoid the need for prior authorization which is required on advantage plans.
Medicare Advantage trial rights are rules that allow someone to switch out of their advantage plan. There are two cases in which a trial right is created.
- Taking an advantage plan when first eligible for Medicare. A trial right is created allowing the member to change back to Original Medicare any time in the first 12 months. They can go to Original Medicare with a supplement and/or Rx plan the first of any month
- Taking an advantage plan for the first time. If someone is taking an Advantage plan for the first time. (Even if they have been on a supplement previously). They will have a trial right for the first year they are in the advantage plan. This would allow them to change to a supplement and/or drug plan
AEP- At this time you can change your plan (Advantage to supplement or supplement to advantage) every January 1st during AEP. At this time someone can make any change they would like. Some states will underwrite a move to a supplement however.
MADP- During this period, a person may leave an advantage plan and go back to Original Medicare. MADP runs from January 1 through February 14th every year. They can also enroll in a supplement and/or Rx plan if they would like.
SEP- A Special Election Period allows someone to make a change outside of AEP. Certain circumstances will create a SEP. Moving outside the plan service area, qualifying for extra help, lose of employer coverage. These are all examples that would create a special election.