What is a Medicare Advantage Plan
Original Medicare includes benefits for Part A (hospitalization) and Part B (doctor visits). However, not all of a beneficiary’s needs may be satisfied. (Click here to learn 5 things that are not covered.) A Medicare Advantage Plan, also known as Medicare Part C or MAPD, can be an effective and financially smart way to ensure that senior citizens have the medical coverage they need going into their golden years.
While not part of the original federal health plan, Medicare Part C became law in 1982. The way it works is that the federal government pays private insurance companies a specific amount of money per person to bundle the original Medicare benefits. Many companies also add prescription drug coverage, or Medicare Part D, in their advantage plans. Some of these plans cover additional services than original Medicare, making them a smart choice for many senior citizens.
Because many Medicare Advantage plans work like private insurance plans, the options for them include:
Health maintenance organization plans (HMOs)
Preferred provider organization plans (PPOs)
Private fee-for-service (PFFS)
Because of their connection to the federal plan, Medicare usually sets the fee for both the provider and the individual enrollee. But, for a PFFS plan, the private insurance company sets those fees. Medicare Advantage plans must follow Medicare rules and guidance from the federal government, though each private company can have different out-of-pocket costs or access to services. In addition, insurance companies can, and do, change the rules of their Medicare Part C (Advantage) plans each year.
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