Medicare Advantage plans are some of the most talked about kinds of plans in the world of Medicare. Between the nonstop television commercials promising free stuff, to the endless pieces of mail that rain down on Medicare beneficiaries boasting $0 premium insurance plans, they certainly have become popular, but also very controversial.
The way that Medicare Advantage plans can easily be defined would be all-in-one comprehensive plans that provide a person on Medicare medical coverage, prescription coverage, as well as additional benefits that could include dental, vision, and hearing benefits, as well.
The person purchasing this plan essentially has their Medicare ran through a private insurance company, to which the private insurance company comes in and takes over the risk of covering that individual.
How Much Does Medicare Advantage Cost?
Ah the million dollar question! What is the cost? In order to understand the price and cost of Medicare Advantage plans, you must first understand the funding they receive! You see, since these private insurance companies take on all the responsibility in terms of a person's claims, this takes a huge burden off of Medicare's shoulders. Because of this, they agree to fund the private insurance company every month to take care of the person's needs.
Since they receive all this funding, typically the cost of an Advantage plan is very low. In fact, many areas have Medicare Advantage plans available that have no premium at all! That is where all the $0 premium talk comes from. The person that enrolls into a Medicare Advantage plan must still keep their Medicare Parts A & B active in order for their Advantage plan to work (that includes paying their Medicare Part-B premium). Usually the commercials leave that part out!
So...What's The Catch?
While Medicare Advantage plans do have a lot be excited about, they do have some important downsides that people need to be aware of. Unlike original Medicare with a supplemental plan, you do not have the freedom to go to any doctor in America that accepts Medicare assignment when you are on a Medicare Advantage plan. You are typically assigned a network of hospitals and doctors and either get decreased benefits when going outside of this network, or none at all.
Medicare Advantage plans also can come with more restrictions, such as referral programs and prior authorizations on certain treatments and/or procedures. Characteristically, they have a larger portion out of pocket expense because Advantage plans typically charge copays for most services provided. Copays can add up! The two most common network types for Medicare Advantage plans are the HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization). Here is a short video we made explaining the difference of the two!