Since 1997, Medicare enrollees have had the option of going beyond their Original Medicare coverage by enrolling in Medicare Advantage. And according to the Centers for Medicare & Medicaid Services, as of August 2010, approximately 1.6 million Americans have enrolled in the Part C plans.
The Balanced Budget Act signed into law by President Bill Clinton in 1997 gave Medicare enrollees the option of receiving their health care benefits through private insurance plans. Previously, the only plan available was Original Medicare.
With Medicare Advantage plans, the essential Medicare Part A and Part B benefits – except hospice services – are automatically covered. Advantage plans also cover urgent and emergency care services, and in many cases, the private plans cover vision, hearing, health and wellness programs and dental coverage.
Insurance companies offer five different approaches to Medicare Advantage plans: an HMO (health maintenance organization), a PPO (preferred provider organization), a PFFS (Private Fee-For-Service), a MSA (medical savings account), or an SNP (special needs plan).
You need to choose your own primary care doctor with an SNP and HMO but not with an MSA, a PPO or a PFFS. In most instances prescription drug coverage is included with the exception of the MSA plan. HMOs and SNPs are the only plans that require a referral prior to seeing a specialist; and the HMO plan is the only plan in which you must receive care from doctors in that network.
Even though Advantage enrollees have rights and protections under Medicare guidelines, the services offered and the fees charged by private insurers vary widely. A thorough understanding of how these plans work is key to successful management of your personal health.
Some Advantage plans charge monthly premiums in addition to the Part B premium. Others limit how much enrollees must pay out-of-pocket annually. Some Advantage plans have deductibles, others do not.
Copayments for doctor's visits differ dramatically, as do the actual health care services and how often enrollees receive those services. Close attention to the details is called for when assessing these plans.
If you are 65, live in the designated service area of the specific plan, and already have Part A and Part B, you may join a Medicare Advantage plan. If you have union or employer-sponsored insurance, you may be able to add an Advantage plan, but be forewarned that in some cases you may lose your employer or union coverage when you enroll in an Advantage plan.
You should know that if you enroll in a Medicare Advantage Plan, you will not need to purchase Medigap coverage (and you will not be able to buy the coverage). If you already have Medigap coverage, you can keep the coverage, it won't pay for Medicar Advantage plan expenses, such as copayments.
Individuals with End-Stage Renal Disease (ESRD) are generally not eligible for Advantage plans – unless they are already in a Medicare Advantage Plan when they are diagnosed with ESRD.
The Patient Protection and Affordable Care Act will attempt to reduce budget spending on Medicare by restructuring payments to Medicare Advantage. For some enrollees, that means their out-of-pocket payments for Medicare Advantage will increase, resulting in an estimated $135 billion reduction in federal spending over the next 10 years. For those Medicare Advantage plan enrollees whose payments are raised by more than $30, the adjustments will be spread out over a four-year period. Those whose premiums rise by $50 or more will have the increases spread out over six years. No increases will occur until 2012.
Also called "traditional" Medicare, it's the fee-for-service program in which the government pays your health care costs. The coverage includes Medicare Part A and Medicare Part B and allows you to see any doctor anywhere (who accepts Medicare patients).
Medicare Part A helps cover inpatient hospital visit expenses, including a semi-private room, medical tests and doctors' fees. It may pay a portion of skilled nursing expenses and home health services, if ordered by a physician, and often 100 percent of hospice care.
Medicare Advantage plans replace your government coverage with private insurance. These plans cost more but offer more benefits than traditional medicare.
Medicare Part D is prescription drug coverage available only through private companies, but any individual who receives Medicare health insurance is eligible. Part D covers both brand name and generic drugs with a short list of exceptions.
Medigap plans offer supplemental benefits sold by private companies to extend traditional medicare. Fourteen plans offer varying combinations of benefits, covering copayments and deductibles and foreign travel emergency expenses, at-home care and preventive care.