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How Do Medicare Advantage Plans Work?

Senior Male Talking With Male Doctor

Medicare has four different parts — Part A (hospitalization), Part B (healthcare services), Part C (Medicare Advantage Plans), and Part D (prescription drug coverage). Medicare Advantage Plans are an alternative to Original Medicare for Part A and Part B coverage. These plans are offered by private companies approved by Medicare and administered according to set Medicare rules. Because they work like private health insurance, Part C plans are popular with many Medicare beneficiaries.

What Do Medicare Advantage Plans Cover and How Much Are the Premiums?

Part C Medicare Advantage plans cover all services covered by Original Medicare. In addition, many of these plans offer other coverages, including:

  • Dental
  • Vision
  • Hearing
  • Prescription drugs
  • Other optional services

The total cost of a Medicare Advantage Plan will depend on the particular plan, your location, and your medical services. You pay the same Part B premiums you would pay for Original Medicare. In 2021, the standard premium amount is $148.50. For some Medicare Advantage Plans, an additional premium is required. For others, there is no additional premium, and some Part C plans cover all or a portion of your Part B premiums.

What Types of Health Plans Are Available Under Part C?

Insurance companies offering Medicare Advantage Plans can choose what health plan structures to offer. The most popular plan options are HMO (Health Maintenance Organization) and PPO (Preferred Provider Organization) plans. Some insurers offer additional plan options, which may include SNP (Special Needs Plans), PFFS (Private Fee-for-Service) plans, or Medicare savings account plans.

What Are the Out-of-Pocket Costs With Medicare Advantage Plans?

Most Medicare Advantage plans charge a co-payment for medical services, such as specialist visits and prescription refills. Co-payments are also set for hospital stays, but the amount can vary depending on the length of the stay. Unlike Original Medicare, Part C plans have out-of-pocket maximums. Once your covered out-of-pocket costs for medical services, hospitalization, and prescription drugs combined accumulate to a certain amount within any given year, co-pays are no longer required from you for the remainder of the year. This can be a lifesaver if an accident or unforeseen health issues cause medical expenses to skyrocket.

Who Can Enroll in a Medicare Advantage Plan?

To enroll in a Medicare Advantage Plan, you must first enroll in Original Medicare Part B. To be eligible for Original Medicare, you must be at least 65 years old, have been receiving Social Security or Railroad Retirement Board disability benefits for 24 months, or have been diagnosed with end-stage renal disease (ESRD) or amyotrophic lateral sclerosis (ALS). If you are enrolled in Original Medicare, you have a once-a-year window of opportunity during Open Enrollment to select and enroll in a Part C Plan.
Medicare Advantage Plans keep your health coverage and prescription drug coverage under one plan. Many provide dental, vision, and hearing coverage. They set an out-of-pocket maximum, which protects you in case of an accident or illness requiring extensive treatment or expensive medications. If you need assistance in shopping for or enrolling in a Medicare Advantage Plan, our agent will be happy to help.

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