Medicare Advantage (MA) is a health insurance program that provides an eligible person with the United States’ Medicare benefits. Medicare Advantage differs from the original Medicare model, which offered a standard plan provided directly by the state. In contrast, Medicare Advantage is offered by a private provider.
Where did the term originate from?
The term originated with the passage of the Balanced Budget Act of 1997, which offered Medicare beneficiaries this option, instead of receiving these benefits through the original Medicare plan (Parts A and B). These programs were known as Medicare+Choice or Part C plans. Pursuant to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the compensation and business practices changed for insurers that offer these plans, and “Medicare+Choice” plans became known as Medicare Advantage plans.
What are some of the Medicare Benefits?
Medicare has a standard benefit package that covers all reasonable and necessary health care services that older adults and people with disabilities can receive. For people who choose to enroll in a Medicare Advantage plan, Medicare pays the private health plan a set amount every month for each member. Members may have to pay a monthly premium in addition to the Medicare Part B premium, but many companies offering Medicare Advantage plans make them available for a $0 monthly premium in addition to the Medicare Part B premium, which the member pays directly to Medicare. Medicare Advantage subscribers generally pay a fixed amount (a copayment of $20, for example) every time they see a doctor as opposed to meeting a deductible and paying a coinsurance (typically 20%) under Original Medicare. The copayment can be higher to see a specialist with a Medicare Advantage plan. Under Original Medicare the coinsurance remains 20%, but the actual amount out of pocket can be higher since specialists generally charge more for services.
What are the Private Plans required to do?
The private plans are required to offer a benefit “package” that is at least as good as Medicare’s and cover everything Medicare covers, but 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, like skilled nursing facility care, can balance their benefits package by offering lower copayments for doctor visits. A private plan may use some of the excess payments they receive from the government for each enrollee to offer supplemental benefits.
How do plans use the excess subsidies?
Many plans use the excess subsidies to offer hearing coverage, vision coverage, gym memberships and other services not covered by Medicare. As with traditional Medicare, private plan members can incur high out-of-pocket costs, however Medicare Advantage plans typically have an out of pocket maximum ($6,700 for example), which can protect individuals against catastrophic medical bills. Once the out of pocket maximum is reached for an individual, the plan will pay 100% of Medicare approved services for the remainder of the calendar year, with no lifetime maximum, so long as individuals use in-network providers. If individuals voluntarily choose to use out-of-network providers, they generally must pay the full cost of their care and there is no out-of-pocket cap on their expenses. This can be a problem for people with Medicare with costly conditions, who need to use out-of-network specialists or who are hospitalized and are forced to use out-of-network doctors while in the hospital. By law, however, if a patient’s in-network physician orders tests or procedures that are not available or provided by any in-network facility or specialist’s office, the Medicare Advantage plan must pay for the patient’s procedures or services at an out-of-network location at no additional cost to the patient, so long as the necessary services are normally covered by Medicare.
Do Medicare Advantage plans contain deductibles?
Medicare Advantage plans typically do not contain deductibles, thereby giving members “first-dollar” coverage. Original Medicare has a potentially recurring (more than once per calendar year) deductible for Part A and an annual deductible for Part B.