If you are approaching retirement age, then you should familiarize yourself with your health insurance options. This includes the basics of Medicare, the federal government’s health insurance assistance program for seniors. Medicare has a number of components designated as Parts A, B, C, and D. Part A offers coverage for hospital services, while Part B covers mostly outpatient services. Part D is Medicare’s prescription drug program.
You may sign up for these traditional components of Medicare, or you may take advantage of Part C, which allows you to obtain private health insurance with Medicare paying all or part of those private policy premiums. These plans must offer benefits similar to traditional Medicare; they do not have to include prescription drug benefits, but they often do. Plans offered through Medicare Part C are often known as Medicare Advantage plans.
Rising Popularity of Medicare Advantage Plans
The option of getting health coverage through a private insurer has proven to be extremely popular. In 2004, there were 5.3 million beneficiaries enrolled in Medicare Advantage plans, but by 2016, this number had more than tripled to 17.6 million. That is 31 percent of all Medicare enrollees. US Centers for Medicare and Medicaid Services (CMS) predicts that enrollment will rise to 18.5 million in 2017.
One of the primary reasons for this surge in popularity is cost. While some plans are wholly subsidized by Medicare, many others require a small premium payment on a monthly basis by beneficiaries. The average monthly payment for MA plan enrollees in 2016 was $32.59. The state with lowest average premium was Florida at $7, and the highest was Minnesota at $138.
Another reason so many seniors are joining MA plans is that many of these plans offer benefits not found in Medicare Parts A or B. Many plans come with benefits for vision, dental, hearing and prescription drugs, all at one low cost. These benefits are of particular value to seniors who often struggle with related health conditions that traditional Medicare ignores.
Additionally, traditional Medicare requires a 20 percent co-insurance payment for many medical services including doctor’s visits and outpatient surgery. That means you must pay 20 percent of the entire bill. On the other hand, Medicare Advantage plans usually require only a co-payment, which is usually only a few dollars.
Furthermore, Medicare Advantage plans also usually have an out-of-pocket annual maximum. While Medicare has no such out-of-pocket caps, MA plans will pay all of the medical expenses once the annual maximum is reached. This is especially beneficial to enrollees who suffer from chronic conditions that necessitate many doctor’s visits or hospital stays.
Network Exclusions with Medicare and Medicare Advantage
If you decide to enroll in a Medicare Advantage plan, you may be somewhat surprised that not every physician is available to you. This is because the private insurer who is offering the MA plan has created a network of providers that are contractually obligated to offer services at a discounted rate. The size of the network is determined by the type of Medicare Advantage plan you choose.
If you choose a HMO plan, then you are choosing the most popular type of plan. Almost 64 percent of all MA plans are HMOs. Once again, this popularity is based on pricing because HMO plans are usually the least expensive. However, HMO plans typically have the narrowest networks and require that your primary care physician sign off on any specialty referral.
Another 30 percent of Medicare Advantage plans use a PPO design. This type of plan allows you to see physicians outside of your network and medical specialists without a referral, but typically cost more in monthly premiums than HMO plans.
Although traditional Medicare allows you to go to any physician that accepts Medicare, you should know that fewer and fewer doctors are willing to take on new Medicare patients. This is because, in the last few years, the government has reduced reimbursement payments to providers, so most physicians prefer to get repayment from private insurers. If you stay on Medicare, you may have difficulty finding a new physician.
Other Reasons to Consider a Medicare Advantage Plan
If you are not already convinced that a Medicare Advantage is superior to traditional Medicare, then you may wish to consider the following. In addition to the cost and network benefits, most Medicare Advantage plans also include prescription drug coverage because you can’t have a MA plan and enroll in Medicare Part D.
It is extremely convenient to have one private insurer manage all of your inpatient, outpatient and prescription drug services as well as vision, dental and hearing. You don’t need to deal with various parts of the Medicare agency when your private insurer offers comprehensive coverage.
If you plan on traveling outside of the U.S. once you are retired, you will probably want a Medicare Advantage plan. While traditional Medicare offers more physicians in the United States, it doesn’t offer any coverage abroad. If you are vacationing and become injured or ill, a foreign provider may be covered under your MA plan. If you decide to seek treatment from a more inexpensive provider abroad, your private insurer may be willing to reimburse you for some or all of the medical expenses.
Original Medicare remains an important safety net for retired Americans. It helps pay for many of the medical services that seniors need, but with the introduction of more comprehensive Medicare Advantage plans, it may be outdated. Because you get almost all of the benefits of traditional Medicare plus much, much more at minimal cost, there are compelling reasons to join the millions of Americans who are enjoying a Medicare Advantage plan.
If you would like to learn more about Medicare Advantage plans available to you, you can find answers with an experienced insurance agent like those at Boost Health Insurance. Boost Health Insurance has helped thousands of seniors find and obtain the ideal Medicare Advantage plan that will protect them in their twilight years.