What is a Medicare Advantage Plan (Medicare Part C)?
Medicare Advantage Plans are Medicare-approved health plans offered by a private health insurance companies. Marketed and framed as an “advantage”, these plans are “alternative” coverage to Original Medicare. You may also see these Medicare Advantage Plans marketed as Medicare Part C Plans, or MAPD plans (MA- Medicare Advantage/PD-Prescription Drug). These plans are designed to offer medical care through a Medicare Advantage Plan network (ie. HMO/ PPO) with specific medical groups and specific medical facilities. (i.e. “in-network or “out-of-network”). These plans are typically offered on a county by county and state by state. Not all counties offer Medicare Advantage Plans. Check your ZIP code.
Medicare Advantage Plans are designed and built by insurance companies, and therefore, they choose where they would like to offer plans to Medicare beneficiaries on an annual basis. This is very different than the standard Medicare Supplement Plan, where the plan’s coverage does not vary county to county, state to state, nor does it change year to year. See- guaranteed renewable in the Medicare Glossary.
The plans should not be thought of as “additional coverage” to Medicare the same way Medicare Supplements and Part D plans “supplement” Original Medicare. The specific Medicare Advantage plan network of providers you join in the plan would in turn act as your primary access to your Medicare healthcare coverage, not Medicare itself as the primary payor. This is why the term, “signing over” your Medicare is used when enrolling in a Medicare Advantage/Part C Plan.
Signing over Original Medicare
When you enroll in a Medicare Advantage Plan you are technically signing your Medicare over to a specific networked plan (aka Part C). The plan then becomes your primary Medicare coverage. Thus, it is not added to Medicare. Rather, think of this as a “substitute” or “alternative” for Original Medicare that may offer additional coverage as well as Part D Prescription Plan. Medical and prescription benefits are offered through networks – “in network/out-of-network” (HMO/PPO).
You should think of these plans as “bundled” plans, offering a specific network of physicians/providers/medical facilities that provide you with Medicare health and prescription drug coverage consisting of deductible(s), copays, co-insurance (ie HMO/PPO). Medicare Advantage Plans also typically include a Part D Prescription Drug Plan (in rare circumstances such as a MA-only plan they are not included).
If you’re considering a Medicare Advantage Plan, it is important to note that you would in fact be signing over your Medicare to the private insurance company— not adding to your Medicare as the insurance companies seem to “market” these products to you. By singing over your Medicare, you are in essence allowing the insurance company you chose your Medicare Part C plan through to be paid by Medicare for offering you the basic equivalent coverage of Part A & B along with additional coverage, a prescription drug plan, and possible dental and vision plans all “bundled” up in one plan. The specific Medicare Advantage Plan would then offer you Medicare coverage through their coordinated/networked plan. Again, the insurance company’s planned Medicare network for that specific plan in your region would be primary, not Medicare itself as the primary payor as you would have with Original Medicare.
Signing over your Medicare (Part A & B) to the Advantage Plan or Medicare Part C
Medicare (Part A & B)
"Bundled"
SIGN OVER
"Nationwide Network"
"Plan's Network"
Why are Medicare Advantage Plans considered "bundled"?
Now why are these plans considered “bundled”, as opposed to “customizable” like adding a Medicare Supplement Plan, and Part D Prescription Drug plans to your Medicare? The reason is, Medicare Advantage plans include Part D Prescription Drug coverage in the packaged Medicare plan the insurance companies are offering you. They may offer additional benefits such as dental, vision, and hearing at an additional cost or no cost at all (depends).
To be very clear, Medicare Part C almost always includes a Part D Prescription Drug Plan. There are MA-only plans, but these are not very common.
Think “all inclusive” plan, but with network limitations or “access to physicians” (in network/out of network with HMO plans). These plans make sense for many clients looking for lower monthly plan premiums, and many times work better for those living in urban areas with more concentrated medical groups and facilities. Although the premiums are typically cheaper than a Medicare Supplement Plan, the potential out-of-pocket expenses is almost always greater.
For those of you that want access to all Medicare providers (regardless of hospital or medical group affiliation) and the ability to customize your coverage, the Medicare Supplement Plan and a Part D Rx plan will be the route for you. With that said, we have many satisfied clients in Medicare Advantage Plans- just be sure you to know what you are signing up for before you enroll.
Would you like help comparing Medicare Advantage Plan? Follow us here. Maybe you’re considering a Medicare Advantage Plan and/or you have a Medicare Advantage Plan and want to know more about your options for changing your Medicare Advantage Plan during the AEP. View more here.
Mentor One Insight
Disclaimer*– The following Mentor One Insight section is not intended to deter you from enrolling in a Medicare Advantage Plan. I broker these plans and I’m more than happy to help out clients that choose these plans to fit what is suitable for their Medicare health plan. With that said, I see a greater responsibility to all retirees to clearly disclose the function of a Medicare Advantage Plans, its structure, and to clearly explain the ins and outs of the plan, so if you choose to go with one, you are fully informed and confident with your selection.
My frustration lies with the manipulative sales tactics of the “slick” agents and insurance companies taking “advantage” of you and your inexperience with these products on television and/or online. Let’s answer the question, why are the insurance companies and agents pushing these plans? The premiums on these plans are typically much lower, but the commission paid to the agent/broker is much higher than a Medicare Supplement Plan commission as well as a stand alone Medicare prescription Drug Plan (Part D) commission– combined! If you choose to go with this plan type, go through a broker who will disclose the entire plan and it’s functionality to you. I do not recommend contacting a television ad or a call center representative if you’re looking for clear and concise answers about these plans, how they function, and the compensation they receive for “selling” them to you. Yes, I receive the same compensation, however, I’m willing to disclose this to you as well as notify you of any conflict of interest that could arise from the higher commission structure these plans offer licensed agents and brokers.
Medicare Advantage doesn't "supplement" Medicare.
Remember, Part D is typically included inside Medicare Part C. You do not want to add another stand-alone Medicare Prescription Plan (Part D) to your Medicare Advantage plan (Medicare Part C) unless it is a MA-only plan. In fact, adding a Part D Medicare Prescription Plan will effectively cancel out the Part C and leave you with Part A & B of Medicare and a Medicare Prescription Plan (Part D).
If you have a Medicare Advantage Plan or are considering one, it is important to know that once you enroll into that Medicare Advantage Plan (Medicare Part C), it is now primary for all your health coverage and your Medicare Part A & B are technically now inactive. This is not to say you loose Part A and B, rather, you’ve signed over those benefits to the specific Medicare Advantage Plan to provide you with a specific plan that is offering you Medicare health benefits. You must also continue to pay for your Part B premium to have the Part C or Medicare Advantage Plan ($174.70 in 2024).
Part A is built into the Part C as well, but there is no premium associated with Part A if you’re paid into the system for 10 years or 40 quarters, so this is typically not brought up when discussing the signing over of your Medicare A & B to the Medicare Advantage Plan.
If you decide to enroll on a county based Medicare Advantage Plan, you are no longer able see every physician and provider that accepts Medicare. You are only able to access the providers and physicians in the network (if it’s an HMO). You may have a PPO option that offers in-network and out-of -network access depending on what is available in your county. This may provide you will more access, but at what cost? Look closely at the PPO out-of-network coverage being offered by the plan. It undoubtably be higher than in-network. View the potential OOP Max carefully!
If you decide to enroll in a Medicare Advantage Plan, you will have a directory of physicians that accept the plan (these are likely the same physicians that accept Original Medicare with a Medicare Supplement Plan as well (ie. Sutter, Dignity, UCD, UCSF). It is important to note that it is extremely rare to find a physician that accepts a Medicare Advantage Plan and does not accept Original Medicare with a Medicare Supplement Plan (unless it is a strict HMO only umbrella insurance company/physicians/facility such as Kaiser). Kaiser is strictly a Medicare Advantage system. They do not accept Medicare. Rather, you sign over Medicare to their Kaiser Medicare Advantage Plan which they then accept as the alternative to Medicare to access their physicians and facilities.
I say this to point out that if two people were on Medicare– one is on Medicare + Medicare Supplement Plan and the other on a Medicare Advantage Plan. They may be able to see the same doctor (happens all the time). However, it’s likely that the enrollee with the Medicare + Medicare Supplement Plan will be able to see a large group of providers that the Medicare Advantage Plan enrollee cannot see. Let’s break this down to help reinforce understanding with some Mentor One Insight below.
Compare the Pros & Cons of a Medicare Advantage Plan vs. a Medicare Supplement Plan.
The best practices and process of changing Medicare Advantage Plans.
Questions? Contact John for objective medicare advice.
Mentor One Insight
Medicare Advantage vs. Medicare Supplement
Let’s compare two people in hypothetical scenarios with each plan type/design.
Mary is a Medicare beneficiary with Medicare + Medicare Supplement Plan G.
Cathy is Medicare beneficiary with a Medicare Advantage Plan (HMO).
(I’m not addressing the Part D Prescription Drug Plan variable for each plan type/design to keep the hypothetical of networks as simple as possible). Thousands of physicians accept MAPD plans through the state of California, but for this hypothetical, let’s make the number smaller to show you how these plans can limit your access.
– 5 Medicare Advantage HMO Plans offered in county “xyz” and 1000 physicians in the same county “xyz”.
– 100 of these physicians do not take any form of Medicare. This is their choice as a provider.
– Of the 1000 physicians, 900 of them take Original Medicare + Medicare Supplement Plan. Mary can see all 900 physicians with her Original Medicare + Medicare Supplement Plan, without referrals.
Cathy? Unlikely, since she is now in a networked Medicare Advantage Plan which is now her primary insurer. So, which physicians take her specific Medicare Advantage Plan, and then more specifically accept her exact Medicare Advantage Plans network??
Of those same 1000 physicians, lets say 600 take Medicare Advantage Plans, but they don’t accept all 5 of the Medicare Advantage plans in-network (let’s say each physician accepts only 1 of the 5 networked Medicare Advantage Plans within their medical group). For ease, let’s say the 600 physicians who take Part C are split up into 5 different medical groups for the 5 different Medicare Advantage Plans. Let’s also assume there is no crossover between physicians being part of multiple medical groups.
So if each physician accepts 1 of the 5 Medicare Advantage plans in network, then Cathy has access to 120 of the physicians (600/5 = 120) in her specific Medicare Advantage Plan. This example is hypothetical, but it shows how the networks, once broken down, can really restrict Cathy’s access to physicians vs. Original Medicare with a Medicare Supplement Plan.
In this scenario, Cathy chose the Medicare Advantage Plan with her primary care physician in-network which included a Part D Prescription Drug Plan. She pays a lower monthly premium which works with her budget. If medical issues arise, she will find a way to pay for her out-of-pocket expenses since her OOP Max is for hypothetical reasons, $7,550 a year (copays/co-insurance of the procedures and appointments). She may even qualify for low income subsidies with her prescription costs at the pharmacy as well as Part B premium reimbursement if she qualifies for Medi-Cal (dependent on her income/assets).
If she does qualify as a dual elegible Medi/Medi, the higher out of pocket costs associated with Medicare Advantage Plans (when used) may be picked up by the state (Medi-Cal). To be clear, Medicare Advantage Plans typically have an annual OOP Max (Out-of-Pocket Max) roughly $4,000-$10,000 a year–depending on the plan. The lower premium is attractive along with the included Part D Prescription Plan, but the potential to pay much more out-of-pocket when the plan is used for a major medical is a common issue with this type of Medicare plan.
On the other hand, Mary is more comfortable paying more per month with her Medicare Supplement Plan which provides her much lower, predictable out-of-pocket costs when she uses her Medicare Supplement Plan at medical facilities. Mary prefers a monthly premium of roughly $120 a month with only an annual deductible of $240 a year (Part B deductible in 2024). Once Mary pays this deductible, she will not have any out-of-pocket costs for her medical/hospital medical needs the rest of the year. She will need to add an additional Medicare Prescription Drug Plan (Part D) at an additional cost, but she likes being able to customize this plan each fall for her prescription needs. It may be a little tedious to review each fall during AEP, but keeping her access open to all Medicare physicians and providers is why she chose this Medicare plan path. There is no OOP Max with Mary’s Plan G as it picks up all the costs for her Medicare covered services once the deductible of $240 is paid for the year (2024). Yes, the entire 20% after Medicare pays their share of 80%.
Keeping all things exactly as we stated above, Cathy, in her Medicare Advantage Plan, is only able to see 120 of the 1000 physicians in the example since her specific Medicare Advantage Plan HMO has its own network and she is no longer on Original Medicare with her Medicare Part C Plan. She is only able to see in network physicians in her HMO that accept the plan. Even though there are more physicians that accept Medicare, she is no longer technically on Medicare, and therefore, not able to see them. She signed over her Medicare to the alternative insurance carrier’s Medicare Advantage Plan and is subject to the terms of how that plan is designed. If she doesn’t have any major issues, she is likely to pay less than Mary did for the year in premium, as they are usually cheaper, but she is taking a chance on being subject to the OOP Max of $4000-$10,000 as well as referrals, and potential access issues to specialists if not approved by the HMO.
On the other hand, Mary can see all 900 of physicians that accept Medicare + Medicare Supplement Plan. Mary may pay more for her Medicare Supplement Plan and the additional Medicare Prescription Drug Plan on a monthly basis, however, she has access to more providers, no referrals, and much lower out-of-pocket costs when she uses her plan. Having this predictability is why Mary favored the Medicare Supplement Plan route.
Note: If you live in a county that has Medicare Advantage Plans and you are dual eligible Medi/Medi (Medicare/ Medi-Cal eligible) you may want to look closely at Medicare Advantage Plans, since the premiums are inexpensive and the state will pick up a portion or all of the OOP Max depending on your level of need as Medi/Medi. If your county doesn’t have Medicare Advantage Plans and you are dual eligible Medi/Medi, ask your county social worker about the “spend down” method to drop your income with a small insurance premium to fully qualify for $0 out-of-pocket costs.
Using a Medicare Supplement to reduce “share of cost” to zero is a common way to qualify for this program which in turn, reimburses your Part B premium of $174.70 (2024) a month once you lower your income to the appropriate level with an insurance product. In essence, paying for the insurance plan pays for itself if it drops your income below a certain level. In many cases, you actually come out ahead, as the Medicare insurance premium is less than the Part B premium of $164.90 a month. Contact me if you have more questions about this “spend down” strategy for dual eligible Medi/Medi beneficiaries.
