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Open enrollment (October 15 through December 7) offers an annual chance to reevaluate – and change – Advantage coverage
Since 1997, Medicare enrollees have had the option of going beyond their Original Medicare coverage by enrolling in Medicare Advantage. As of 2016, there were 17.6 million people enrolled in Medicare Advantage plans, accounting for about 30 percent of all Medicare beneficiaries. Managed care programs administered by private health insurers have been available to Medicare beneficiaries since the 1970s, but these programs have grown significantly since the Balanced Budget Act – signed into law by President Bill Clinton in 1997 – created the Medicare+Choice program.The Medicare Modernization Act of 2003 changed the name to Medicare Advantage, but the concept is still the same: beneficiaries receive their Medicare benefits through a private health insurance plan, and the health insurance carrier receives payments from the Medicare program to cover beneficiaries’ medical costs.
Medicare Advantage benefits
With Medicare Advantage plans, the essential Medicare Part A and Part B benefits – except hospice services – are automatically covered. (If you need hospice services, that’s covered under Original Medicare, even if you’re enrolled in a Medicare Advantage plan.) 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 six different approaches to Medicare Advantage plans, although not all of them are available in all areas: an HMO (health maintenance organization), a PPO (preferred provider organization), an HMOPOS (HMO Point of Service), 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, HMO, or HMOPOS, but not with an MSA, a PPO or a PFFS. 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.
In most instances prescription drug coverage is included in Medicare Advantage plans, with the exception of the MSA plan. If you want to have prescription drug coverage and you’re choosing an HMO or PPO Medicare Advantage plan, it’s important to select a plan that includes prescription coverage (most of them do), because you can’t purchase stand-alone Medicare Part D (drug coverage) if you have an HMO or PPO Advantage plan. SNPs are required to cover prescriptions. PFFS plans sometimes cover prescriptions, but if you have one that doesn’t, you can supplement it with a Medicare Part D plan.
What do Advantage plans cost?
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.
Most Advantage plans charge monthly premiums in addition to the Part B premium (you have to pay the Part B premium in addition to your Advantage premium, even if you’re in a “zero premium” Advantage plan). Some plans have deductibles, others do not. But all Medicare Advantage plans must limit maximum out-of-pocket (not counting prescriptions) to no more than $6,700 in 2018 (unchanged from 2016 and 2017; CMS will be using new methodology to set maximum out-of-pocket limits for Medicare Advantage plans as of 2020). Many plans have out-of-pocket limits below this threshold however, so it’s important to consider the maximum out-of-pocket when comparing policies. The median out-of-pocket amount for Medicare Advantage plans in 2016 was $5,800. This was a 3.5 percent increase from 2015’s median out-of-pocket limit, but it’s still well below the maximum allowed by law.
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.
Who is eligible to join Advantage 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, although it won’t pay for Medicare Advantage plan expenses, such as copayments.
If you change your mind and want to switch back to Original Medicare in the future, you’ll be able to do so during the annual open enrollment period (October 15 to December 7) or the annual Medicare Advantage open enrollment period (January 1 to March 31, annually starting in 2019), and you’ll have an opportunity to also enroll in a Medicare D plan at that point, regardless of how long you’ve been enrolled in Medicare Advantage. But if you’ve been on the Medicare Advantage plan for more than a year, there is no requirement that Medigap plans be guaranteed issue for people switching back from Medicare Advantage to Original Medicare, so if you’ve got health conditions, it may be expensive or impossible to get another Medigap plan.
If you’ve been in in the Medicare Advantage plan for less than a year, you’re still in your trial period and you do have the option to enroll in a guaranteed issue Medigap plan when you switch back to Original Medicare; if you enrolled in Medicare Advantage when you were first eligible and are switching back to Original Medicare within a year, you can enroll in any Medigap plan sold in your state. If you dropped your Medigap plan to enroll in a Medicare Advantage plan and you switch back within a year, you can enroll in the Medigap plan you had before, or if it’s no longer available, you can enroll in any plan A, B, C, F, K, or L sold in your state.
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.
How has health reform impacted Medicare Advantage?
The Patient Protection and Affordable Care Act has restructured payments to Medicare Advantage plans in an effort to reduce budget spending on Medicare, but for the last few years the payment changes have either been delayed or offset by payment increases. When the law was first passed, many people – including the CBO – projected that Medicare Advantage enrollment would drop considerably over the coming years as payment reductions forced plans to offer fewer benefits, higher out-of-pocket costs, and narrower networks.
But that has not been the case at all. Medicare Advantage enrollment continues to grow each year. There were 19 million Advantage enrollees in 2017, which is about a third of all Medicare beneficiaries, who totaled about 58 million in 2017). The number of Medicare Advantage plans available has been fairly steady since 2011 (2,034 in 2016, up from 1,945 in 2015; but down from a high of 2,830 in 2009). The majority of beneficiaries still have at least one zero-premium plan available to them, and the average enrollee could select from among 21 plans in 2018, which was slightly higher than it had been at any point since 2011 (but this is still down significantly from 48 plans in 2009).