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What to Consider When Comparing Medicare Advantage Plans

Written by: MJ Gissas

If you’re approaching your initial enrollment period for Medicare, you may be wondering whether you should choose Original Medicare (Parts A and B) or a Medicare Advantage plan (Part C). Original Medicare will cover most of your inpatient and outpatient medical expenses, but it won’t cover prescription drugs (you’ll need to enroll in a Medicare Part D plan for medication coverage). Medicare Advantage plans are required to cover everything that Original Medicare does (except for hospice care) and may also include benefits such as dental, vision, hearing, and prescription drug coverage.

It’s easy to see the appeal of Medicare Advantage, since comprehensive coverage is rolled into one plan. But before you enroll in Medicare Part C, you’ll need to read the fine print and make sure you fully understand the coverage and restrictions.

How Do Medicare Advantage Plans Work?

Medicare Advantage plans are offered by private insurance companies who have signed a contract with the government. Medicare pays the insurance company when you enroll, and the insurance company is required to cover the health care costs specified in your plan. You will still have some out-of-pocket expenses, but most plans set a maximum out-of-pocket dollar amount and will cover anything that goes above that. The out-of-pocket cap will vary by plan and can change from year to year.

There are several different types of Medicare Advantage plans:

  • Health Maintenance Organization (HMO)—This type of plan usually requires you to select a primary care doctor from within the insurance provider’s network and get a referral to see any specialists. HMOs usually don’t cover the cost of seeing an out-of-network health care
  • Preferred Provider Organization (PPO)—PPOs typically allow you to see any healthcare provider, but you’ll pay less out-of-pocket when you see a provider within the plan’s network. While PPOs are less restrictive than HMOs, they generally have higher monthly premiums.
  • Private Fee-for-Service (PFFS)—The majority of PFFS plans are untethered from a network of providers (meaning you can see any doctor or specialist). However, certain PFFS plans are now required to include a provider network, so you’ll have to read the details of each plan carefully.
  • Special Needs Plans (SNPs)—These plans are only available to people who meet certain qualifications, such as living in a nursing home or having a severe chronic illness. SNPs usually only cover in-network care, but the plan’s network includes specialists who treat the types of conditions that members have.
  • HMO Point-of-Service (HMO POS)—Unlike traditional HMOs, an HMO POS plan lets you see out-of-network providers. However, you’ll pay more if you go out-of-network, just as you would with a PPO.
  • Medical Savings Account (MSA)—This Medicare plan will deposit a certain dollar amount into a bank account annually, and you can use this money to cover any healthcare costs. However, the amount that Medicare deposits is often less than the plan’s deductible, so this may not be a good option if you have high medical expenses.
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 What Should You Research When Choosing a Medicare Advantage Plan?

Once you enroll in a Medicare Advantage plan, you won’t be able to change it until the next year’s open enrollment period. You’ll need to do your due diligence before you sign up to determine which plan is best for you and your anticipated health care needs. Here are a few of the factors you’ll need to consider:

Premiums, Deductibles, and Copays

As with any health insurance plan, you’ll need to evaluate your out-of-pocket expenses, including monthly premiums, deductibles, and copays. Some Medicare Advantage plans may have low or even $0 premiums but high deductibles and copays, which may not be the best option for you if you visit the doctor frequently. You should also keep in mind that some plans will have a steep copay—or no coverage at all—for out-of-network providers.

Network of Providers

If you’re looking at a specific Medicare Advantage plan, visit the plan provider’s website to view a list of their in-network providers. If your current doctor isn’t on the list, you’ll have to decide if you’re comfortable switching to a new doctor. If you regularly see a specialist, you should check whether the plan will require you to get a referral to continue going to the specialist.

Prescription Drugs

Most Medicare Advantage plans cover prescription drugs, but not all do—so read the coverage details carefully. Additionally, plans that offer prescription drug coverage may not cover every medication you take. You’ll need to compare the plan’s formulary (list of covered medications) against your list of prescriptions to make sure you’re getting the coverage you need.

There’s a lot to think about when choosing a Medicare Advantage plan, but you don’t have to make the decision alone. Make sure you’re getting all the information you need by meeting with a Medicare consultant at Americans for Life Financial Services.

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