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Medicare Advantage

Medicare Advantage Plans

Medicare Advantage plans, also referred to as Medicare Part C plans or MA plans, are administered by approved private health insurance organizations. Participants who elect to receive Medicare benefits through a Medicare Advantage provider must receive all Medicare benefits (including optional Part B and Part D plans) through the Medicare Advantage provider.

Medicare Advantage providers may be:

  • Health Maintenance Organizations (HMO)
  • Preferred Provider Organizations (PPO)
  • Provider Service Organizations (PSO)

and may include:

  • Medical Savings Account (MSA) plans
  • Point-of-Service (POS) plans
  • Private Fee-for-Service (PFFS) plans
  • Special Needs plans (SNP)

Medicare Advantage plans provide the same coverage that traditional Medicare Part A and Part B plans do, with one significant exception. Medicare Advantage providers are not required to offer

While Medicare Advantage providers are approved by Medicare and must adhere to rules established by Medicare, they also have broad discretion regarding the cost of services and the way in which a participant receives services. For example, a Medicare Advantage provider may require that participants use specific providers and suppliers to receive benefits.

Medicare Advantage plan participants may incur out-of-pocket expenses in the form of premiums, co-pays and deductibles. In addition participants may be subject to penalties or fees for using out-of-plan providers, and coverage limits may increase the participant’s overall costs.

Stand Alone Prescription Drug Plans

Medicare Part D offers optional stand-alone prescription drug plans (PDP) to eligible Medicare participants. Each Medicare Part D plan provider determines the prescription drugs that are covered by the plan, the cost of the Part D premium, the amount of a participant’s co-pay and/or deductible, coverage limitations and the out-of-pocket cost of a drug to the participant.

Stand-alone PDPs are offered on a strictly optional basis. There is no requirement that a participant carry Part D coverage, however, Medicare Part D coverage is restricted to participants who:

  • have Medicare Part A and/or Part B coverage
  • have a Medicare Part C plan that includes both Medicare Part A and Part B coverage

Eligible participants may not elect to carry only Medicare Part D coverage. If a participant has Medicare Part A and/or Medicare Part B, s/he may choose a stand-alone prescription drug plan provider. Medicare Part C plan participants must work with their plan provider to acquire prescription drug coverage; they do not purchase stand-alone prescription drug plans.

Medicare Coverage Basics

Medicare is a national health care plan for eligible participants. The program services are divided into two parts:

  • Part A covers hospitalization and related inpatient services
  • Part B covers medical care that is delivered outside the hospital setting
  • Part C is an alternative to traditional Medicare coverage.
  • Part D covers prescription drugs

Medicare Part A

Medicare Part A helps to pay for facilities-based (inpatient) health care at hospitals, skilled nursing facilities, long-term care facilities, mental health facilities, rehabilitation hospitals and hospices. Medicare Part A also helps to pay for in-home health care and bariatric (obesity) surgery, provided that the services meet the standards for medical necessity as defined by Medicare. Typically, Medicare payments cover only a portion of the cost of these services.

Participants may or may not pay Medicare Part A healthcare premiums, depending upon their eligibility status. Participants are entitled to free Medicare Part A coverage if they are 65 years of age or older, and:

  • The participant or his/her spouse worked and paid Medicare taxes for at least ten years
  • Receives Social Security benefits or Railroad benefits
  • Are eligible to receive Social Security or Railroad benefits, but have not yet applied for coverage
  • The participant (hr his/her spouse) worked for a government agency that offered Medicare coverage as an employment benefit

Participants are also entitled to free Medicare Part A coverage if they are less than 65 years of age, and:

  • Have been granted full Social Security or Railroad Retirement Board disability benefits for the preceding 24 months. If a participant is disabled due to Amyotrophic Lateral Sclerosis (ALS) also known as Lou Gehrig’s Disease, s/he are entitled to Medicare Part A benefits the first month s/he is also eligible for Social Security or Railroad Retirement disability benefits
  • Are a kidney dialysis or kidney transplant patient

If a prospective participant is less than 65 years of age, does not qualify for Social Security or Railroad Retirement disability benefits, or did not pay Medicare taxes before retirement, s/he may be able to purchase Medicare Part A insurance coverage at his or her own expense.

Medicare Part B

Medicare Part B is optional insurance coverage that can help reduce the cost of medical care provided outside the hospital setting. Medicare Part B helps to pay for health care costs like:

  • Doctor’s office visits
  • Laboratory tests, X-rays and other diagnostic tests
  • Health care supplies
  • Durable medical equipment, such as beds and wheelchairs
  • Ambulance services
  • Prosthetic devices

As with Medicare Part A, Medicare Part B payments generally do not pay the full cost of a covered service. Most often, Medicare determines the “reasonable cost” of a covered service and reimburses the provider 80% of the “reasonable cost.” Certain tests, procedures and services may be covered in full, but the participant may still incur costs related to the doctor visit. The insured party is responsible for costs that Medicare Part B does not cover, or does not cover in full.

Every eligible participant, regardless of age, employment benefits or disability status must pay Medicare Part B health care premiums, if non-hospital health care coverage through Medicare is desired. Medicare Part B premiums can be withdrawn from a participant’s monthly Social Security, Railroad Retirement or Civil Retirement check. If a participant receives none of these payments, Medicare will send a quarterly bill for Part B premiums.

Medicare Part C

Medicare Part C plans are administered through private health care insurance providers as an alternative to traditional Medicare coverage. Part C plans are also known as Medicare Advantage plans. Medicare Part C plans cover both hospitalization and non-hospital medical care and are used in place of Medicare Part A and Part B plans. Some Medicare Part C plans also include prescription drug coverage. Please see the section of this Web site entitled Medicare Advantage for more information about Medicare Part C coverage.

Medicare Part D

Medicare Part D is an optional prescription drug plan (PDP). No Medicare participant is required to purchase Medicare Part D coverage, however, a participant may only purchase Medicare Part D coverage if s/he also has either Medicare Part A or Medicare Part B insurance. Participants who choose Medicare Part C coverage can purchase Part D coverage only if their Part C coverage includes both Medicare Part A and B services.

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