The Medicare Advantage program was created by the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) which was passed in 2004. The program was designed to bring more affordable healthcare and prescription drug coverage to Medicare beneficiaries, expand health options and preventive care services and improve health access for those living in rural areas. Medicare Advantage plans replaced “Medicare + Choice” plans, an alternative to original fee-for-service Medicare. An important aspect of Medicare Advantage plans is a mandatory maximum out-of-pocket amount for all Original Medicare services. After a beneficiary reaches the maximum out-of-pocket limit in a given coverage year, the plan must cover 100% of your remaining Original Medicare-covered costs for the remainder of the year. The mandatory maximum out-of-pocket limit for 2019 Medicare Advantage plans is $6,700, though individual plans have the option of reducing limit to an even lower amount.
A Medicare Advantage Plan is a Medicare health insurance policy offered by a private insurance company. Medicare reimburses the insurance companies a fixed monthly amount for each member according to factors such as Medicare Advantage risk scores. Medicare enrollees often decide to receive healthcare coverage through a Medicare Advantage plan because many of these Medicare Part C plans can include more benefits (such as vision, dental, hearing, and health/wellness plans) than Original Medicare and most Medicare Advantage Plans provide prescription drug coverage.1 Medicare Advantage beneficiaries may have to pay a monthly premium for their additional benefits and most Medicare Advantage plans require copays for services. Some copays are lower than what a beneficiary would have to pay if they were enrolled in Original Medicare but copays for certain services can cost more.
The Medicare Modernization Act authorized private insurance companies to offer the following products to consumers:
Medicare Advantage HMO – With Health Maintenance Organization (HMO) plans, you typically must receive your healthcare services within that plan's network of doctors and medical facilities. In some exceptions, such as emergency care or dialysis treatments received out of area, you can receive services out of network. Some Medicare Advantage HMO Plans [those with a point-of-service option (POS)], allow you to go out-of-network, usually at a higher cost.2 Out-of-Pocket Costs for Medicare Advantage HMOs are usually lower than POS & PPO plans.
Medicare Advantage PPO - In a Preferred Provider Organization (PPO) plan, you can typically receive services from any doctor or hospital but will pay less if they are part of the plan's network. Services received from out-of-network doctors and medical facilities come with an additional charge.3 Out-of pockets costs are generally higher than HMO and POS plans.
Medicare Advantage PFFS – With Medicare Advantage Private Fee for Service Plans, the plan determines how much it will pay for healthcare services. As long as the doctor or hospital agrees to treat you and agrees to the terms of payment, you can typically receive services from any doctor or hospital. However, not all healthcare providers will accept beneficiaries using a Medicare Advantage PFFS.4 Monthly premiums for PFFS are typically lower than most Medigap plans.
Medicare Advantage SNPs – Medicare Advantage Special Needs Plans (SNP) only accept beneficiaries meeting certain eligibility criteria. There are three categories of plans: those serving people enrolled in both Medicare and Medicaid (dual eligible), those serving people living in institutions like a nursing home, and those serving people with particular chronic diseases like diabetes. The private insurance company adapts the plan in order to best meet the beneficiaries’ special needs. Like Medicare Advantage HMO Plans, you typically must receive your healthcare services within that plan's network.5
The average premium nationwide for 2019 Medicare Advantage plans is $65.00. This average premium is slightly higher than the 2018 average of $60.36. The least expensive Medicare Advantage premium is still $0 a month. In 2019, 56% of Medicare Advantage plans offer a $0 premium.
The most expensive 2019 Medicare Advantage plan, at $168.10 a month, is the HealthPartners Freedom Ultimate (Cost) plan in the state of Minnesota. In 2018, the most expensive Medicare Advantage plan was the HealthPartners Freedom Ultimate with Enhanced Rx (Cost) in the state of Minnesota. It cost $375.90 per month, 55% higher than the highest premium in 2019.
The average drug deductible for 2019 Medicare Advantage plans with drug coverage (MA-PD plans) is $166.41. The maximum allowable MA-PD drug deductible in 2019 is $415, $5 higher than the maximum allowable deductible of $405 for 2018 MA-PD plans.
Medicare Advantage enrollment has increased in virtually all states over the past year. About 34% of Medicare beneficiaries are enrolled in a Medicare Advantage plan in 2019. Total Medicare Advantage enrollment grew by about 1.6 million beneficiaries, between 2018 and 2019. 6
A HealthPocket study of 2019 Medicare Advantage plans found that plans rated at least 4 stars are available to residents in about half of U.S. counties. Another HealthPocket study found that 72% of star-rated 2019 Medicare Advantage plans had at least 4 stars
At Healthpocket, we provide you the tools to find Medicare Advantage coverage. We’ll help you find the right plan and save on your out of pocket Medicare Advantage costs:
What are the requirements to enroll in a Medicare Advantage Plan?
You must be enrolled in Original Medicare (Parts A & B) to qualify for Medicare Advantage. You cannot be denied enrollment in a Medicare Advantage plan due to a pre-existing condition unless you have permanent kidney failure, also known as end-stage renal disease. However, if you develop the condition while you are enrolled in Medicare, your plan cannot drop you.
When can I enroll in a Medicare Advantage Plan?
You can enroll in a Medicare Advantage plan during your initial enrollment period, also known as your initial coverage election period, which is the 7-month period when you are first eligible for Medicare. You can also enroll during Medicare’s open enrollment period, also known as annual election period, from October 15th to December 7th of each year. Outside of those two periods, if you meet certain requirements you may qualify for a special enrollment period, also known as a special election period, which allows you to enroll or disenroll from a Medicare Advantage plan.
If you are currently enrolled in a Medicare Advantage plan because prices and coverage differ among Medicare Advantage plans within a state and can change annually, it is important to review your current plan as well as your other plan choices during Medicare’s open enrollment period.
When can I drop/disenroll from a Medicare Advantage Plan?7
You can disenroll during the open enrollment period, special election periods if you qualify, and also during the Medicare Advantage Disenrollment period from January 1st to February 14th of each year.
During the open enrollment period or special enrollment period, if you want to return to Original Medicare you must send a written request to your plan or call 1-800-MEDICARE during the enrollment period. However, if you wish to switch from one MA plan to another, you will be automatically disenrolled from your current plan once your application for the new plan is accepted. The same rules apply if you wish to change or disenroll in your Medicare Part D prescription drug plan.
During the Medicare Advantage Disenrollment Period:
Keep in mind that if your current Medicare Advantage plan is an HMO or SNP plan you must continue to seek services in-network until the date your disenrollment becomes effective, or you will have to pay out-of-pocket for rendered services. If your current Medicare Advantage plan is a PFFS plan and you wish to disenroll in the plan you must make sure providers that you see accept the plan’s payment terms and conditions until the date your disenrollment becomes effective.
What’s the difference between Medicare Advantage and Original Medicare?
Coverage: Medicare Advantage plans are sold by private insurance companies, and must cover the same Part A and Part B benefits as Original Medicare. Many Medicare Advantage plans offer more services than Original Medicare, such as dental, vision, and hearing.
Original Medicare does not cover drugs, you can buy a separate Prescription Drug Plan (PDP) from a private insurance company. If you want drug coverage in a Medicare Advantage plan, you can sign up for a plan that includes both health and drug coverage, called a Medicare Advantage Prescription Drug Plan (MAPD).
Cost: Your out-of-pocket costs in a Medicare Advantage plan (Part C) depend on:
For Original Medicare, most people pay a monthly premium for Part B. People enrolled in Medicare Advantage still pay this Part B premium.
Is Medicare Advantage a better choice for me compared to other Medicare options?
A March 2014 HealthPocket study compared costs for three different Medicare plan combination scenarios for a 65 year-old beneficiary who makes two primary care visits and four specialist visits per year and takes three common prescription drugs. Results of the study indicated that Medicare Advantage was the best choice in terms of total costs for a typical new Medicare enrollee:
Despite the results of the study it is important to remember that every individual is different and it is important to compare plans while taking into consideration factors such as your healthcare usage and prescription drug needs. For example, the value of Medigap Plan F improves as a beneficiary uses more services covered by Medicare Part A and Part B since the plan covers 100% coinsurance and deductibles for Original Medicare.
HealthPocket is a free information source designed to help consumers find medical coverage. Whether you are looking for Medicare, or an individual and family health insurance plan, we will help you find the right healthcare option and save on your out of pocket healthcare costs. We receive our data from government, non-profit and private sources, and you should confirm key provisions of your coverage with your selected health plan. If you select a plan presented on our site, you will be directed (via a click or a call) to one of our partners who can help you with your application. Our website is not a health insurance agency and not affiliated with and does not represent or endorse any health plan. HealthPocket, Inc. is part of the Health Insurance Innovations, Inc. family of companies (NASDAQ: HIIQ).