The Good and Bad With Medicare Part-C Advantage Plans
Medicare Part C, also called an Advantage Plan, completely replaces original Medicare. Some Advantage Plans include additional benefits that are not included with regular Medicare, such as vision, dental, hearing, and prescription drugs.
I'll start with giving you a basic understanding of regular Medicare. Then I'll cover all the benefits of Advantage Plans. In the last section, I discuss the pros and cons to help you decide if it's right for you. They do have some negative points that you need to know.
First, a Review of Regular Medicare
Parts A and B
Regular Medicare has two primary parts. Part A covers hospital expenses. Part B covers doctors and other medical procedures. Both of these combined pays for 80% of your healthcare costs.
You still pay the deductible, and you are responsible for the other 20%. However, that’s 20% of what Medicare approves for the billing, not 20% of what the doctor or hospital charged. Not many people realize that.
If you are concerned about paying your share, you can get an optional supplemental plan that pays the 20% portion that Medicare doesn’t cover, less the deductible. That is also known as Medigap. These plans are provided by independent insurance companies.1
There are several different supplemental plans to choose from, labeled as Plans A through N, each with varying benefits of coverage and premiums. However, that’s not the subject of this article.
Besides a supplemental plan, you need to consider prescription drug coverage. That is Part D. You need to subscribe to this with an independent insurance company. Each one has somewhat different coverages for various drugs.2
Part D is optional, but there is a penalty if you don’t take it. Don’t confuse that with the penalty for Obamacare, which President Trump repealed. The penalty for not having Medicare Part D still exists.
If you don’t have a Medicare-approved Part D coverage after your 65th birthday, then a penalty will be added to your premium when you need it.
The penalty is an accumulative amount of 1% per month. That means if you skip two years (24 months) and then sign up for a pharmaceutical plan, you’ll pay a penalty of 24% on top of the regular Part D premium. Technically that percentage is figured on the average nationwide Part D premium, not on the premium of the plan you choose.
Now that I gave you a limited explanation of regular Medicare, you’re ready for me to describe Part C.
Medicare Part C: The Advantage Plan
It’s inaccurate to call this Part C, in my opinion. It always confuses people because it’s not really a part of Medicare. It’s a plan, an Advantage Plan, and it completely replaces regular Medicare.
Once you understand what I will cover here, you’ll be able to determine if it’s a better choice over regular Medicare for you.
Most advantage plans are health maintenance organizations (HMO) or preferred provider organizations (PPO). They cover the same medical services as original Medicare parts A and B. They also provide additional benefits that I’ll discuss below.
A Medicare Advantage plan takes over the entire record-keeping. You still need to pay for Medicare Part B or have that deducted from your Social Security payments. Most plans include an approved Part D creditable drug coverage.
The premium can also be deducted from Social Security if you prefer. These premiums are usually much lower because Medicare reimburses those private insurance companies for taking care of everything. Some plans even have a zero premium!
In the rest of this article, I’m going to give you a general outline of the coverage and benefits. I can’t go into detail because each advantage plan in every town or city offers different benefits.
For example, the plan I have pays $200 a year towards eyeglasses or contact lenses and $50 a month towards a gym membership. However, they are only in New York, so you need to review the plans available to you where you live.
Your Maximum Out-of-Pocket Responsibility
There is a limit to how much you would have to pay with accumulated co-pays per year. As long as you go to in-network providers, once you reach that annual limit, you no longer need to pay the co-pays.
That limit is high, however, usually in the range of $7,000. However, if you are in poor health and go to doctors or the hospital often, your co-pays can add up. It’s nice to know there is a limit to your out-of-pocket expenses.
Do I Still Pay the Deductible?
Some advantage plans pay the standard Medicare deductible so that you may have no deductible. Regular Medicare doesn’t pay until the deductible is used up.
Advantage Plan Benefits
Every plan is different, but some Advantage Plans have these benefits:
- Zero co-pay for Preventive Care
- Low or zero co-pay for PCP office visits
- Zero co-pay for tier-1 generic drugs
Advantage Plan Reimbursements
Many Medicare Advantage plans provide reimbursement for certain things not usually covered by regular Medicare. Here are things to look for, based on what you prefer having:
- Allowance for OTC pharmacy items
- Gym membership reimbursement
- Eye-ware / contact lens reimbursement
Prescription Drugs Benefits
Most Advantage plans include Part D coverage. That means you don't need to apply for this separately. It also is an approved Part D, so you avoid the penalty for not having prescription drug coverage.
Part D with advantage plans has a tiered structure. There are many generic drugs in tier 1, which has a low, or zero, co-pay. But other drugs fall into higher co-pay tiers.
If you are taking a variety of medications, check with each plan to see how well you are covered. Every plan has different co-pays, and they each have specific drugs in a different tier structure.
Some plans have a zero co-pay on some drugs when you order through the mail.
You do need to watch out for charges if you order drugs from out-of-network providers.
If you use so many drugs that you fall within the Medicare Coverage Gap (also known as the Donut Hole), then you will want to check on how the available advantage plans handle this. Each plan has a different way of handling Gap Coverage.
All advantage plans have their own structure for hospital costs, and it may be different for inpatient and outpatient.
Some plans have reasonable daily co-pays for the first week. Then you are fully covered and pay nothing up to three months. That’s great for those who are generally healthy.
If you expect to need extended hospital stays, you might do better with regular Medicare, and paying for an additional supplemental plan rather than using an advantage plan.
If you use any of the following preventive services, confirm if your plan covers it. Most advantage plans have a zero co-pay for these services.
- Yearly "Wellness" visit
- Abdominal aortic aneurysm screening
- Alcohol misuse counseling
- Bone mass measurement
- Depression screening
- Diabetes screening
- Cardiovascular disease screenings
- Colonoscopy and Sigmoidoscopy
- Mammogram breast cancer screening
- Cervical and vaginal cancer screening
- STD and HIV screening and counseling
- Medical nutrition therapy services
- Obesity screening and counseling
- Prostate cancer screenings (PSA)
- Stop smoking tobacco counseling
- Flu, Hepatitis B, and Pneumococcal Vaccines
Regular Medicare does not pay for dental work. However, some advantage plans pay for dental x-rays, one oral exam every year, and two cleanings every year. Check with the plans in your area.
Common Medicare Benefits
All benefits common to Medicare are included with advantage plans. Below is a summary of these benefits. Under an advantage plan, the co-pays and limits might be better than regular Medicare coverage. You need to compare this with the plans available in your area.
Routine eye exams and follow up visits to diagnose and treat eye diseases and conditions are standard.
In addition, some plans include coverage for contact lens or eyeglass prescriptions. Some plans even reimburse part of the cost of filling these prescriptions.
All advantage plans cover emergency care when you need to a hospital ER. There is usually a higher co-pay, such as around $80.
Medicare-covered exams to diagnose and treat hearing issues, and routine hearing exams are included. Usually one visit per year, but evaluation and fitting for hearing aids might be covered just once every other year.
Other Coverages Provided by Advantage Plans
Many advantage plans also include the following. Check with the plan you are considering:
- Skilled Nursing Facilities
- Occupational therapy
- Physical therapy
- Cardiac Rehabilitation Services
- Ambulance Services
- Foot Care (Podiatry)
- Medical Equipment and Supplies
- Chiropractic (if Medicare approved)
- Outpatient Surgery
- Mental Health Services
- Medicare-certified hospice
Prior Authorization and Referral Requirements
Some procedures require prior authorization by your doctor, and in some cases, you need a referral from your primary doctor to go to a specialist. However, there are exceptions, so check with the plan you are investigating.
You Still Need Medicare Parts A and B
When you have an advantage plan, you still need to pay the premium for Medicare Part B (Medical Coverage).
If you’re over 65 and had health coverage through your employer, or your spouse’s employer, you still need to sign up for Medicare Parts A and B, even if you select an advantage plan (Part C).
The Advantage Membership Card
If you use regular Medicare and have Part D for prescription drug coverage, and a supplemental plan to cover the other 20%, then you would have three membership cards you need to carry. I did that the first year I was on Medicare.
When you have an advantage plan, you only need to carry one card to receive services. That covers everything. You do not need to carry your regular Medicare card. Put that away in a safe place. You don’t need it unless you go back to regular Medicare. You also don't need a separate card for prescription drugs. It's all under one plan.
So what's the catch?
Whenever something sounds too good to be true, one should be aware of the negatives. Medicare Advantage plans offer a lot of benefits, but they also have limitations that may not be good for people in poor health.
Advantage plans may not be the right choice if you have major health issues. That's because you are limited to doctors that are on the plan. Besides, some doctors don't accept particular Advantage Plans because they tend to pay doctors less than Medicare and Supplemental insurance. Therefore, you may not always be able to choose the best doctors for your particular condition.
With regular Medicare, you can go to any doctor that accepts Medicare. You’re covered when you travel too.
Advantage plans, on the other hand, have a network of doctors, hospitals, and pharmacies in your area. If you use providers that are not in the network, the plan may not pay for those services.
You must use pharmacies that are in the network to fill your prescriptions for covered Part D drugs. Most standard pharmacies are included, but you should check on that.
You need to verify that the doctors you go to are in the network. They all list the in-network doctors online, so it’s easy to research.
In addition, doctors are known to drop off the plan any time if they are not satisfied with the payment structure. That means you may have to change doctors.
You can change to a different advantage plan only once a year, during the open enrollment period near the end of the year.
If you move, you would have to select a new plan that exists in your new location. A special enrollment period allows making a change when you move.
Benefits can be added or eliminated upon the annual renewal. You will know that ahead of time so that you can decide to switch to another advantage plan, or back to regular Medicare, during the open enrollment period.
My prior advantage plan had discontinued reimbursing for over the counter essentials. So during the open enrollment period, I switched to an advantage plan with another insurance company that still offered that benefit.
If you travel a lot, you’ll want to be sure you're covered for any doctor that accepts Medicare no matter where you are. In that case, an advantage plan is not the right choice for you since you can only use in-network doctors.
Some advantage plans cover emergency services when outside the United States. Those that do may not necessarily offer other useful benefits. That is why you need to compare plans in your area and chose accordingly.
I am comfortable with my advantage plan. It gives me everything I need plus other benefits I decided to use, such as gym membership and eyeglass reimbursement.
It all boils down to your needs, your health, and the selection of plans available in your area. Take all the pros and cons into consideration so that you can decide if it’s an advantage for you.
This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.
© 2018 Glenn Stok