How Do Medicare Advantage Plans Work?

Medicare Advantage plans are offered by private insurance companies throughout the United States. These companies have entered into an agreement with Medicare to provide coverage for the same services as original Medicare. This consists of hospital services covered under Medicare Part A and medical services covered under Medicare Part B.

Certain Medicare Advantage plans may also include additional healthcare benefits, such as dental, vision, hearing, and prescription drug coverage. However, the extent of these additional benefits can vary depending on the specific plan, as each Medicare Advantage plan has the freedom to choose which additional coverage options to offer.

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Medicare Advantage plans were established as an alternative to Original Medicare and Medigap, offering individuals an alternative way to receive their healthcare coverage. By enrolling in one of these plans, you authorize Medicare to allocate a fixed monthly amount to the Advantage plan for your medical care. In return, the plan assumes responsibility for providing all the services outlined in Part A and Part B of Medicare, effectively assuming all your medical risks.

While enrolled in an Advantage plan, it is crucial to continue paying your Medicare Part B premium. Eligibility for these plans requires enrollment in both Medicare Parts A and B, along with residing within the service area of the chosen plan.

It is important to note that Medicare Advantage policies should not be confused with Medigap plans. They function differently since they assume the role of paying for your healthcare services instead of Medicare, rather than supplementing or covering expenses not paid by Medicare.

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Newcomers to Medicare often ask us about the advantages and disadvantages of Medicare Advantage plans compared to Original Medicare. A significant factor to consider is how you access the benefits. Original Medicare entails deductibles and a 20% coinsurance on Part B. You have the freedom to choose any doctor or hospital that participates in Medicare, which is typically the majority. On the other hand, with an Advantage plan, you utilize a network of providers associated with the plan, usually within your local area. When receiving healthcare services, you will be responsible for co-payments. Each plan establishes its own cost-sharing structure. For instance, you may pay a modest copay for a visit to a primary care doctor and a higher copay to see a specialist. Similarly, certain plans require a daily hospital copay, while others may charge a flat fee for the entire duration of the stay.