While the majority of people with Medicare get their health coverage from Original Medicare, some people (around one-third of beneficiaries) choose to get their benefits from a Medicare Advantage Plan, sometimes called a Medicare private health plan. Medicare Advantage Plans contract with the federal government and are paid a fixed amount per person to provide Medicare benefits.
The most common types of Medicare Advantage Plan are:
- Health Maintenance Organizations (HMOs)
- Preferred Provider Organizations (PPOs)
- Private Fee-For-Service (PFFS)
Note: You may also see Medicare Advantage Plans called Special Needs Plans (SNPs), Provider Sponsored Organizations (PSOs), and Medicare Medical Savings Accounts (MSAs).
Remember, you still have Medicare if you enroll in a Medicare Advantage Plan. This means that you must still pay your monthly Part B premium (and your Part A premium, if you have one). Each Medicare Advantage Plan must provide all Part A and Part B services offered by Original Medicare, but can do so with different rules, costs, and restrictions that can affect how and when you receive care.
All Medicare Advantage Plans must include a limit on your out-of-pocket expenses for Part A and B services (for example, the out-of-pocket maximum for HMO plans in 2018 is $6,700). These limits tend to be high. Plans can’t include cost-sharing (copays or coinsurances) that are higher than they would be under Original Medicare for certain services, like chemotherapy and dialysis, but they can have higher cost sharing for other services. Medicare Advantage Plans can also provide additional benefits that Original Medicare does not cover, such as routine vision or dental care.
As noted above, different types of plans have different rules for how and where you can get coverage. However, even plans of the same type offered by different companies may have different rules, so you should always check with a plan directly to find out how its coverage works.
Medicare Advantage Plans often charge a premium in addition to the Medicare Part B premium. They also generally charge a fixed amount, called a copayment, that you are responsible for whenever you receive a service. Some plans charge a percentage of the cost of the service, called a coinsurance, for some or all services.
You can join a Medicare Advantage Plan if:
- You have Medicare Parts A and B;
- You live in the plan’s service area; and
- You do not have End-Stage Renal Disease (ESRD).
- Note: If you have ESRD that requires dialysis or a kidney transplant, you can enroll in a Medicare Advantage Plan if you join a Special Needs Plan (SNP) that specifically accepts people with ESRD or if other special circumstances apply.
If you want Medicare coverage through a Medicare Advantage Plan and also want drug coverage (Part D), you must generally choose a plan that offers Part D drug coverage as part of its benefits package. If you join an MSA, a PFFS without drug coverage, or a Cost Plan, you can join a stand-alone Part D drug plan.
If you have health coverage from your union or current or former employer when you become eligible for Medicare, you may automatically be enrolled in a Medicare Advantage Plan that they sponsor. You have the choice to stay with this plan, switch to Original Medicare, or enroll in a different Medicare Advantage Plan. Be aware that if you switch to Original Medicare or enroll in a different Medicare Advantage Plan, your employer or union could terminate or reduce your health benefits, the health benefits of your dependents, and any other benefits you get from your company. Talk to your employer/union and your plan before making changes to find out how your health benefits and other benefits may be affected.