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Medicare Advantage – The Good, the Bad and the Ugly (Revised for 2021)

Introduction

First let’s understand what Medicare Advantage is.  It is known as Part C of Medicare and also referred to as a “Medicare Health Plan”.  Also, the acronyms MA (Medicare Advantage) and MAPD (Medicare Advantage with Part D) are attributed to this part of Medicare.

We are not going to get into the history of Medicare Advantage.  That is for Wikipedia to represent.  Rather, we want to provide a working understanding of this type of coverage for those who have it or are considering it.  Therefore, let’s assume that as you are reading this you are eligible, approaching eligibility or perhaps researching for someone.

Eligibility is for most having Part A coverage and paying a Part B premium. Medicare Advantage plans are issued by private insurers who operate under Medicare rules.  They become your primary coverage.  These plans, for reasons that you may find obvious are increasing in popularity.

That said, our goal is to arm you with all you require to make a decision without regard to the hype and misdirection that surrounds this segment of the industry.

The Good

Generally, these plans have a zero premium. For obvious reasons this is attractive especially for seniors on fixed incomes whose under 65 health insurance premiums ballooned under ACA (aka Obamacare).

They include copays (fixed fee) for many services. For example, Dr. visits, hospital room and board and can include ER visits, outpatient services and other related health care. This creates a predictable understanding of cost especially helpful to those on fixed incomes.

They have a Maximum Out Of Pocket or MOOP. Under Original Medicare there is unlimited annual Part B risk in terms of coinsurance (cost sharing of 20% due by the beneficiary).  The MOOP creates a cap or limit to one’s risk.  Depending on the plan that can range from $1500 to $6700 for 2020.

Plans may include prescription (Part D) coverage.  For beneficiaries in Original Medicare with or without Medigap (Medicare Supplemental Plans) prescription Part D coverage comes in a separate plan with a premium.

MAPD plans (the PD is Part D) include this coverage without the premium and the plans may have better coverage for medications that the standalone Part D in your area.  It’s another way to save money.

They provide other added services. Such as routine dental, vision and hearing and health maintenance services like gym memberships and exercise programs.

There is additional help for those of greatly limited income and certain health conditions. These are referred to as Special Needs Plans, SNPs or “Snips”.  They can provide additional services like transportation, help with prescription costs and Part B premiums and other benefits.  They are only available to those who qualify.  These particular plans may also have enrollment year-round.

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The Bad

They contain networks that can be restrictive.  Under Original Medicare you have “open access” that is, if a participant takes Medicare they will provide you services regardless of where they or you are located. 

There are however PPO (Preferred Provider Networks) plans that have coverage regionally or even nationwide.  Copays may be higher though, and cost sharing (coinsurance) may also apply.  

You should weigh the cost of care in a PPO versus the premiums of Medigap & Part D or the risk of Original Medicare.  This is part of our diagnostic for all beneficiaries considering this option. 

Most Beneficiaries leave their plan due lack of access to providers.

With Medicare Advantage the vast majority of beneficiaries are in plans that contain a network.  Most plans in this group are HMOs (Health Maintenance Organizations).  These plans generally require a Primary Care Physician (PCP) and referrals for any specialist with rare exceptions (Like OBGYNS).  These plans trade access for risk as they tend to have the lowest MOOP and copays although especially in urban areas the networks can be great.

As long as you are happy with a PCP, access to specialists and quality facilities (hospitals and surgical centers) these plans can work very well.  

There are HMO-POS plans that provide more flexibility, still require a PCP but usually do not require referrals and specialist/facility networks tend to be more robust.  There may be a compromise in the form of a higher MOOP and copays in certain cases so it makes sense to compare.  They also may have out of network coverage but the PCP is still essential (as in POS or the Point of Service) and services may be charged as coinsurance or shared costs rather than a fixed fee copay.

Lastly there are PPO plans.  PPO (Preferred Provider Organization) plans generally have the best level of access.  However, local and regional PPOs have emerged that are a subset of what most people, especially those used to “open access PPOs” in their pre-Medicare days, find to be somewhat restrictive.  A PCP is not required and therefore neither are referrals.

Unlike other plans, these may have a premium.  Out of network coverage operates similarly to HMO-POS plans.  It is essential that the beneficiary get an analysis either from Medicare.gov if they are computer savvy or from a licensed, appointed, and preferably independent agent contracted with the top carriers in your area.

You are committed to the plan for the plan year. All plans operate on a calendar year and there are restrictions to changing plans.  There is an Annual Election Period (AEP) from October 15 – December 7 each year and an Open Enrollment Period at the beginning of the year.   Certain plans that have the highest overall Star Rating of Five Stars may enroll year-round.  Other circumstances may trigger a Special Enrollment Period (SEP) such as moving out of a coverage area.

Medicare Advantage is like any health insurance in that the plan renews automatically.  Unless you forfeit all coverage, which is hardly justifiable with a zero-premium plan and you do not qualify in any other sense you are committed to the plan for the year and may only avoid automatic renewal by enrolling in a new plan or going back to Original Medicare.

The ability to change plans in AEP is not guaranteed. Most beneficiaries are not aware of this.  Although the option to change is the benchmark of AEP (aka Open Enrollment erroneously) you are still subject to underwriting approval.  If you are in the middle of care for certain, mostly serious conditions or are scheduled for procedures related to one, you may be declined.

Going through a “prescreen” either directly with the carrier or through an agent can save you from disappointment if you have these concerns.  Conversely if certain condition that no longer exist kept you from a better plan a prescreen is worth the effort if the desired plan achieves better health outcomes.

Pro Tip: All insurance companies have “look back provisions for (especially serious) illnesses.  A look back provision is the time lapse since you were last treated.  Some may have more favorable underwriting that as you will discover can affect your eligibility if you wish to change plans .

The Ugly

Everything changes but the monthly premium. In every AEP carriers revise plans.  This may include changes to networks, cost of services, MOOP and plans may come into or leave coverage areas.  Plans may also be eliminated in entirety and may or may not be replaced.  New plans may also be introduced.  Not all changes are unfavorable and it is a good idea prior to renewal to review changes, especially to cost and access.

You cannot leave the plan if your PCP or specialist leaves the network in the middle of a plan year. Doctors retire or leave the area.  Physician groups have opted out in entirety in disputes as have hospital groups.  Especially with your PCP if you have one it is always a good idea to get her take on the future related to the plan.

If you decide to go back to Original Medicare there may be substantial risk. It only makes sense to stay in Original Medicare if you can offset the 20% cost sharing in Part B (coinsurance) with a Medicare Supplement (Medigap).  In addition to cost, if you do not qualify medically for the Medigap then you should look for better options in Medicare Advantage.

You cannot have Medicare Advantage and Medigap at the same time legally and if you enroll in Medigap and are declined you may be disenrolled from Medicare Advantage compounding the dilemma.

Medicare Advantage can be an excellent option once you know the Good, the Bad and the Ugly and have chosen a plan that is best suited to your unique health situation.  If you would like a no cost or obligation consultation regarding your options there is a short form on this post.

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