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Types of Medicare Advantage Plans

Some may perceive Medicare as a single government program. For those who opt for traditional Medicare, that may be true. Others, however, want options. For these people, there is the Medicare Advantage program. Medicare Advantage (MA) plans are private health plans that offer Medicare benefits. Similar to regular insurance plans on the market, there are several types of MA plans.

  1. Health Maintenance Organization (HMO)

    • Most MA plans are HMO plans. HMOs primarily work by creating a network of care and providers. Beneficiaries must see doctors and go to hospitals within the network or care is not covered by the HMO plan. HMO beneficiaries also must choose primary care physicians (PCP) and receive a referral from their PCPs before seeing a specialist.

    Preferred Provider Organization (PPO)

    • PPOs are similar to HMOs. PPOs have a network of providers that beneficiaries can see. However, if a beneficiary wants to go to a non-network provider, typically they may do so at a higher cost. PPO beneficiaries do not need to select a primary care physician.

    Point of Service (POS)

    • A POS plan is a combination of an HMO and PPO. Similar to an HMO, beneficiaries must select a primary care physician and must receive referrals from their PCP to see a specialist. Similar to a PPO, the beneficiary can see an out-of-network specialist at a higher cost.

    Provider Sponsored Organization (PSO)

    • A provider sponsored organization is a plan that cuts out the insurance companies altogether. In a PSO, a provider or group of providers contract directly with Medicare to provide complete services for a beneficiary.

    Private Fee-for-Service (PFFS)

    • Private fee-for-service plans do not have any network of doctors, do not require their beneficiaries to select a primary care physician and do not require their beneficiaries to receive referrals to see a specialist. Beneficiaries can see any doctor who is willing to accept the PFFS insurance.

    Special Needs Plans (SNP)

    • A Medicare SNP operates like any one of the previous plans, except they are designed to specifically cover individuals in certain situations. This includes people who live in nursing homes or any institutional facilities for the mentally challenged, those with both Medicare and Medicaid, and those with chronic diseases such as diabetes, heart disease or end-stage renal disease.

    Medical Savings Account (MSA)

    • Medicare MSAs function like health savings accounts. A private insurance company deposits a certain amount into a bank account, and the beneficiary may spend this money on medical expenses. Once a high deductible is reached, the MSA begins to cover the beneficiary similar to normal insurance.

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