The Definition of Medicare Advantage

Medicare Advantage was established in 2003 as a part of the Medicare Modernization Act of 2003. It replaced the Medicare+Choice program. The program was created to save federal dollars spent on Medicare, with the hope that private insurance plans’ oversight could encourage prevention and keep beneficiaries from having catastrophic illnesses and diseases. Medicare Advantage is a popular option for Medicare beneficiaries, with 23 percent of Medicare recipients enrolled in 2009.

Simple Definition

• Medicare Advantage plans are private health plans that have contracted with Medicare. These plans are paid fixed subsidies by Medicare to provide Medicare beneficiaries benefits. Most of these plans are managed care plans, which are plans that control both the financial and health services aspect of the insurance plan.

Types

• Just like normal private health plans on the market, there are several types of Medicare Advantage plans. Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), and Private Fee-For Service (PFFS) plans are the most seen on the market. Though they are rarer, Special Needs Plans (SNP) made specifically for those with end-stage renal disease, diabetes, or any other disease, Provider Sponsored Organizations (PSO) and Medicare Medical Savings Accounts (MSAs) are other types of Medicare Advantages plans available to purchase in some areas.

Costs

• Most beneficiaries are still required to pay their monthly Part A and Part B premium. Medicare Advantage plans will also usually require an additional Part B premium on top of the standard Part B premium. When receiving services, beneficiaries should expect to pay a co-payment.

Rules

• Medicare Advantage plans are all required to offer the same services and benefits as original Medicare. However, they will usually do so with different rules and costs. Furthermore, there is very little predictability in a private health plan’s rules, because each Medicare Advantage plan has different rules for how a beneficiary can access coverage. A beneficiary should always contact the plan directly for clarification.

  In most private health plans, the beneficiary may be locked into a network of doctors, providers and pharmacists. However, if a private health plan leaves the beneficiary’s area, the beneficiary has the right to switch back into original Medicare or join another plan in his area.

  No matter what, a beneficiary has the same rights as he would have in original Medicare, and so he can always appeal.

Drug Coverage

• In addition to the minimum Part A and Part B benefits, most Medicare Advantage plans are packaged with Part D Medicare drug coverage. If a beneficiary wants the Part D benefit, he must choose one of these plans. The only exception to this is if he is enrolled in an MSA, a PFFS or a Cost Plan.