Updated October 2017
Enrollment in Medicare Advantage
As we head into Medicare open enrollment for 2018, now’s the time to review your health insurance coverage whether you’re new to the program or looking for other options for next year. Each year, Medicare enrollees have a chance to change, drop or replace existing Medicare coverage for another plan – original or Advantage – and that period for 2018 will run from October 15 through December 7.
Medicare Advantage is an increasingly popular alternative to traditional (original) Medicare. The Centers for Medicare and Medicaid Services (CMS) estimates that enrollment in Advantage will increase by 9 percent in 2018, up to more than 20 million people. That means that about 34 percent, or more than a third, of all Medicare enrollees are choosing the private alternative to Medicare.
If you’re considering making the switch to Advantage, then here are some facts to know as we head into the 2018 open enrollment period.
New Predictions for Medicare Advantage in 2018
According to the CMS, Medicare Advantage plans will play a larger role this year for America’s seniors. The agency is expecting record enrollment in Medicare’s private alternative. Not only that, but many of those who do sign up for Advantage will have more options than they had in 2017. For the 2018 season, there will be about 3,100 Medicare Advantage plans nationwide, an increase over last year’s 2,700. Approximately 85 percent of Advantage members will have access to at least 10 different plans.
Medicare Advantage plan members will also benefit from high-quality coverage, particularly those with plans that cover prescription drugs. MA drug plans for 2018 have been rated highly for the upcoming enrollment season. About 73 percent of MA subscribers with drug coverage will be in 4- or 5-star plans. That represents an increase of 4 percent over last year. For the plans themselves, 44 percent of Medicare Advantage plans with drug coverage have been rated four stars or higher for 2018.
Advantage members will also enjoy lower premiums in 2018. The average premium for Medicare Advantage is expected to drop to about $30 a month for most members, a 6 percent decrease over the 2017 average of nearly $32. For 77 percent of Advantage enrollees who stay in their current plans, premiums will remain the same or drop for 2018.
Pros and Cons of Medicare Advantage Plans for Seniors in 2018
If you’ve hit age 65 and you’re ready to discuss your options for health insurance after retirement, you’ve no doubt come across information about Medicare Advantage, the private portion of Medicare that’s sold through insurance companies. It’s tough to sort out the differences between Medicare Advantage and its original, federally subsidized counterpart (traditional Medicare). Medicare Advantage (MA) plans can be cheaper, they typically cover more services and they may be useful if you travel frequently.But original Medicare is more widely accepted and not as confusing when it comes to breaking down coverage costs.
That said, just recently a United Healthcare executive estimated that in a relatively short period of time, the company believes that upwards of 50 percent of all Medicare enrollees will opt to go with a Medicare Advantage plan over any other option.
There has also been a lot of discussion about lowering the age limit for Medicare enrollment so that individuals would have the ability to buy into Medicare Advantage sooner.
At the end of the day, which option you choose depends on a lot of personal factors, including your medical history, budget, and lifestyle.
Here are some of the major pros and cons of signing up for a Medicare Advantage plan.
The Advantages of Medicare Advantage in 2018
Cost Savings with Medicare Advantage
When you’re enrolled in traditional Medicare policies, you will be responsible for 20 percent of any covered medical expenses out of pocket after you meet your deductible. This may not seem bad when your bills are $100, but what if something happens and you’re suddenly facing 20 percent of a $10,000 bill? There is also no limit to how much you can pay since there are no out-of-pocket spending limits with original Medicare. It will be 20 percent of every medical bill regardless of how expensive.
Medicare Advantage plans may require you to pay a copay at each doctor visit or medical procedure, there’s a cap on what you can expect to pay annually. In 2018, the cap on out-of-pocket spending for Medicare Advantage is $6,700, but many plans keep their OOP limits much lower.
If you are someone who visits the doctor on a regular basis or is expecting to have expensive medical procedures done, it may be financially beneficial to enroll in a Medicare Advantage plan, which would enable you to plan for a maximum out-of-pocket responsibility for the year. Once you meet the OOP limit, your plan will pay 100 percent of covered costs for the rest of the plan year.
Another way you will save is that some insurance companies do not charge a monthly premium. Because Medicare pays insurance companies a certain amount of money per enrollee, some companies offer zero-dollar premiums when they think they can make money without charging a beneficiary. Even when premiums are charged, they’re low with Advantage plans. In 2016, the average MA enrollee paid just over $32 a month. Premiums are expected to drop slightly for 2018, with the average enrollee paying just $30 a month for coverage.
Coverage Benefits with Medicare Advantage
One of the biggest perks to enrolling in a Medicare Advantage plan is the list of additional services that might be covered depending on plan type, among them prescription drug coverage, dental, vision, assisted living and nursing home care. Traditional Medicare plans do not cover these benefits, so any costs accrued would be paid for out of pocket.
Prescription drug coverage is available to regular Medicare enrollees but at an additional cost in the form of Medicare Part D. Not all Medicare Advantage plans cover prescription drugs, but those plans are by far the minority, with over 82 percent of Medicare Advantage plans offering this coverage. Whether this is an advantage will depend on your personal situation, as in what drugs you carry prescriptions for.
Most Advantage plans also cover extra services like vision, dental, assisted living and nursing home care. Traditional Medicare plans do not cover these services, which can make it especially hard for some to pay for assisted living and nursing home services as most of these facilities are only able to accept a certain percentage of residents with Medicare coverage.
If you are still covered by an employer’s or a spouse’s medical insurance, an Advantage plan may be redundant, or you may not be ready to move into a custodial care facility. However, for those who do need extended care, an Advantage plan can help save a considerable amount of money. While there are still out-of-pocket expenses for those with Medicare Advantage, most plans have a cap on what enrollees will be required to pay annually, as discussed above.
International Coverage Options with Medicare Advantage
With a traditional Medicare policy, your healthcare benefits exist only within the borders of the United States. If you are out of the country and find yourself in need of medical care, you won’t receive any help from Medicare, with a few exceptions, such as emergency situations or if you’re traveling and experience an unavoidable delay.
Some Medicare Advantage policies, however, will cover both doctor’s visits and emergency room visits that take place outside of the U.S., requiring only the same medical co-payment required locally. Many seniors look forward to doing a lot of traveling when they retire, but the fear of needing medical attention when thousands of miles from home can be discouraging at best. Here’s a link to some additional information regarding Medicare Advantage and Traveling.
While not all Medicare Advantage plans offer this feature, it’s worth shopping around for one that does if you do intend to travel. It is important to note that many Advantage plans will drop your coverage if you are out of the country for longer than six months. Keep that in mind as you shop for plans.
Disadvantages to Medicare Advantage
Restricted Networks – Also Known as Skinny Networks
When you have a Medicare Advantage plan, the only doctors or facilities that you can visit are ones that are in your network, unless you want to pay substantially higher charges for going out of network. This means that depending on which network your chosen insurance agency is a part of, you may not get to keep your current doctor. It also means that if you need to see a specialist, you will need a referral from your primary care physician. Those enrolled in traditional Medicare plans do not have these restrictions and can see any doctor they like with no restrictions, including specialists.
Some members of Medicare Advantage plans also have reported that finding emergency care within their network can be difficult. When you are in a medical emergency you don’t want to have to worry about what facility will be covered by your insurance company’s network of providers. While most health plans will waive added charges in a true emergency, it’s tough to make a gamble like that when you need care and don’t know where to turn.
If you find a plan that includes a network with doctors you trust in a local group, this isn’t a concern. However, it is possible for contracts to end and insurance companies to drop networks. This can be frustrating, to say the least, for those with Medicare Advantage plans.
It Can be Difficult to Determine What Medicare Advantage Plan is Actually Best for Your Needs
When shopping around for Medicare Advantage plans, it can be tough to find accurate side-by-side comparisons. Plans come in all shapes and sizes, and it can be confusing trying to figure out which available plans fit your individual needs. While you know you will at least be receiving the basics already afforded to you by Medicare Parts A and B, the similarities end there. Two different plans may both offer zero-dollar premiums, but annual out-of-pocket expenses or co-pays may be significantly different. Many Medicare Advantage plans offer extra features that original Medicare plans do not, such as chiropractic, dental, vision or continuing care facility coverage, and these benefits will also vary from plan to plan.
And just because you have found a plan that fits your needs now doesn’t mean that the plan will be the same next year. Contracts can end, and plans will change accordingly. Choosing Medicare Advantage means you’ll need to be even more diligent about your coverage from year to year, although any insurance plan should be reviewed each year to see if it’s still working for you.
As always, we highly suggest that you seek advice from a licensed Medicare insurance professional, and take measures to ensure that he or she is in fact licensed and working with a reputable agency.
Trouble When You Switch from Original Medicare
If you are on a Medicare Advantage plan and have decided it is not the right fit for you, you can drop it and enroll in original Medicare during open enrollment, which runs from October 15 through December 7. Under certain conditions, you can also switch to a different Advantage plan.
The thing that you might not realize, however, is that in most states, if you were a member of a Medicare Advantage plan for longer than a year, you may be ineligible for a Medigap policy. Medigap is an extra insurance policy that Medicare participants purchase to help with things that their Medicare coverage does not cover, like copays, deductible, and international medical expenses. Unlike a Medicare Advantage plan, Medigap policies will never cover things like chiropractic, vision, dental, or extended care facilities such as assisted living or nursing homes.
In some cases, you may still be able to qualify for a Medigap policy pending medical underwriting, which will determine your personal risk as a beneficiary. In some states, you won’t have to worry as they allow an individual to also buy a Medigap policy during the open enrollment period.
There are several advantages and disadvantages to enrolling in a Medicare Advantage policy. The good news is that there are free resources available to help you determine if a Medicare Advantage plan is right for you. You can take a self-assessment from the National Council on Aging, or reach out to your local Council on Aging for directions to federally funded Medicare counseling, which is available to you free of charge. The differences are worth exploring and applying to your individual situation because your choice will impact both your finances and your health as you age.
Do You Know About the Recent Changes to Medicare Advantage?
Medicare Advantage (MA, or Medicare Part C) plans are a private insurance option in lieu of Original Medicare. By law, MA plans must offer the same benefits as Original Medicare (Parts A and B). They may provide additional coverage, such as vision, hearing, dental and even health and wellness programs. These plans can also provide Medicare prescription drug coverage (Part D).
MA plan enrollment has increased by 5.6 million (50 percent) since the Affordable Care Act (ACA) was enacted. As of March 2015, 31 percent of all Medicare recipients were enrolled in an MA plan. As of June 30, 2015, there were 16.8 million MA beneficiaries, 31 percent of the entire Medicare population. According to the Kaiser Family Foundation (KFF), a nonprofit healthcare organization, there is a wave of changes affecting MA pricing and plan availability. As such, it’s important that current and new members note the plan changes revealed in the KFF’s study, as 2016 begins.
New Predictions for Medicare Advantage in 2017
In September 2016, the Centers for Medicare & Medicaid Services (CMS) announced that Medicare recipients would benefit from increased access to Medicare Advantage plans. Across the county, 99 percent of enrollees now have access to an Advantage plan. The CMS fact sheet also noted that in 2017:
- More than 94 percent of Medicare beneficiaries can enroll in an Advantage plan with a zero-dollar premium.
The number of Advantage options per county will remain largely unchanged since 2016 while access to supplemental coverage, like vision and dental care, will continue to increase.
Medicare Advantage premiums will have decreased by 13 percent compared to rates in 2010.
- Enrollment in Medicare Advantage will have increased by over 60 percent since 2010. This represents an all-time high of 18.5 million Advantage enrollees and about 32 percent of Medicare enrollees overall.
Certain steps taken by Medicare continues to improve access and quality across the board, especially for those who enroll in Medicare Advantage plans. Under the ACA, at least 85 percent of premiums from Advantage plans must be spent on quality and care delivery rather than overhead or administrative costs. This ensures that members benefit from careful consideration of their plan dollars. Medicare recipients can also take advantage of a one-time switch per calendar year to a 5-star rated Medicare Advantage plan in their area. Low-rated plans have an icon indicating poor performance, which helps members choose plans with confidence.
Going forward for next year and beyond, measures will be taken to improve the rating system for MA plans, leading to greater accuracy in plan ratings. Furthermore, 2017 payment reforms will ensure that payments made to MA plans are more precise.
In September, the CMS also announced that average monthly premium rates for Medicare Advantage members would drop by about 4 percent. Last year, the average monthly premium for MA beneficiaries was $32.59. In 2017, that rate will go down to $31.40. Most Medicare Advantage enrollees – 67 percent – will see no premium increase for 2017.
Recent Developments in Medicare Advantage Plans
There were several developments in Medicare Advantage plans in 2016 for the 2017 season. Among them were increased access to plans around the country, changes in Part D premiums, higher deductibles for prescription drug coverage, higher out-of-pocket limits and proposed mergers between several of the nation’s largest insurers.
- Rising plan availability. In 2016, there were about 3 percent more MA plans than there were in 2015. The number of plans will stay about the same for 2017. Americans living in metropolitan areas had access to an average of 19 plans last year, while people outside those areas had access to 11. The number of companies offering these plans has changed in recent years. An average of six companies offered coverage last year, but nationwide, just three or fewer companies offered plans. The top 25 percent offered eight or more plans. Health Maintenance Organizations (HMOs) grew last year, representing more than two-thirds of plans. Preferred Provider Organizations (PPOs) and other options continued to be stable in 2016.
- Increases in Part D premiums. For MA-provided drug coverage, the average monthly premium fell slightly in 2016. HMO costs rose approximately 9 percent to $31 per month while local PPOs rose 8 percent to $68. But zero-cost prescription drug plan coverage also increased in 2016, with 81 percent of all participants having access, compared to 79 percent in 2015.
- Increases in Part D deductibles. In 2010, 90 percent of MA plans had no deductibles, but in 2016, this fell to 55 percent. The average deductible in 2015 was $90 a month; in 2016, it was $118 and 16 percent of all plans charged the maximum $360 deductible. The max deductible in 2017 is now $400.00 a year. People receiving drug coverage through MA plans are more likely to pay a $0 deductible; for stand-alone Part D plans, only a third of plans charge no deductible.
- Out-of-pocket limits should increase. In 2017, MA plans had an out-of-pocket maximum of $6,700 for spending on hospital and medical services, but the average out-of-pocket maximum for most plans in 2016 was $5,400. Thirty-nine percent of plans charge the maximum in 2016 compared to 34 percent in 2015. Only 23 percent of plans charged $3,400 or less in out-of-pocket maximums in 2016, down from 30 percent in 2015.
- Carriers cater to certain members. Among carriers, about half of all Humana plans are HMOs while 84 percent of all UnitedHealth plans are HMOs. The industry’s potential mergers may further change the MA program as well.
Everything you need to know about Medicare Advantage
Medicare Advantage is a managed health care plan that acts as an alternative to original Medicare. Medicare is offered to people aged 65 or older who have met the working credit requirements by paying into the Medicare system through payroll deductions. People who are under the age of 65 with certain disabilities and people of all ages with Lou Gehrig’s disease (ALS) or end-stage renal disease (permanent kidney failure requiring dialysis or a kidney transplant) also qualify for Medicare. Most people who qualify for traditional Medicare can utilize Medicare Advantage plans instead of original Medicare (Parts A and B).
United States citizens and legal residents who have resided in the U.S. for at least five years usually receive Part A (hospital insurance) without any additional cost. Part A is also generally provided without any additional cost to U.S. citizens and legal residents who are fully insured under the Social Security Administration program. Some people do have to pay for Part A coverage, but this portion of Medicare is typically referred to as “premium-free Part A.”
Medicare beneficiaries have been receiving Medicare benefits through private health insurance plans since the 1970s. However, it was the Balanced Budget Act of 1997 that named the managed care program “Medicare+Choice” or “Part C.” Upon the passing of the Medicare Prescription Drug, Improvement and Modernization of the Act of 2003, the program became known as Medicare Advantage. Prescription drug coverage was also added.
Medicare Advantage benefits
Original Medicare and Medicare Advantage offer two benefit options: Part A and Part B. Part A pays for hospital services. Whereas most people don’t have to pay for Part A, enrollees are required to pay for Part B coverage. Part B pays for medical services, such as doctor visits, outpatient treatments, diagnostic testing, lab services and durable medical equipment, among other benefits.
The Centers for Medicare & Medicaid Services (CMS) processes all original Medicare claims. Private health insurance companies offer and manage Medicare Advantage plans. They receive financial compensation from the federal government to help offset healthcare costs, and the government oversees certain aspects of Advantage plans to make sure that they adhere to Medicare standards. Medicare Advantage claims are not processed through the CMS; the health insurance company processes the claim for their enrollees.
Medicare Advantage plans usually include a Part D benefit that provides prescription drug coverage. Enrollees of Medicare Advantage programs typically pay a small copayment, which could be as low as $20 per visit. Copayments may be higher when visiting a specialist. With original Medicare, coinsurance remains at 20 percent.
Insurance providers that offer Medicare Advantage plans usually offer healthcare services that are equivalent to, or even exceed, the services offered under original Medicare. Plans may also differ slightly from original Medicare. Medicare plans are designed to specifically reduce out-of-pocket expenses when visiting a physician or seeking healthcare services. Medicare Advantage plans may offer expanded benefits, such as:
- Other healthcare benefits that are not covered by original Medicare
Medicare Advantage plans usually have lower annual deductibles. An annual deductible is the amount that you have to pay out of pocket in a year before your healthcare plan pays its portion of the bill. Advantage plans don’t always charge a deductible, but some plans charge a deductible of more than $1,000 a year for out-of-network providers. When signing up for a plan, make sure you understand the costs involved ahead of time, especially if your usual doctor is out of network.
Medicare Advantage plans come in different sizes and shapes, and each type of plan has different rules and requirements. For instance, individuals who are enrolled in a Medicare Advantage HMO are unable to utilize the services of healthcare specialists or out-of-network providers without first obtaining authorization. If you’re enrolled in a Medicare Advantage PPO plan, then you can visit any physician or hospital without the need for authorization.
Medicare Advantage Plans
There are several types of Medicare Advantage plans, including: Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPOs), Private Fee-for-Service Plans (PFFS), Special Needs Plans (SNPs) and Medicare Medical Savings Account Plans (MSAs).
Health Maintenance Organization (HMO) plans
Medicare HMOs have a network of participating providers. These plans usually negotiate fees with providers, and enrollees are required to use the providers within the network or pay higher cost sharing expenses for out-of-network services. Enrollees are also required to choose a primary care physician, and in most cases, you’ll need to obtain a referral to see a specialist. Referrals are not required for services like yearly mammogram screenings. If medical care is received outside of the plan’s network, you may be required to pay the full cost. Following the plan’s rules is essential to avoiding high medical costs.
Preferred Provider Organization (PPO) plans
PPO plans are a type of Medicare Advantage Plan (Part C) offered by a private health insurance carrier. With a PPO plan, you pay less if you use doctors, hospital and healthcare providers within the plan’s network. You have additional costs if these services are provided by a medical professional outside of the network.
Unlike in an HMO, enrollees in a PPO plan can usually obtain medical services from any doctor, hospital or health provider that is not a part of the network. This plan is much more flexible than an HMO plan. Prescription drugs are usually covered under PPOs as well. Enrollees are not required to choose a primary care physician, nor are they required to obtain a referral. PPO plans typically offer a variety of extra benefits, but there are usually extra fees charged to compensate.
Private Fees-for-Services (PFFS) Plans
PFFS plans generally don’t have provider networks. They usually pay for Medicare coverage services using Medicare’s fee schedules. Enrollees may use any provider that is willing to accept the plan’s payment. As an enrollee in a PFFS plan, you’re not required to have a primary care physician, and you don’t need a referral to see a specialist. However, you may be required to pay a copayment or coinsurance when seeking medical services under a PFFS plan.
Special Needs Plans (SNP)
An SNP is a type of Medicare Advantage plan that is limited to people with specific diseases or illnesses. Benefits are usually tailored to meet the medical needs of these individuals. Doctors and hospitals within the Medicare SNP network, with the exception of medical emergencies, generally provide care and services. All SNPs cover prescription drugs.
Enrollees are usually required to have a primary care physician, and referrals are required to see a specialist. However, referrals are not required on certain services, such as Pap smears or pelvic exams. Membership in a Special Needs Plans is limited to the following groups:
- Those who live in certain institutions, like nursing homes
- People who qualify for Medicare and Medicaid (dual eligibility)
- Individuals with specific disabling conditions, such as ALS, diabetes or end-stage renal disease; HIV and AIDS; or chronic heart failure
Medical Savings Accounts (MSA) Plan
An MSA plan is similar to a health savings account. It combines a high-deductible plan with a medical savings account. The high-deductible plan will only provide health coverage when you have met your annual deductible, which is typically much higher than a deductible would be with other kinds of plans. The medical savings account deposits money into your savings account. You can then decide how funds will be distributed to cover medical expenses. Some plans will offer extra benefits, such as dental services or prescription drugs.
It’s important to remember that Medicare Advantage plans cover at least the same services that are offered by Medicare Part A and Part B (original Medicare). In order to understand what Advantage plans cover, you need to know what Parts A and B cover. Here’s a snapshot:
Medicare Part A coverage
Medicare Part A generally covers hospital services, including inpatient stays and other related types of treatment and care. The following additional services are also usually covered:
- Hospital care
- Skilled nursing facility care
- Home health services
- Nursing home care
Hospice care is not covered under any Medicare Advantage plan. It’s the one exception to the rule that Advantage plans have to cover the same services as original Medicare. It’s recommended that you sign up for Medicare Part A, which is free if you have paid payroll taxes for the last 10 years, to cover any hospice care costs that you may incur.
Medicare Part B coverage
Medicare Part B is the medical insurance portion of Medicare, which includes medically necessary services and preventive care. Anything that your doctor determines is medically necessary – ranging from lab testing to durable medical equipment and more – should be covered by Medicare Part B. Examples of covered services include:
- Clinical research
- Ambulance service
- Second opinions before surgery
- Outpatient prescription drugs
- Mental health care
What is not usually covered by Part A and Part B?
Original Medicare doesn’t cover everything. For some enrollees, traditional Medicare isn’t enough, which is where Medicare Advantage comes in. Here are a few services that aren’t covered by Parts A and B that may be covered by an Advantage plan:
- Long-term care (also known as custodial care)
- Cosmetic surgery
- Most dental care, including dentures
- Hearing aids and related exams
- Eye examinations and prescription glasses
Why Medicare Advantage Can Be a Good Choice
- Many Medicare Advantage plans offer prescription drug coverage. Original Medicare does not include prescription drug coverage unless you purchase Part D. In 2017, the average monthly premium for a Part D plan was $34.10. The 2018 base premium decreased by 2 percent to $35.02 according to the Kaiser Family Foundation.
- Medicare Advantage offers a cap on out-of-pocket expenses. Original Medicare does not offer a cap on out-of-pocket expenses. You keep paying a portion of the services, regardless of how many times you use them. Once the maximum amounts of out-of-pocket expenses have been reached, the Medicare Advantage plan will then cover all qualifying expenses.
- It is more cost-effective than adding Medigap coverage to original Medicare.
- Medicare Advantage plans often cover vision, dental, nursing home care and assisted living facilities. These are not usually covered under original Medicare.
How do I join a Medicare Advantage Plan?
There are a variety of Medicare Advantage plans, and you’ll want to find a plan that works best for your budget and health care needs. Here are the current enrollment options:
- Go to HealthNetwork.com/Medicare and shop for a Medicare Advantage plan online and either call the phone number to speak to a licensed Medicare sales agent or apply online for the plan that you’ve chosen.
- Use Medicare’s Plan Finder, and visit the plan’s website to see if you can enroll online.
- Complete a paper application and submit it to the plan.
- Call the plan you would like to join and request enrollment procedures.
- Call (800) MEDICARE (633-4227). You can also visit your local Social Security Administration office for more information.