Every year we get questions about selling Medicare Advantage from a lot of “non-Medicare Advantage agents”. So this year I’ve decided to focus on a Medicare Advantage blog series that will address a lot of the questions our Marketing Department receives about Part C (That’s Medicare Advantage, you know).
What I knew About Medicare Advantage
I started at Senior Benefit Services in November of 2012. Yup, right in the middle of the stress and chaos of AEP! I had never worked in insurance before so my new co-workers were quick to tell me the all the negatives of Medicare Advantage especially during the Annual Enrollment Period (AEP). Now almost 6 years later I realized that my introduction to Medicare Advantage was not the best, and it’s a poor attitude about the subject that I seem to pass along to every agent that calls in simply wanting to learn more. I’ll tell them, “Oh, it’s a whole different animal!” But the truth is …it is different, but not really that bad.
To begin this week’s blog I’m starting with finding the answers to the most basic Medicare Advantage questions:
What is Medicare Advantage?
Established in 2003, Medicare Advantage is an alternative option to Original Medicare where it pays for health care costs based on a monthly fee per enrolle rather than billing for each fee for a Medicare services that is provided to the client. (like Original Medicare). But for an actual definition we turn to www.Medicare.gov (the most useful website you should probably have bookmarked),
“Medicare Advantage Plans, sometimes called ‘Part C’ or ‘MA Plans’ are offered by private companies approved by Medicare.” When a client joins a Medicare Advantage plan, they still have Medicare, but not original Medicare Part A (hospital insurance) and Part B (Medical Insurance). The client instead receives coverage from Part C (Medicare Advantage Plan) that typically includes a Rx plan.”
The definition is pretty straight forward, instead of the client receiving Original Medicare they will have Medicare under Part C.
What Carriers Offer Part C?
There are quite a few carriers that offer Medicare Advantage, but the carriers we focus on are Aetna, Humana, and Johns Hopkins (MD only). These are private companies that have a contract with Medicare offering a couple different types of Medicare Advantage plans.
There are different types of Medicare Advantage Plans?
I know it’s confusing because there appears to be one Original Medicare so you would think there is one Medicare Advantage plan. However there are 4 common Medicare Advantage plans that you will see most often:
- HMO – Health Maintenance Organization plans are typically the most affordable (and sometimes with a $0 premium) but the client will have to go to doctors, hospitals, and specialists within the plan’s network.
- PPO – Preferred Provider Organization will cost more but allows your client to go to doctors, hospitals, and specialists out of the plan’s network. Of course, going outside of the network will come at a higher cost rather than staying within the network.
- PFFs – Private Fee For Services is very similar to Original Medicare where the client can go to any doctor, hospital, or specialist as long as they accept the plan’s predetermined costs for care.
- SNPs– Special Needs Plans focus on specialized health care for clients that have both Medicare and Medicaid (also called a Dual Eligible), living in a nursing home, or have chronic medical conditions.
With the carriers we work with, you will find that HMOs and PPOs are the most common Medicare Advantage plans.
What’s the cost of a Medicare Advantage plan?
Your client’s Medicare Advantage premium can vary from carrier to carrier and by state. Typically there is a monthly fee associated with the commonly sold HMO and PPO plans that is in addition to the Part B premium. Even though your client will not be receiving the benefits of Original Part A and Part B of Medicare they still will need to pay their Part B (Medical Insurance) premium.
Who Can Enroll in a Medicare Advantage Plan?
Any client that has Part A and B and lives in the plan’s service area. There is no underwriting except clients with End-Stage Renal Disease (ESRD) typically cannot purchase a Medicare Advantage plan.
What’s the difference between Original Medicare and Medicare Advantage?
When you get right down to it, there’s not much of a difference. Both offer the same services, however Medicare Advantage is through a private company and the out of pocket costs can differ. In addition, there are details to both Medicare options that can make a big difference for the client. The Medicare Rights Center created a neat guide to help explain the difference. Click Here for the original copy or check out the details below:
- The traditional program administered directly through the federal government.
- Includes Part A (hospital) and Part B (medical) coverage if you enroll in both.
- You pay a deductible and/or coinsurance when you get health care (usually 20% of the Medicare-approved cost for outpatient care).
- Most people pay a monthly premium for Part B. There’s no Part A premium if you have at least 10 years of United States work history.
- You can go to any doctor or hospital in the country that accepts Medicare.
- No referrals needed to see specialists; no prior authorization for services.
- You can buy a Medigap plan as supplemental coverage.
- If you want Medicare drug coverage, you must buy a separate Prescription Drug Plan (PDP) from a private insurance company
- Sold by private insurance companies that provide Medicare benefits.
- Must cover the same Part A and Part B benefits as Original Medicare.
- Some also cover extra benefits such as vision and dental care.
- The most common types are HMOs (Health Maintenance Organizations), PPOs (Preferred Provider Organizations) and PFFS (Private-Fee-for-Service) plans.
- You still have Medicare but you’re no longer in Original Medicare—you’re in a private plan that typically has different costs and restrictions.
- You pay a deductible and/or copay for services (usually a fixed copay, like $15 per office visit).
- You still pay Medicare premiums, and your plan may charge an extra premium.
- You typically are required to use doctors and hospitals in the plan’s network.
- You may have to choose a Primary Care Physician, get referrals to see specialists, and/or get prior authorization for certain services.
- You can’t buy Medigap supplemental insurance to help pay your out-of-pocket costs.
- Plans must have yearly limits on your out-of-pocket health care costs (an out-of-pocket maximum), after which you pay nothing for the rest of the year.
- If you want Medicare drug coverage, sign up for a plan that includes both health and drug coverage, called a Medicare Advantage Prescription Drug Plan (MA-PD). You usually can’t have a separate Part D plan, unless you’re in a Medicare Medical Savings Account (MSA) or a PFFS plan.
Another thing to keep in mind is hospice care falls under Original Medicare. However if a Medicare Advantage client requires hospice care then they will be able to use it under Original Medicare. If the client decides to drop their hospice care then they can return to the Medicare Advantage plan the following month.
What’s the downside to Medicare Advantage?
After comparing it to Original Medicare, Medicare Advantage doesn’t seem as bad as I originally thought. But what might work for one client, won’t work for them all. Here are some downsides for you and your client to consider.
One, the carrier is privately contracted by Medicare, which means if the carrier doesn’t renew the contract then members will lose coverage.
Two, depending on what type of Medicare Advantage plan the client enrolls in they might have to switch doctors and specialists. If they are not willing to do this, make sure you find a plan where their preferred doctors are within their network or at least a plan where they can travel outside of their network. Keep in mind networks can change from year to year. Speaking of the network, it’s important for clients to understand that if they travel or receive care outside of their “home” state, their plan may not cover that care (emergency care is often an exception). For us on the East Coast, there a lot of “Snow Birds” that spend their summers in a northern state, and their winters in the south. In situations like this they’ll want to ensure they have access to in network care when in a different state.
Another downside, is the Rx coverage in Medicare Advantage Plans. If you client is on a prescription medication make sure you check out what Tier Level their prescription falls under because pricing will vary from plan to plan. If you’re not too sure of the client’s prescription costs under Medicare Advantage then review everything under www.Medicare.gov’s Plan Finder. Here you can compare the out of pocket cost with a Medicare Advantage versus purchasing a Prescription Drug Plan (PDP) with Original Medicare. And just like the provider network, the Prescription formulary can change as well. So be sure your clients are reviewing plans annually to see how changes with their medications or changes to the plan’s formulary will impact their out of pocket costs.
Have any further questions?
If you have any further questions or comments about the basics of a Medicare Advantage, let me know in the comment section below. I’ll be happy to find out details for you.