Money Talks....
Thanks for joining us on today’s issue of Money Talks….we continue our series of “You don’t know what you don’t know. Today we are talking about Medicare Advantage and the difference between Medicare Advantage and Medicare Supplement. Let’s dive in.
Medicare Advantage, also known as Medicare Part C, is a type of Medicare health plan offered by private companies that contract with Medicare to provide Part A (hospital insurance) and Part B (medical insurance) benefits. Many Medicare Advantage plans also include Part D (prescription drug coverage).
Here's a breakdown of key aspects of Medicare Advantage:
How it Works:
Instead of Original Medicare, you get your Medicare benefits through a private plan.
These plans are approved by Medicare and must follow Medicare's rules.
Most Medicare Advantage plans offer "extra benefits" beyond what Original Medicare covers, such as vision, hearing, dental, and wellness programs (like gym memberships).
Types of Medicare Advantage Plans: There are several types of Medicare Advantage plans, including:
Health Maintenance Organizations (HMOs): Typically require you to use doctors and hospitals within the plan's network. You may need a referral from your primary care doctor to see a specialist.
Preferred Provider Organizations (PPOs): Allow you to see doctors and hospitals both in and out of the network, but you'll usually pay more for out-of-network care. Referrals to specialists are generally not required.
Special Needs Plans (SNPs): Tailored for individuals with specific chronic conditions, disabilities, or those who are dually eligible for Medicare and Medicaid.
Medicare Medical Savings Account (MSA) Plans: Combine a high-deductible health plan with a medical savings account that Medicare contributes to.
Private Fee-for-Service (PFFS) Plans: The plan determines how much it will pay doctors, hospitals, and other providers, and how much you pay when you get care. You may be able to go to any Medicare-approved provider who accepts the plan's terms.
Costs Associated with Medicare Advantage:
Monthly Premium: Many Medicare Advantage plans have low or even $0 monthly premiums. However, you must continue to pay your Medicare Part B premium ($185 in 2025, although this can vary based on income). Some plans may help cover part or all of your Part B premium.
Deductible: Some Medicare Advantage plans have a deductible, which is the amount you pay out-of-pocket before the plan starts to cover services. This can be a general deductible or a separate deductible for prescription drugs. The maximum deductible for Part D plans in 2025 is $590.
Copayments and Coinsurance: These are the amounts you pay for specific healthcare services. A copayment is a fixed amount (e.g., $20 per doctor visit), while coinsurance is a percentage of the cost (e.g., 20% of the cost of a procedure). Copayments and coinsurance amounts vary by plan and the type of service. Out-of-network care usually has higher copayments or coinsurance.
Out-of-Pocket Maximum: Medicare Advantage plans have an annual limit on how much you'll pay out-of-pocket for covered Part A and Part B services. In 2025, this limit cannot be higher than $9,350 for in-network services. Once you reach this limit, the plan pays 100% of covered services for the rest of the year. Some plans may have lower out-of-pocket maximums.
Key Considerations for Medicare Advantage:
Network Restrictions: Many plans, especially HMOs, have networks of doctors and hospitals you must use to get covered care (except in emergencies). PPOs offer more flexibility but may cost more if you go out-of-network.
Referrals and Prior Authorizations: HMO plans often require referrals to see specialists, and some plans may require prior authorization for certain services or procedures.
Prescription Drug Coverage: Most Medicare Advantage plans include Part D coverage, so you usually don't need to enroll in a separate stand-alone Part D plan.
Extra Benefits: The additional benefits offered by Medicare Advantage plans can be attractive, but consider if you'll actually use them.
Service Area: Medicare Advantage plans have specific service areas, and you generally need to live within the plan's area to enroll.
Medicare Advantage vs. Medigap (Medicare Supplement Insurance):
Medicare Advantage and Medigap are different ways to get your Medicare coverage. You cannot have both at the same time (with very limited exceptions).
Medicare Advantage: An alternative to Original Medicare, often includes Part D and extra benefits, and typically has network restrictions and cost-sharing.
Medigap: A supplement to Original Medicare that helps pay for some of the out-of-pocket costs (like deductibles and coinsurance) that Original Medicare doesn't cover. It doesn't include Part D (you'd need a separate plan for that) and generally allows you to see any doctor who accepts Medicare nationwide. Medigap plans tend to have higher monthly premiums but lower out-of-pocket costs when you need care.
Choosing between Medicare Advantage and Medigap depends on your individual healthcare needs, preferences, and budget.
Contact us today to see which one is best for your situation.
Until next time,
Diane