In the first four parts of our series, we learned about Original Medicare, Medicare Supplements, and the Medicare Prescription Drug Program. In the fourth and final chapter, we will attempt to demystify Medicare Part C, also known as Medicare Advantage.
Medicare Advantage, or Medicare Part C plans replace your original Medicare A and B with an “all-in-one” plan administered by a private insurance company that you choose. You will continue to pay your Medicare Part B premium, but Medicare will now send that money to the Part C Plan that you have elected. The insurer will then combine your hospital and medical coverage and sometimes your drug coverage into one plan. I want to make one point very clear here, you do not lose Medicare. You are still in the system, but you have now been contracted out to this private insurance company. Medicare says, “Here’s the money, you take care of them”. These plans take many forms, but most are PPOs and HMOs.
Part C plans are not standardized like Medigap plans. Every plan from every company can be different. The “Advantage” is that in addition to the Part B premium that you will continue to pay, you may pay no additional monthly premium for your plan. Most of the HMOs are still zero premium, but the PPOs usually do come with a separate monthly cost. Some of the PPOs cost as much or even more than a Medicare Supplement.
Where you WILL pay is when you use the insurance. Now, you have cost sharing in the form of co-pays, co-insurance, and deductibles. The cost sharing is limited. Most plans will limit your maximum out of pocket (MOOP) to somewhere between $3000 to about $7000 per year depending on the plan. You will have to pay a co-pay for office visits. A co-pay is a set fee for routine items. You may pay a co-pay or co-insurance for in and out patient care. Co-insurance is a percentage of the total bill. Most co-insurance is about 20%. The means that if your total outpatient bill is $1000, you will be responsible for paying $200 out of pocket.
Remember, Medicare is out of the picture, so now the insurance companies get to set the rates that they pay the doctors. Now, we have to deal with doctor networks. Now, you must go to their doctors. If you have an HMO that is very strict. You can only go to their doctors. If you have a PPO, they are more open. PPOs will allow you to go to out-of-network providers, you just pay the out-of-network cost, which is usually much more. The fact is that a lot of providers are just not willing to accept Medicare Advantage. So, your choices are limited. And, because there is a network, you will also likely have a service area where you must live and obtain your health care services. If you move or travel outside of that service area, your insurance may not work.
Part C plans also come with what is called managed care. In fact, they are often referred to as “managed care plans” by providers. Managed care means to you is that it is the insurance company that manages your care, not you and your doctors. You must get a referral to see a specialist, and for anything that is not a life and death emergency or a regular office visit, you must get permission from the insurance company first. They can, and do say no. It is this feature that turns most people off of Part C. Most people want to be in charge of their own health care. They don’t want to be told by a team of accountants at an insurance company what treatments they can and cannot have.
Further, Medicare Advantage plans are one year contracts. They have a one-year contract with Medicare, the doctors, and you. If any one of those three things changes, you will find yourself shopping for a new insurance plan or a new doctor. Most people will find themselves in this position every year or two.
By now you probably think it’s a jungle out there, and it can be if you try to go it alone. Let us be your pathfinders. We’ve seen the land mines and know where the pitfalls are. Remember, we don’t sell products – we educate you and guide you to making a well-informed, wise decision. We work for you, not the insurance companies.