Medicare is an important and popular program that helps lower the cost of health care for millions of Americans. It is a big part of Americans’ retirement strategies and helps maintain and improve their health and overall wellbeing. As useful as the program is, Medicare isn’t a perfect solution and has a number of gaps in coverage. Medicare Advantage is an increasingly popular program that’s designed to enhance your Part A and B benefits. Read this comprehensive guide to learn about Medicare Advantage (Part C) coverage, enrollment, and eligibility requirements in 2022.
In order to understand how Medicare Advantage plans work, and why they’re growing in popularity, it’s important to review how the Medicare program works. The basic program, which was created in 1965 and opened in 1966 is composed of two “parts:” Part A, which provides hospital insurance, and Part B, which provides medical insurance. Together, these two parts cover most of what traditional health insurance covers, but not everything. In other words, there are a number of gaps between traditional, under-65 health insurance (which most people get either through group health coverage from an employer, or individual health insurance policies) and Medicare.
These gaps come in two forms:
For 2022, the Part A deductible is $1,556 . This is the amount you’ll pay before Medicare will help pay for your hospital or skilled nursing stay. It also applies to hospice and home health care. Not only do you have to pay this amount before Part A starts helping pay for your costs, but it’s also possible to pay this deductible more than once in a year. This is totally unlike all other kinds of health insurance. Although rare, this possibility can add a significant financial burden to people on fixed incomes.
Once you’ve paid your Part A deductible, you may encounter daily co-payments for longer-term hospital or skilled nursing facility stays. These co-payments vary depending on which setting you’re staying in:
If your hospital stay lasts longer than 90 days, you’ll pay a daily co-insurance amount of $778 per day for every day over 90, until you’ve used up your lifetime reserve days. After that, you’ll pay the full cost. You’ll also pay full cost for nursing home stays longer than 100 days.
Besides these costs for hospital and skilled nursing home stays, there are also co-insurance amounts for hospice and home health care that you’re expected to pay out of pocket.
The Part B deductible is $233 for 2022. This is an amount you only pay once per year. Once you’ve paid it, Part B will begin paying 80% of the cost for all of your Part B services like doctor’s appointments, physical therapy, and outpatient surgeries.
Under Part B, you are responsible for paying the other 20% that Medicare doesn’t pay. You may also have to pay an additional 15% as an “excess charge” if your provider is allowed to do so.
Besides these out of pocket costs, there are a number of important benefits that aren’t provided by either Part A or B. The most important of these are:
Most of these benefits are commonly available from traditional health insurance policies. The two biggest gaps here are prescription drug coverage and lack of Out of Pocket Maximum (OOPM) protection. Since Medicare doesn’t provide an annual cap on your spending, you can face unlimited out of pocket costs under Parts A and B.
In order to get help covering some of these gaps in their coverage, many people turn to one or more of the private Medicare Insurance plans available. One of the most popular of these options is Medicare Advantage.
Medicare Advantage plans were created by Part C of the Medicare program. This occurred in 1996. Technically, even though Part C is a part of the Medicare system, Medicare Advantage plans are an alternative to Original Medicare.
A Medicare Advantage plan is a contract between a private insurance company and CMS, the Centers for Medicare and Medicaid Services, the government body responsible for the Medicare program.
When you enroll in a Medicare Advantage plan, you are electing to receive your government benefits (Part A and B) from your plan and insurance company. It’s important to know that by law you are guaranteed all of your rights and benefits available from Part A and B. In other words, Medicare Advantage plans are prohibited from denying you access to services and procedures that are available to you under Original Medicare. Not only do they provide at least as much coverage as Parts A and B, they also offer several benefits beyond what Medicare provides.
These plans tend to work very much like traditional employer-provided health insurance. Unlike with Part B, which typically features a 20% co-insurance amount, Medicare Advantage plans tend to provide small, fixed co-payments for most services or procedures.
When you use your plan benefits, like when you see a doctor, you’ll provide only your Medicare Advantage plan card, not your Medicare card. Your doctor will collect your co-payment from you and then bill your plan for the remainder of their fee. When a provider contracts with a plan, they agree to accept the amounts that the plan will pay for all Medicare-approved services and procedures. In this way, you’re not responsible for amounts beyond the plan-specified co-payments. Medicare is not involved in any way; you pay the co-payment and the plan pays the provider.
As you use services throughout the year, you’ll pay co-payments (and in rarer cases, co-insurance). The great thing about these plans, though, is that you will have a hard Out of Pocket Maximum limit. Your out of pocket costs for medical benefits can’t exceed the OOPM amount. Once you hit the limit, your plan will pay 100% of your Medicare-approved medical costs for the rest of the year. Your OOPM resets each year.
Besides the Out of Pocket Maximum feature, Medicare Advantage plans come with other benefits not available from Original Medicare. Among the most common Extra Benefits are:
These extra features are integrated right into your plan, usually without any additional premium cost, although some plans may offer even more enhanced benefits for an extra premium.
Not all Medicare Advantage plans come with drug coverage, but those that do are called Medicare Advantage Prescription Drug Plans (MAPD). MAPD plans provide drug coverage that meets the requirements of Part D.
If you enroll in a Medicare Advantage plan that provides drug coverage, you aren’t allowed to enroll in a standalone Part D drug plan; you can’t combine benefits from two different Medicare drug plans.
There are several kinds of Medicare Advantage plan, including:
The two most popular kinds of plan by far are HMOs and PPOs, so we’ll focus on these.
HMO plans are built on a provider network. You must only use providers that are in the plan network; otherwise, the plan won’t pay for your services and you’ll be responsible for the full cost of your care.
With an HMO, you’ll use a Primary Care Physician (PCP). This doctor is responsible for monitoring and coordinating your health care. If you need to see a specialist, your PCP will refer you to one. They will also order any lab or diagnostic tests they believe you need.
While Medicare Advantage HMOs are the most restrictive in terms of network and referral requirements, they are also usually the least expensive. HMOs tend to have lower costs in these areas:
PPOs tend to be less strict. With a PPO, there’s still a network of providers, but you’re not required to use it. You can see any provider who will accept your plan. Very often with Medicare Advantage PPO plans, you’ll have access to a national network of providers, so you can see doctors all over the country.
While you don’t have to use the network providers, you’ll usually have lower costs if you do. It’s common with PPOs for there to be two different cost schedules: one for in-network providers and one for out-of-network providers. The Out of Pocket Maximum limit is often much higher for out-of-network providers and facilities.
You may not have to have a Primary Care Physician with a PPO, and you can usually see specialists without receiving a referral.
Both HMO and PPO plans can come with prescription drug coverage, and they also tend to offer similar extra benefits. The differences primarily relate to cost and freedom of physician choice.
In order to enroll in a Medicare Advantage plan, you must first be eligible for Medicare. Even though these plans are an alternative to Original Medicare, you have to continue paying your Part B premium in order to keep your Part C coverage.
Your eligibility window for Medicare Advantage will match that for Original Medicare. Most people enter Medicare when they turn 65 years old. For these people, your Initial Coverage Election Period (ICEP) for Medicare Advantage lasts a total of seven months:
Assuming that you enroll in Part A and B, you can enroll in any Medicare Advantage plan available in your area during this window of time. Medicare Advantage plans are generally available by county or state, although there can be multi-state plans.
Some people are able to enter Medicare before age 65, and in that case, you’ll also be able to enroll in a Medicare Advantage plan when you first enter Medicare. This would happen if you enter Medicare Parts A and B early due to:
Besides your initial enrollment period, you’ll also have opportunities to change Medicare Advantage plans, enroll in one for the first time, or drop your coverage and return to Original Medicare at least once per year.
During the Annual Election Period (AEP), everyone in the Medicare system has the right to change their coverage. AEP runs from October 15th to December 7th of each year. If you make a change to your Medicare coverage during this window, your new plan will be effective on January 1st. During AEP, you can make any of these changes:
In addition to this enrollment period that’s available to every Medicare Beneficiary, there is one more standard enrollment period available to people who already have a Medicare Advantage plan - the Medicare Advantage Open Enrollment Period (MA-OEP). MA-OEP is January 1 to March 31 of each year. If you make a change in coverage, your new plan will be effective on the first day of the month after you enroll. During MA-OEP, you can do any of the following:
Remember, you can only use this election period if you already have a Medicare Advantage plan. You can’t use it as a way to get into one from Original Medicare. That can only be done during AEP.
Now that you’ve reviewed Medicare Part C coverage, enrollment, eligibility in 2022, if you’re interested in one of these plans, you’ll want to keep several things in mind as you shop for a plan:
These are the two most important factors to consider when choosing a plan. This can be a daunting task. If you want help doing this research, reach out to a licensed health insurance agent.
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