Medicare 101: Medicare Advantage (Part C) Plans
Eileen St. Pierre, The Everyday Financial Planner
Medicare open enrollment currently runs until December 7. It is during this time period that you can make changes to your 2014 Medicare plan options. You may be thinking about switching plan providers. For example, you may be considering switching from Original Medicare to a Medicare Advantage Plan.
What is a Medicare Advantage Plan?
Medicare Advantage is an alternative to Original Medicare. It is also called Part C or a MA Plan. These plans are offered by private companies approved by Medicare. If you join a Medicare Advantage Plan, the plan will provide all of your Part A (Hospital Insurance) and Part B (Medical Insurance) coverage.
- They are required to set a maximum amount for out-of-pocket expenses for Part A and B services.
- They cannot charge more than Original Medicare for certain services, such as chemotherapy, dialysis, and skilled care.
- They may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D).
- Make sure you shop around and ask yourself how much of this extra coverage do you need.
According to USA Today, roughly one in four Medicare beneficiaries has MA coverage. The average monthly premium is expected to increase in 2014 by $1.64 to $32.60. The average monthly premium for prescription drug coverage is expected to cost $31, the same as last year.
Impact of the Health Reform Law
Under the Affordable Care Act, Medicare is reducing payments made to these private insurance companies. According to Avalere Health, there will be 142 fewer MA plans for 2014, a 5.3% decrease:
- About 80% of counties in the South and Midwest will see a reduction in MA plan options, while slightly more than half of the counties in the Northeast and West will have fewer plan options.
- Plan providers are reducing their presence in rural markets and relying on more Health Maintenance Organizations (HMOs) – Preferred Provider Organization (PPO) offerings will decline.
Signing up for a MA plan
Medicare Advantage plans are not sold on the new health insurance exchanges, the Marketplace.
[Note: Those eligible for Medicare should not enroll in the new health insurance exchanges – Read my column Already on Medicare? Don’t worry about the new exchanges.]
You can search for a MA plan in your area using the government’s online Plan Finder. Because of the recent government shutdown, there may be a delay in all the information being updated. However, unlike the Healthcare.gov website, at least the Plan Finder works.
The final column in this Medicare 101 series will focus on Part D Prescription Drug Plans. For additional information, download the Official 2014 Medicare Handbook.
Visit my Financial Planning for Later in Life page for more information.