It’s Fall in Texas and up comes a commercial on the television, depicting seniors overly excited about their Medicare insurance plan benefits, jumping up and down eerily like they just won the lottery. Ever wonder what those ads are for? Chances are those ads are about Medicare Advantage plans (also known as Medicare Part C), which are offered by private insurance companies and approved by Medicare. Nearly 22 million Americans are on a Medicare Advantage plan currently. In a nutshell, they allow you to get all the coverage Original Medicare (Parts A and B) offers, plus additional benefits and services all in one single plan, such as prescription drug coverage (Part D), often for no additional premium. It is important to remember, that if you join a Medicare Advantage plan, you will still have Medicare. You just will get your coverage from your Medicare Advantage Plan, rather than Original Medicare.
How Do Medicare Advantage Plans Work Specifically?
When one joins a Medicare Advantage plan, let’s say here in Texas for instance, Medicare will pay a fixed amount each month to the insurance company and in return, the insurance companies must follow Medicare’s coverage rules (good thing). The Medicare Advantage plans also have yearly contracts with Medicare. Medicare Advantage plans can however charge different out-of-pocket costs and also have different rules for how one gets services (such as needing a referral to see a specialist). These rules can change each year. Your Medicare Advantage plan must notify you about any changes before the start of the next enrollment year, referred to as the “Annual Notice of Change” (ANOC) by September 30th. Case in point, Aetna Medicare in certain areas of Texas had changed plan numbers for a popular PPO plan late in 2019 and notified all those affected in writing ahead of time that they needed to enroll in the updated Aetna Medicare PPO plan or find a different insurance carrier.The most important thing to keep in mind is that if someone joins a Medicare Advantage plan, they will have the same rights and protections that you would have otherwise under Original Medicare.
I Heard Medicare Advantage Plans Include Extra Benefits, Is That True?
The answer is most likely yes, as benefits differ by plan and frankly by state. One plan offered in Texas may not have the same extra benefits as one in Florida or California but in general, many Medicare Advantage plans include prescription drug coverage, routine vision , hearing, and dental. Some also will include transportation benefits, telemedicine virtual visits so one can “visit” a doctor from the comfort of their home, a monthly allowance for over-the-counter items, and fitness memberships such as Silver Sneakers, that will give you complimentary access to local in-network facilities, such as Gold’s Gym in San Antonio, Texas for example. These extra’s are unique to Medicare Advantage plans, as Original Medicare will not cover them.
How Do I Become Eligible For Medicare Advantage Plans?
You’re eligible for a Medicare Advantage plan if you are enrolled in both Original Medicare Parts A and B, live in the plan’s service area, and you do not have end-stage renal disease (kidney failure). To learn how to acquire Medicare Parts A &B, visit our Medicare 101 page. An important note for 2021, is that folks that have ESRD will be able to get on a Medicare Advantage plan. Be sure to double-check that a plan is available in your local area, whether that is San Antonio, Texas, Pensacola, Florida, or even Los Angeles, California. On this note, unlike a Medicare Supplement, Medicare Advantage plans are not the same in every state, so if you move from let’s say Texas to California, you will have to re-enroll in a new Medicare Advantage plan in that area.
What Do Medicare Advantage Plans Cost?
Let’s start with the basics first. As you learned from our Medicare 101 page and from above, you must have both Medicare Part A&B to be on a Medicare Advantage plan. For many Americans, Part A is premium free because they worked at least 10 years (40 quarters) and payed Medicare taxes during that time and Part B is dependent on your adjusted gross income from 2 years prior, but typically is $144.60 a month in 2020. Many Americans deduct their Part B premiums from Social Security automatically but we do meet folks who delay their Social Security benefit, in which case they will pay their Part B premiums quarterly.
Medicare Advantage plans themselves may or may not have a premium, depending on the plan you choose. Typically, HMO’s will be premium-free, and PPO’s will have a premium but this depends on the specific Medicare Advantage plans in your area. You may also run into Medicare Advantage plans that could help pay for some or all of your Part B premium, referred to as a “Medicare Part B premium reduction”. Next, after analyzing Medicare Advantage premiums (if any), you will want to look internally at the policy, to see if you have a deductible (a set amount you pay before certain services are covered), copayment’s/coinsurance’s (a fixed amount or percentage you pay for services, such as $30 to see a primary care doctor), and look at what the annual out-of-pocket maximum is for your plan (the most someone could pay in a calendar year in copay’s/co-insurance’s, before the insurance company covers you 100%). As you learned from our Medicare 101 page, Original Medicare has some real let downs, notably no maximum out of pocket like Medicare Advantage plans have in every plan, typically from $3,400 -$6,700. Some important documents that you want to look at are the Summary of Benefits (SOB) which will give you a general outline of your plan, as well as the Evidence of Coverage (EOC), which goes more in-depth on what your plan will cover.
As you will learn below, if someone meets certain income requirements (Medicaid-level), they could potentially qualify to enroll in Medicare Advantage plans that are tailored to low-income Americans called Special Needs Plans (SNP’s). They could potentially not have any costs on a Medicare Advantage plan, such as copay’s/coinsurance’s.
What Are The Payment Stages If My Medicare Advantage Plan Has Drug Coverage Built Into The Plan?
Stage #1- Deducible Stage:
During this stage, if your plan has a deductible, you usually pay the full cost of your drugs up to the deductible amount. This in general, applies to drugs on tiers 3, 4, and 5. Once you reach the deductible amount, you pay a co-payment or co-insurance in the initial coverage stage.
Stage #2- Initial Coverage Stage:
During this stage, the plan pays its share of the cost and you pay a co-payment or co-insurance (your share of the cost) for each prescription you fill until your total drug costs reach $4,020. Once you reach $4,020, you enter the coverage gap or “donut hole”.
Stage #3- Coverage Gap Stage:
During this stage, you receive limited coverage on certain drugs. You’ll also get a discount on brand-name drugs and generic drugs. This stage continues until your yearly out-of-pocket drug costs reach $6,350. Once your yearly out-of-pocket costs reach $6,350, you move to catastrophic coverage.
Stage #4- Catastrophic Coverage Stage:
In this stage, you pay only a small co-payment or co-insurance amount for each prescription you fill, the greater of 5% coinsurance or $3.60 for generic medications (including brand name drugs treated as generics) and a $8.95 copay for all other drugs.
Are There Other Ways To Save Money On Prescriptions?
Yes. We here at The Harrin Group are big believers in helping our clients save money whenever possible and one big problem area for many on Medicare Advantage plans has to do with prescription drugs. One route to consider is comparing what a drug costs on your plan versus using GoodRx (a free coupon service), as sometimes you may find it to be cheaper on the latter. You might inquire about manufacturer drug assistance programs such as the Novo Nordisk Patient Assistance Program, to help folks with insulin medication costs, and also see if you qualify for Extra Help, a free program from the Social Security Administration that could potentially save you money on prescription drugs. We can even help you apply for this!
What Are The Types Of Medicare Advantage Plans?
Health Maintenance Organization (HMO) Plans-HMO plans require you to seek care from providers in your network, except in emergencies. For instance, you may have a Medicare Advantage plan that only uses the Baptist Healthcare System in San Antonio, Texas and not Methodist Healthcare System. Many of these plans will require you to get a referral from your primary care physician to see a specialist, so that your care is coordinated. In most cases, prescription drugs are covered in Medicare HMO plans. If you find out you don’t have drug coverage with your plan, you cannot join a stand-alone prescription drug plan (Part D).
Point Of Service (POS) Plans-A type of HMO plan that allows you to see doctors and hospitals outside the network for some covered services, usually for a higher co-pay or co-insurance. It is important that you follow the plan’s rules, like getting prior approval for a certain service when needed.If you find out you don’t have drug coverage with your plan, you cannot join a stand-alone prescription drug plan (Part D).
Preferred Provider Organization (PPO) Plans-PPO plans use a network of providers but you are able to go outside the network to seek care, usually at higher cost-sharing, such as 50% co-insurance. You can also see a specialist, without needing a referral from your primary care doctor. You may also be able to utilize specialty facilities like M.D. Anderson Cancer Center, if they are willing to bill out-of-network with your PPO plan. In most cases, prescription drugs are covered in Medicare PPO plans. If you find out you don’t have drug coverage with your plan, you cannot join a stand-alone prescription drug plan (Part D).
Special Needs Plans (SNP’s)-These plans provide benefits and services to people with specific diseases, certain health care needs (like Diabetes), or limited incomes (such as on Medicaid). SNP’s cover the same services that all Medicare Advantage plans cover, but you will have to continuously meet the special conditions to stay on this type of plan. For example, if I am on a Medicare Advantage SEP Dual plan (low income), and I lose Medicaid, this could result in me having to go back to a regular Medicare Advantage plan. With these types of plans, you generally must get care from providers in the network, but some SNP’s may be PPO plans that allow you to go out-of-network. There will be a strong emphasis on managed care with these plans, so referrals will most likely be needed to see a specialist. All SNP’s must provide prescription drug coverage.
Private Fee-For-Service (PFFS) Plans- This kind of Medicare Advantage plan allows you to go to any Medicare-approved provider that accepts the plan’s payment terms and will agree to treat you. If your PFFS plan has a network, these providers have already agreed to the plan’s terms. You will not need a referral to see a specialist with this type of plan. Keep in mind that in a medical emergency, the nearest provider must treat you. In most cases, prescription drugs are covered in Medicare PPFS plans. If you find out you don’t have drug coverage with your plan, you cannot join a stand-alone prescription drug plan (Part D).
Medical Savings Account (MSA) Plans-MSA plans combine a high-deductible insurance plan with a medical savings account that you can use to pay for your health care costs. Besides the Part A&B services that MSA plans must cover, some plans may offer additional benefits like dental coverage for an extra cost. With an MSA plan, you can choose your health care providers. You will need to get a separate stand-alone prescription drug plan (Part D) with this plan option.
When Can I Sign Up For A Medicare Advantage Plan?
You can sign up for a Medicare Advantage plan during the enrollment periods below:
Initial Enrollment Period-When you first become eligible for Medicare, you can sign up during what is referred to as the Initial Enrollment Period (IEP). This 7-month period begins 3 months before you turn 65, the month of your 65th birthday, and ends 3 months after you turn 65. This period is crucial, because you have to make a decision on how you want to receive your Medicare benefits (ie. Medicare Advantage or Medicare Supplement). So when does coverage start? Well it depends on when you enroll. If you sign up during the first 3 months of your IEP, in most cases, your coverage starts the first day of your birthday month. So if I enroll on March 24th and my birthday month is April, my Medicare Advantage plan would start April 1st. If you enrolled after the initial 3 months, your start date for coverage will be delayed. After enrolling during your IEP, any plan changes can only be made at certain times of the year, as you’ll learn below.
Annual Enrollment Period-Remember when we talked earlier about those commercials on television, depicting seniors overly excited about their Medicare plan benefits? Well, this is the time of the year when seniors will be bombarded with such ads on television, in the mail, online, and on the phone. Because October 15th- December 7th, anyone who has Medicare can join, switch, or drop a Medicare Advantage plan. Coverage will begin on January 1st, so long as you enrolled before the end of December 7th. We caution you to be wary of all the noise you will hear during this time, and to analyze if your Medicare Advantage plan is still working out for you. It never hurts to see what is out there, but be sure to check that all your doctors, medications, and so forth are covered, despite what the fast-talking agent says! Often here in San Antonio, Texas and beyond, we hear horror stories of dishonest agents who were careless in their assistance with seniors, and put them on plans that were less than ideal for them, or suddenly become “unreachable” after they get the sale. Be careful!
Open Enrollment Period- This period allows you to switch from one Medicare Advantage plan to another (with or without drug coverage), disenroll from a Medicare Advantage plan and go back to Original Medicare. If you choose to do so, you can then join a Medicare prescription drug plan. You cannot however, go from Original Medicare to a Medicare Advantage plan/Medicare prescription drug plan, or switch from one Medicare prescription drug plan to another. This period runs from January 1st through March 31st each year. You can only make one change during this period, and any changes made will be effective the first of the month after the insurance company gets your request. If you are having second-thoughts about a Medicare Advantage plan you choose during AEP, this would be a great opportunity to try out a new plan without having to wait a long time.
Special Enrollment Period- In certain situations, you may be able to join, switch, or drop a Medicare Advantage plan during this period. You must qualify due to certain reasons, such as having both Medicare and Medicaid, receiving “Extra Help” from the government with your Part D drugs, changing where you live and having to enroll in a different Medicare Advantage plan such as from Texas to California, leaving employer coverage, etc. It is vital to pay close attention to deadlines you have during this enrollment period. For instance, you have a 2-month window after your work coverage ends, to acquire a Medicare Advantage plan. If someone is on a SNP plan (remember above) that is tailored for folks on Medicare/Medicaid, they can change to another SNP plan one time during these periods: January-March, April-June, July-September.
Do I Need To Enroll Each Year?
This is a question we get asked often here in San Antonio, Texas, and the short answer is that your plan automatically renews each year as long as you pay the premium and the plan is available in your service area. You do not have to do anything to your coverage, but make sure that the plan is meeting your ongoing needs.
What Are Star Ratings And Why Do They Matter?
Star ratings are a way for consumers to compare the relative quality of care of Medicare Advantage plans. The Centers for Medicare & Medicaid Services (CMS) issues the ratings based on:
Plan Member Surveys
Every Medicare Advantage plan receives star ratings from one star (lowest) to five stars (highest). CMS also issues an overall star rating for each plan. This matters because if you run into a plan with a low star rating, you might want to research why! This system also matters on the opposite spectrum, because if you run into a 5-star Medicare Advantage plan in your area, such as in San Antonio, Texas, this creates a Special Enrollment Period in its own right, as between December 8th and November 30th, you can enroll in a 5-star plan, one time.
Do Agents/Brokers Get Paid To Enroll Me On A Medicare Advantage Plan?
Yes. We are real straight-forward folks here at The Harrin Group and want to give you a behind-the-scenes look at compensation. Basically, an agent or broker gets compensated from the insurance company he/she is representing, for every new Medicare Advantage plan enrollment. While we won’t go into exact numbers, an agent or broker gets compensated more if someone is “new” to Medicare (turning 65) and less if they are changing Medicare Advantage plans during the Annual Enrollment Period for example. You want to be really, really careful about who you work with, and ensure they are independent insurance agents/brokers who represent multiple insurance companies, don’t charge any fees to assist you, are highly rated, ethical and reliable folks. The latter point is where many people come to us here in San Antonio, Texas, asking for us to be their new broker, as their last one never answered the phone after the sale was done, or never replied to their numerous emails. We strive to assist each and every client with the same urgency before and after the sale, and pride ourselves on living by the Golden Rule in business “treat others the way you want to be treated.”
I Want To Read More About Medicare Advantage Plans, Where Should I Go?
We would start with the latest 2020 “Understanding Medicare Advantage Plans” handbook, published yearly by The Centers for Medicare and Medicaid Services (CMS). You can access the ebook-version here.
As you will see in the video below from The Harrin Group founder and U.S. Navy veteran: Barry Harrin,veterans should inquire about Medicare Advantage plans that could offer additional benefits such as having access to care outside of the VA system, dental coverage, or even a gym membership. It is vital to see what benefits you may be entitled to as a veteran by reaching out to use for a free, no obligation analysis.
The Harrin Group offers free, comparative quotes on Medicare Advantage plans from multiple insurance carriers so you can get the best possible rate.
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Sources: Kaiser Family Foundation, Silver Sneakers, Better Medicare Alliance, Medicare.gov, GoodRx, Novo Nordisk, Social Security Administration