Thursday, July 18, 2024

Why Are Medicare Advantage Plans So Cheap

Don't Miss

What Is Medicare Advantage Plan

Why I Would Never Choose Medicare Advantage

Medicare Advantage is an integrated Medicare option. Private insurers that offer Medicare Advantage plan contracts with the federal government and provide Medicare coverage. Around four out of 10 Medicare beneficiaries have an Advantage Plan.

The Medicare Advantage Program aims to offer a complete replacement for Original Medicare. These plans are available from privately insured companies that have contracted with Medicare to provide Part B and Part C coverage and sometimes Part B prescription medications. Most insurance plans provide benefits, Original Medicare cannot provide such. In most cases, youll need to use health care providers who participate in the plans network.

It is required that you register with the Medicare Advantage plan Part B. Medicare benefits are billed to individuals as an annual fee by private insurers. Potentially lower premiums for coverage. Limits on how much you may have to pay out of pocket for hospital and medical coverage. This limit is determined by the Centers for Medicare & Medicaid Services, and in 2022 it is $7,550.

Can I Enroll In A Medicare Supplement Plan Later If I Enroll In A Medicare Advantage Plan Now

If you enroll in a Medicare Advantage plan now, you may be able to cancel your Medicare Advantage plan and enroll in a Medicare Supplement plan in the future. To do so, you will have to wait until the Annual Enrollment Period or the Medicare Advantage Open Enrollment Period to make changes.

It is important to know that most beneficiaries will only get a Medicare Supplement Open Enrollment Period once in their lifetime. This is your only opportunity to enroll in a Medigap plan without answering health questions.

Get A Free Quote

Find the most affordable Medicare Plan in your area

If you miss this one-time opportunity to enroll, you will have to answer health questions should you wish to enroll in a Medicare Supplement plan in the future. This means the carrier could deny your application due to pre-existing conditions. Thus, the importance of understanding which coverage is best for you and enrolling in that coverage the first time.

Medicare Program Savings And Employer

Between 1997 and 2003 Medicare continued to lose money on those beneficiaries who enrolled in MA plans, partly because of the payment floors and partly because of favorable selection into Part C. Indeed, the continued favorable selection overwhelmed the ability of risk adjustment to pay less for less expensive beneficiaries. An analysis of the Medicare Current Beneficiary Survey found that in the early 2000s, MA enrollees were less likely than TM enrollees to report that they were in fair or poor health, that they had functional limitations, or that they had heart disease or chronic lung disease . But the analysis found no difference in reported rates of diabetes or cancer.

The evolution of Medicare and commercial insurance also continued to differ. On the private side, traditional indemnity insurance had all but disappeared in the private market, a stark contrast from Medicare . Moreover, the BBA’s treatment of Part C suffered from bad timing because of a halt in the downward trends in the growth of health spending achieved by managed care in the private market in the mid-1990s.

Recommended Reading: What Is A Medicare Set Aside In Personal Injury

How Many Types Of Medicare Advantage Plans Are There

Insurance companies offer six different approaches to Medicare Advantage plans, although not all of them are available in all areas: an HMO , a PPO , an HMOPOS , a PFFS , an MSA , or an SNP .

You need to choose your own primary care doctor with an SNP, HMO, or HMOPOS, but not with an MSA, a PPO, or a PFFS. HMOs and SNPs are the only plans that require a referral prior to seeing a specialist, and the HMO plan is the only plan in which you must only receive care from doctors in that network.

In most instances, prescription drug coverage is included in Medicare Advantage plans, with the exception of the MSA plan and some PFFS plans. If you want to have prescription drug coverage and youre choosing an HMO or PPO Medicare Advantage plan, its important to select a plan that includes prescription coverage , because you cant purchase stand-alone Medicare Part D if you have an HMO or PPO Advantage plan. SNPs are required to cover prescriptions. PFFS plans sometimes cover prescriptions, but if you have one that doesnt, you can supplement it with a Medicare Part D plan. MSAs do not include prescription coverage, but you can buy a Part D plan to supplement your MSA plan.

Medicare Advantage Spends Less On Care So Why Is It Costing So Much

Insights to Why Medicare Advantage Plans Offer Limited Supplemental ...
  • Send any friend a story

    As a subscriber, you have 10 gift articles to give each month. Anyone can read what you share.

    Give this article

By Austin Frakt

The Medicare Advantage program was supposed to save taxpayers money by allowing insurers to offer older Americans private alternatives to Medicare. The plans now cover 19 million people, a third of all those who qualify for Medicare. Enrollee satisfaction is generally high, and studies show that plans offer higher quality than traditional Medicare. But the government pays insurers more than they pay out for patient care in some years, it turns out, a great deal more.

Concern about Medicare Advantages cost has found sharp expression in a recent suit brought by the Justice Department charging UnitedHealth with excessive billing of the government. While that suit plays out, research published by the National Bureau of Economic Research provides context.

The study, released in January, found that the revenue Medicare Advantage plans received in 2010 exceeded the amount they paid out for medical care by a hefty 30 percent. At more than $2,000 per enrollee per year, that probably topped $20 billion dollars, nearly all from federal payments, not enrollee premiums. The study relied on Medicare Advantage billing data obtained from three large insurers across 36 states, a type of data the government doesnt yet release.

Austin Frakt answered questions from readers about this article in this post for The Incidental Economist.

You May Like: How To Enroll In Original Medicare

Health Care Costs Vary Based On Your Medical Care

An important downside is that your total costs will fluctuate based on how much health care you need.

Many beneficiaries assume that Medicare Advantage plans are cheaper alternatives because their monthly premiums are often low or even nonexistent. But most of the costs with Medicare Advantage plans come from copays, coinsurance, deductibles and other out-of-pocket costs that emerge as part of the overall care process.

And these costs can quickly escalate. If you need expensive medical care, you could end up paying more out of pocket than you would with Original Medicare.

Example of how medical expenses compare for a hospitalization

A hospitalized beneficiary covered under a traditional Medicare plan will have to meet a Plan A deductible of $1,480. But after that deductible is met, there are no more costs until the 60th day of hospitalization.

Most Medicare Advantage plans have their own policy deductible. But the plans start charging copays on the first day of hospitalization. This means a beneficiary could spend more for a five-day hospital stay under Medicare Advantage than Original Medicare.

Why Should I Choose Medicare Advantage

A Medicare Advantage plan covers some of the gaps of Original Medicare and usually offers a $0 premium through a private company. It can be an affordable option for patients who are not currently sick or in need of intense medical care. If a patient’s situation worsens, it might be difficult or expensive to switch plans.

Also Check: How Do I Know What Medicare Plan To Choose

How Many Americans Have Medicare Advantage Coverage

As of September 2021, there were nearly 28 million Americans enrolled in Medicare Advantage plans more than 43% of all Medicare beneficiaries.

Enrollment in Medicare Advantage has been steadily growing since 2004, when only about 13% of Medicare beneficiaries were enrolled in Advantage plans. Managed care programs administered by private health insurers have been available to Medicare beneficiaries since the 1970s, but these programs have grown significantly since the Balanced Budget Act signed into law by President Bill Clinton in 1997 created the Medicare+Choice program.

Medicare Part D: Keeping Costs Down By Shopping For A Plan That Can Save You Money

Medicare Advantage Plans Explained (2022)

Your out-of-pocket costs can vary among plans, whether you have a Medicare Advantage plan or a stand-alone Medicare Part D prescription drug plan. And plans can make changes every year. You may want to take a look at your Annual Notice of Change â your plan will send that to you every fall. If your prescription prices went up, or if the plan no longer covers your medications, you can generally change plans during the .

Medicare information is everywhere. What is hard is knowing which information to trust. Because eHealthâs Medicare related content is compliant with CMS regulations, you can rest assured youâre getting accurate information so you can make the right decisions for your coverage.Read more to learn about our Compliance Program.

Recommended Reading: Is There A Copay With Medicare Part D

Look At The Extra Included Benefits

A Medicare Advantage plan bundles coverage across the standard categories of hospital care, medical care and prescription drugs. However, many Medicare Advantage plans also include extras. Options can include:

  • Add-on insurance such as dental or vision insurance.
  • Add-on benefits such as hearing aid coverage, telemedicine or routine chiropractic adjustments.
  • Perks such as gym memberships, discount programs, medical alert systems or SilverSneakers subscriptions.

The value of these add-ons can add up. For example, rather than spending an extra $25 per month on dental insurance, those benefits could be included in your Medicare Advantage plan. That could save you $300 per year because you wouldn’t have to enroll in a separate plan.

These add-ons provide tangible value to the bundle of coverage that you get through Medicare Advantage. However, we recommend that you first narrow down your plan options based on health benefits before weighing the add-ons.

Many insurance marketing materials will push these add-ons. However, the financial benefit from the add-ons is usually much less than the value of having good benefits for medical care and prescription drugs. In other words, make sure the plans you’re considering have good coverage for medical situations like a heart attack or a stroke. Then let perks like an included gym membership tip the scales with their extra value.

Are Some Medicare Advantage Plans Free

The biggest misconception about Medicare Advantage plans is that they are free. However, this is far from the truth. When you enroll in a Medicare Advantage plan, you are still responsible for paying the Medicare Part B premium and cost-sharing. Unfortunately, there is no such thing as a free Medicare plan.

The main reason why Medicare Advantage carriers can offer low to zero-dollar monthly premium plans is that Medicare pays the private companies providing the plans to take on your health risk. But not all Medicare Advantage plans have a low premium cost. Medicare Advantage carriers make their plans look attractive to entice beneficiaries to enroll. Then, Medicare pays the carrier a fixed amount per month to provide coverage to each enrolled beneficiary.

A Medicare Advantage plan will be your primary coverage. Another reason Medicare Advantage plans have low or zero-dollar premiums is cost-sharing. Unlike when you pair Original Medicare with a Medicare Supplement plan, Medicare Advantage plans come with copayments. You can expect to pay a copay for every doctor visit, test, and service you receive.

Get A Free Quote

Find the most affordable Medicare Plan in your area

Also Check: How To Sign Up For Medicare And Tricare For Life

What Types Of Medicare Advantage Plans Are There

Coordinated Care Plans

Most Medicare Advantage plans are coordinated care plans. Coordinated care plans have a network of doctors and providers. If you use the plan’s network doctors and providers, you generally pay less out-of-pocket for care.

Health Maintenance Organization plans

HMO plans use a network primary care provider to help coordinate care. HMO plans usually only pay for doctors and providers in the plan network.

Point of Service plans

POS plans have the benefits of an HMO, but with more flexible doctor/provider choice. Costs are generally lower for using in-network doctors/providers.

Preferred Provider Organization plans

PPO plans cover doctors and providers both in and out of network. These plans pay a portion of the cost for using an out-of-network doctor or provider.

Special Needs Plans

Special Needs Plans have benefits that cover special health care or financial needs. All SNPs include prescription drug coverage.

  • Dual-Eligible Special Needs Plans for people who have both Medicare and Medicaid
  • Chronic Special Needs Plans for people living with severe or disabling chronic conditions
  • Institutional Special Needs Plans for people who live in a skilled nursing facility
  • Institutional-Equivalent Special Needs Plans for people who live in a contracted assisted living facility and need the same kind of care as those who live in a skilled nursing facility

How Is Americans Health Affected

Medicare Plan Finder for Agents

Which type of coverage produces better health outcomes? The evidence is mixed.

Weve seen a number of studies that look at the available measures and try to give some indication of how Advantage is performing compared with traditional Medicare, Dr. Neuman said. It does better on some indicators, and on some others, traditional Medicare does better.

Defenders of Advantage programs point to studies that conclude they are outperforming original Medicare in areas like preventive care, hospital readmission rates, admissions to nursing homes and mortality rates. And they note that the managed care approach is a key part of the programs success.

But critics point to high levels of denial of care. Federal investigators reported in 2018 that Advantage plans had a pattern of inappropriately denying patient claims. The Office of Inspector General at the Department of Health and Human Services found widespread and persistent problems related to denials of care and payment in Medicare Advantage plans.

Confusion about network providers is widespread. In a review of provider directories completed in 2018, the Centers for Medicare and Medicaid Services found that 49 percent contained at least one inaccuracy. Errors included incorrect locations and phone numbers, and whether a provider was accepting new patients.

We think of ourselves as sophisticated consumers, but when it comes to health care, it is almost impossible to figure it out, Mr. Stein said.

You May Like: Is Oral Surgery Covered Under Medicare

What’s The Best Medicare Advantage Plan

  • HMOs: HMOs typically require you to see only providers that are in their network. You usually need to get referrals to see specialists. These plans are usually lower cost.
  • PPOs: PPOs have a preferred network of providers that offer discounted prices. You can choose to see doctors out of network for a higher cost.
  • PFFS plans: PFFS plans let you see any Medicare-approved health care provider youd like but you agree to pay a set price for services.
  • SNPs: SNPs allow people with specific conditions and illnesses to see providers who offer specialized care.

Medicares Private Option Is Gaining Popularity And Critics

As more Americans sign up for Medicare Advantage, detractors worry that its helping private insurers more than patients.

  • Send any friend a story

    As a subscriber, you have 10 gift articles to give each month. Anyone can read what you share.

    Give this article

  • Read in app

When Ed Stein signed up for Medicare eight years ago, the insurance choice seemed like a no-brainer.

Mr. Stein, a Denver retiree, could choose original, fee-for-service Medicare or its private managed-care alternative, Medicare Advantage. He was a healthy and active 65-year-old, and he picked Advantage for its extra benefits.

The price was the same, I liked the access to gyms, and the drug plan was very good, he recalled. After a pause, he added: Never in my wildest dreams did I think Id be facing a crisis like the one Im having now.

In November, at age 72, Mr. Stein received a diagnosis of aggressive bladder cancer that would require chemotherapy and a complex surgical procedure. The doctor who he determined was the best local specialist for his condition was not in his network, so Mr. Stein decided to switch to original Medicare for 2020 a move that would allow him to see nearly any health care provider he chose.

That was when he ran up against one of the least understood implications of selecting Advantage when you enroll in Medicare: The decision is effectively irrevocable.

Also Check: How Does Medicare Work For Nursing Homes

Are Medicare Advantage Plans Worth The Risk

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list ofour partnersandhere’s how we make money.

About 1 in 3 people 65 and older in the U.S. enroll in Medicare Advantage, the private insurance alternative to traditional Medicare. Its not hard to see why: Medicare Advantage plans often cover stuff that Medicare doesnt, and most people dont pay extra for it.

But Medicare Advantage can be more expensive if you get sick because copays and other costs can be higher, says Katy Votava, president of, a health care consultant for financial advisors and consumers.

Unhappy customers who want to switch back to traditional Medicare may find they no longer qualify for the supplemental policies to help pay their medical bills, or that they would face prohibitively high premiums.

“These are complicated products,” says Votava, author of “Making the Most of Medicare.””Theyre like nothing else, no other insurance that people encounter anywhere until they get to Medicare.”

More articles

Popular Articles