About a fourth of all Medicare beneficiaries enroll in Medicare Advantage, private-insurer plans introduced in 1997. For years such plans were heavily subsidized by Medicare, which was reflected in low premiums. Subsidization is being decreased through 2020, but there are still premium savings available in Medicare Advantage plans. Costs for services and procedures vary by plan, and whether you will save money by joining such a plan depends on your individual circumstances and the plan you select. Analyze your expected costs against what plans cover.
Traditional Medicare covers participants’ necessary hospitalization and physician costs, which are subject to deductibles and copays, as well as such preventive services as mammograms and prostate cancer screening, which are covered in full. Prescription drug coverage requires purchase of an additional plan. Medicare Advantage plans are required to provide the same level of coverage as traditional Medicare but sometimes offer different coverage amounts. Most Medicare Advantage plans require participants to obtain care from within a network of providers or pay significantly more to out-of-network providers. Details such as whether you need a referral to see a specialist vary from plan to plan. Most Medicare Advantage plans include prescription drug coverage, and some offer benefits not included in traditional Medicare, like dental and vision coverage, as well as wellness programs like gym memberships.
Traditional Medicare Costs
Participants in traditional Medicare generally pay no premium for Part A, which covers hospital care, and for Part B's doctor visits, lab test and other outpatient care, they pay an income-based monthly premium that ranges from about $105 for most participants to about $336. Part A coverage is subject to a deductible of essentially $1,184 for every hospital stay, and copays beyond the 60th day in the hospital. Part B includes an annual deductible of $147 and a 20% copay for services, although many preventive services are not subject to the deductible or copay. There is no cap on out-of-pocket expenses. Most participants cover some or all these costs with a Medigap supplemental plan, in which coverage levels determine the premiums, which range from about $50 to several hundred dollars monthly. Nationwide, the average Medigap premium was $183 monthly in 2010. Participants may buy Part D prescription drug coverage for about $40 monthly.
Medicare Advantage Costs
Medicare Advantage plans are generally health maintenance organizations or preferred provider organizations and require flat-rate copays for most services instead of the 20% Part B copay. For example, most plans charge a copay for each office visit. Some costs might be configured differently than under original Medicare. Under original Medicare, costs of a skilled nursing facility are paid in full for the first 20 days; many Medicare Advantage plans pay in full only for the first 11 days. Medicare Advantage plans are required to have an annual cap on out-of-pocket costs. In 2013, that cap can be no higher than $6,700. According to the Kaiser Foundation, nearly half of all Medicare Advantage plans have a cap of $3,400 or less.
Network: With Medicare Advantage plans, it’s important to make sure your providers belong to the network if you want to see them. Because many networks are local or regional, coverage outside your home area may be limited. Traditional Medicare has no such regional limitations, and many Medigap plans provide coverage for emergencies while traveling outside the U.S. Availability: While most Medigap plans are available throughout the country, the Medicare Advantage plans are offered on a county-by-county basis where insurers do business, and some counties have sparse availability. Caution: If you belong to any health plan, check with that program before signing anything. Signing up for a Medicare Advantage plan generally triggers disenrollment from any other plan you have and may disqualify you from restoring the coverage later.
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