Since 2003 when Congress passed the Medicare Modernization Act (MMA), Medicare Advantage Plans have blanketed the country with television and print advertising about how Americans can save by signing up for a Medicare Advantage Plan. Approximately 30 percent, 15 million of all Americans eligible for Medicare have elected to trust an insurance company with their Medicare coverage rather than the government.
Medicare Advantage Plans are administered by private insurance companies who believe they can do a better job than the Federal government when it comes to health insurance for seniors. And in many situation, those who have chosen Medicare Advantage plans are correct.
The private market can do a better job at providing the required benefits to the point that they can offer even more coverage than the government plans. These companies use the money that the government would have paid for Medicare recipients, do a better job with administration of the required benefits, and make a profit for their stakeholders.
The logical question is quite simple; if the private insurance companies can do a more efficient job with the dollars available, why doesn’t every senior take advantage of Medicare Advantage Plans? The answer lies within the pros and cons of the plans:
- Prescription Drug Coverage
- Lower Cost for membership
- One payment that includes Part A & B
- Average premium is $35 per month
- Some areas have no premium charges
- Additional benefits like gym memberships, vision, dental
- Small network of doctors and hospitals
- Insurance shopping required
- Coverage is local, not nationwide
- Possible gaps in coverage for major health issues
- Little coverage in rural areas
- HMO/PPO providers only
Medicare Advantage Payment Cuts
One of the cost considerations of a Medicare Advantage Plan is the amount the federal government will pay for the plan. Earlier this year the Centers for Medicare and Medicaid Services (CMS) announced a 5.9% cut to Medicare Advantage payments. A 5.9% cut would increase the cost to participants of $400-900 per year.
The CMS received much backlash from all arenas and in a surprise decision, reversed the proposed cut. A change of direction and reprieve was granted by the CMS; payment for Medicare Advantage plans will increase by .0.4% for 2015.
Should a senior elect not to take a chance on the Medicare Advantage Plan, in most cases they will elect to purchase a Medicare Supplement to fill the gaping holes in standard Medicare Part A & B.
If you are a Medicare recipient with little to no need for national coverage and you are willing to deal with an HMO or PPO network of providers, you may want to check out the Medicare Advantage Plans offered in your area. If your priority is monthly cost and additional benefits, the Medicare Advantage Plan may meet your needs and save you money.
The decision to purchase a Medicare Advantage plan should be researched thoroughly. Secondary insurance policies must also be considered when comparing the positives and negatives of Medicare plus the secondary plan or Medicare Advantage plus a secondary plan.
Open enrollment is quickly approaching. Fall open enrollment to change your Medicare coverage begins October 15, 2014 and continues through December 7, 2014. Any changes to your plan will begin January 1, 2015.
Fall enrollment is the one time annual opportunity to tweak a Medicare Advantage plan or purchase a prescription drug plan (PDP.) It is always wise and suggested to obtain a copy of the Medicare handbook to compare the services with a possible Medicare Advantage Plan from a private insurer.