Medicare Advantage: Private Health Insurance Through Medicare

Medicare Advantage used to be called either "Medicare + Choice" or "Medicare Part C." It's very different from Medicare Part A and Medicare Part B.

Medicare Advantage plans are health plans sold by private insurance companies. Although they are approved by Medicare, they're an alternative to the Original Medicare plan.

Medicare Coverage: What Does Medicare Advantage Cover?

Medicare Advantage plans are generally required to cover the same services that Original Medicare covers. Some may also cover prescription drugs, and dental or vision care.

Medicare Advantage plans may give you some discounts or pay for services that Original Medicare may not cover. But there are drawbacks, too. One is the cost: you will likely pay more for these extra benefits.

Another is that you may be locked into your plan's rules. Original Medicare allows you to see just about any doctor and go to any hospital that accepts Medicare payments, which most providers accept. But Medicare Advantage plans may restrict you to the doctors and hospitals in the plan's network. You might need referrals to see a specialist.

So you have to look hard at what sort of medical coverage you need -- and what you can afford -- when deciding between Original Medicare and a Medicare Advantage plan.

Medicare Benefits: How Do I Get a Medicare Advantage Plan?

To get a Medicare Advantage plan, you must already have Medicare Part A and Part B. If you're 65 and receive Social Security checks, you're automatically enrolled for Part A and Part B.

You will have many Medicare Advantage plans to choose from. Some work like typical HMOs (health maintenance organizations), while others are designed specifically for people with special needs and vary from region to region. To learn what's available in your area, use the online Medicare Personal Plan Finder at www.medicare.gov/MPPF.

How Much Does Medicare Advantage Cost?

You will need to pay the Part B monthly premium, which is $96.40 per month in 2008. On top of that, you'll have to pay a monthly premium for your Medicare Advantage plan. The price varies depending on your plan. Sometimes, there might be more premiums to cover prescription drugs or other additional services.

If your Medicare Advantage plan covers prescription drugs, you may have a coverage gap -- or "doughnut hole" -- after reaching a certain spending limit for drugs that your plan covers. The specific number varies from plan to plan, but the typical cut-off for coverage is $2,510. You then have to start paying all your drug costs on your own. Then, if the amount you spend on prescription drugs gets high enough -- a maximum of $4,050 in 2008 -- Medicare starts paying again. For the rest of the year, you will only have to pay about 5% of the cost of drugs on your plan's approved drug formulary.