Medicare Health Center

Tools & Resources

Font Size

Medicare Advantage: Private Health Insurance Through Medicare

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.

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.

While you won't need to pay a Part A premium, you will need to pay the "standard" Part B monthly premium, which will drop in 2012 to $99.90 from the current $115.40 for new enrollees. Most Medicare beneficiaries did not see an increase in their 2011 Part B premium -- $96.40 -- and will see a $3.50 increase in 2012. A projected cost-of-living rise of about $43 in Social Security payments will offset the increase. People with higher incomes will pay higher premiums on a sliding scale.

On top of that, you'll have to pay a monthly premium for your Medicare Advantage plan, although average premiums will be 4% lower in 2012 because of lower use by beneficiaries, according to U.S. Health and Human Services officials.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 $2,840. You then have to start paying all your drug costs on your own, although for 2011 there's a 50% discount for brand-name drugs and plans will pay 7% of the cost of generic drugs. Then, if the amount you spend on prescription drugs gets high enough -- a maximum of $4,550-- Medicare starts paying again. For the rest of the year, you will only have to pay a small co-pay -- about 5% of the cost of drugs on your plan's approved drug formulary. By 2020, the coverage gap will be closed.

There are restrictions on when you can join or leave a Medicare Advantage plan -- unless you opt for a 5-star plan as rated by Medicare. As of Dec. 8, you may join such a plan at any time during the year. Otherwise, you may join a Medicare Advantage Plan during your initial enrollment period, which spans the three months before and the three months after the month you turn 65. After that, you may join, switch or drop your coverage during the "open enrollment period" between Oct. 15 and Dec. 7. Then, between Jan. 1 and Feb. 14, you may switch to Original Medicare. This is where new restrictions kick in: If you drop your Medicare Advantage Plan, you have only until Feb. 14, to join a Medicare Prescription Drug Plan to add drug coverage. During the Jan. 1-Feb. 14 period, you can't re-enroll in a Medicare Advantage Plan, switch from one Medicare Advantage Plan to another, switch from one Medicare Prescription Drug Plan to another, or drop a Medicare Medical Savings Account Plan.
If you are in a Medicare Advantage plan, you shouldn't need -- and can't get -- a Medigap policy. Medicare Advantage plans should cover the same benefits that Medigap plans do. Keep in mind that if you have a Medigap policy and join a Medicare Advantage plan, you may lose the Medigap policy permanently.
If you're in a Medicare Advantage plan, you usually cannot sign up for a Medicare Prescription Drug Plan on your own. Instead, you should get your drug coverage through your Medicare Advantage plan.
You may not be able to get a Medicare Advantage plan if you have end-stage kidney disease.
For more information about Medicare Advantage plans, see the Medicare web site at www.medicare.gov or call 800-MEDICARE.