For many years, people on Medicare had only one option for supplemental coverage – Medigap plans. These plans pay after Medicare, helping to cover your Medicare deductibles, copays and coinsurance.
However, as part of the Balanced Budget Act of 1997, Medicare Advantage plans were created. These all-in-one plans provided a new alternative type of supplemental coverage. Medicare Advantage plans are private plans that have all the same Medicare Part A and B benefits, but you access them through a private network of providers.
Twenty years later, over 30% of Medicare beneficiaries choose to get their coverage through a Medicare Advantage plan. Experts predict that this enrollment will continue to rise.
Why so much interest in Medicare Advantage plans? Well there are number of attractive features. Here’s what we think is attracting seniors to these plans in droves.
Medicare Advantage plans often have lower premiums than Medigap plans. In some counties you can even find plans that have a $0 premium. It’s not that the plan is free. Instead, what’s happening is that Medicare pays the Medicare Advantage insurance company a monthly fee to take on your medical risk.
So the Medicare Advantage company tries to offer you the lowest premiums possible to attract you to their plan so that they can collect money from Medicare. If they spend less money on your care than they bring in, it’s a financial win for both you and insurance company.
People on Medicare Advantage plans get to spend less on monthly premiums. Instead they pay copays for their medical services as they go along, at the time of service. This appeals greatly to many people on fixed incomes who may not have a lot of extra cash for expensive Medigap premiums.
Another reason that Medicare Advantage enrollment in growing is that many plans include the Part D drug plan rolled right in. Unlike Medigap plans, where you have to add a separate Part D card, Medicare Advantage plans allow you to use the same member ID card at the hospital, doctor and pharmacy. It’s one less bill to keep track of, and people like this.
In 2018, over 2300 Medicare Advantage plans will be available for sale in the Medicare marketplace nationwide. The Kaiser Family Foundation reported that each Medicare beneficiary will have an average of 21 plans to choose from in their county. Each of these plans has a footprint. There are radio and TV ads on constantly.
Insurance companies also mass mail information about their plans to everyone 65 and older. Not to mention that you’ll have friends and family members who like their plan mentioning them to you. It’s kind of hard to escape hearing news about them, and that word of mouth results in more enrollments.
Medicare Advantage plans generally have networks. The largest number of plans are Medicare HMO plans. In these plans, you must treat within the network except in emergencies. You’ll also choose a primary care doctor who will coordinate your care. He must write a referral for you to see a specialist.
Medicare HMO plans are also usually the cheapest, and so they garner the highest enrollment numbers.
Medicare PPO plans, on the other hand, are a bit more flexible. They usually cost more but they allow you to see doctors outside the network at a great cost-share.
Beyond these two, there are also Special Needs Plans and PFFS networks and a few others that offer even more choices.
The end result is this: you can usually find a plan where some or all of your doctors are in the network. Doctors NOT being in the network are the greatest barrier to enrollment. However, with more plans than ever on the market, more and more doctors are beginning to participate in several of them.
With over 10,000 baby boomers aging into Medicare daily, we expect to continue to see the number of enrolls in Medicare Advantage plans continue to grow. Insurance companies do a great job of making consumers aware of their plans through marketing as well, so interest in these plans is on the rise. To learn more Medicare options, you can visit this blog about Medicare insurance.