Medicare Part C: Medicare Advantage plans

Formerly known as Medicare+Choice, Medicare Advantage plans are alternatives to the original Medicare plan and are not the same thing as supplemental insurance (more about this later). Sometimes called Part C or “MA plans,” these plans are run by private companies but are part of the Medicare program.

Basically, Medicare pays an amount of money for your health care into these private Medicare Advantage plans every month. In return, these plans must provide all of your Part A and Part B benefits, and they must cover at least all of the medically necessary services that the original Medicare plan provides.

MA plans can charge different co-payments, co-insurance and deductibles for their services and generally have set provider networks. This means you will likely be limited to seeing only those doctors who belong to the plan, going to certain hospitals for covered services and getting referrals to see specialists. If you use providers who aren’t in the network, you may have to pay the entire cost of the services rendered. However, MA plans can offer extra benefits, such as vision, hearing, dental and health and wellness programs. Most include Medicare prescription drug coverage (usually for an extra cost). 

Retirees can currently choose from five different types of Medicare Advantage plans. Most function like HMOs, with specific networks of doctors. Other plans, such as Private Fee-for-Service plans, or PFFS, will allow you to go to any doctor if the doctor agrees to accept the plan’s terms of payment before treating you. Medicare Special Needs plans, or  SNPs, serve certain people who are chronically ill, live in institutions, such as nursing homes, or have other special needs. (The different benefits offered by the various types of Medicare Advantage plans are outlined on pages 42 through 44 of the “Medicare & You 2008” handbook.)

It’s important to call any plan before joining to find out what your services will cost and to make sure that a plan will meet your needs. Some plans, for example, will let you use out-of-network providers (sometimes for a higher cost). Also be sure to check in advance with your doctors or hospital to determine out if they accept the plan. To enroll in a Medicare Advantage plan, you can complete a paper application, call the plan by telephone or enroll online. Be aware that there are limitations as to when you can join, switch or drop a Medicare Advantage plan.  

Remember, when you join a Medicare Advantage plan, you will have to provide your Medicare number from your Medicare card and the date your Part A and Part B coverage started. You will also generally still pay the monthly Part B premium along with Medicare Advantage plan’s premium (if they charge one). That includes coverage for Part A and Part B benefits, prescription drug coverage (Part D, if offered) and any other extra benefits.

Medicare Part D: Prescription drug benefit

Medicare offers prescription drug coverage for everyone with Medicare under Part D. But to get Medicare drug coverage, you must take the initiative and join a Medicare drug plan.

Medicare drug plans are run by insurance companies and other private companies approved by Medicare. Each plan varies in cost and drugs covered. Even if you don’t take a lot of prescription drugs now, you should still consider joining a Medicare drug plan because, if you decide not to join such a plan when you are first eligible, you will pay a late-enrollment penalty if you choose to join later. The penalty is 1 percent of the monthly premium for each month you don’t enroll and is applied to all future monthly premiums.

“Although there will be a number of seniors out there who don’t take any prescription drugs right now and who’ll view paying for prescription drug insurance as kind of a waste, they also need to think about the future,” says Clark Howard, consumer advice talk show host and author. “Consequently, you are so much better off holding your nose and picking a plan now rather than having to do so in the future and also having to pay a penalty on top of your regular premiums.”

There are two ways to get Medicare prescription drug coverage:

You can join a stand-alone Medicare Prescription Drug plan. These plans, sometimes called PDPs, add drug coverage to the original Medicare plan, to some Medicare Private Fee-for-Service plans, to some Medicare Cost Plans and Medicare Medical Savings Account, or MSA, plans. (The latter two plans are part of the catch-all “other Medicare plans” that are not Medicare Advantage plans. Medicare Cost Plans, available only in certain parts of the country, are a variation of the original Medicare plan. An MSA plan combines a high-deductible Medicare Advantage plan and a bank account, much like the consumer-directed health plans that are available in the private sector.)  

You can join a Medicare Advantage plan, such as an HMO or PPO, or another Medicare health plan that includes prescription drug coverage. Through these you will get all of your Medicare coverage (Part A and Part B), including prescription drugs (Part D). These plans are sometimes called “MA-PDs” and you will usually pay a separate monthly premium in addition to your Part B premium.

Every year, from November 15 to December 31, you can switch to a different Medicare drug plan if your plan coverage changes or your prescription needs change. When you join or switch to a new Medicare drug plan, your coverage will generally begin January 1 of the following year.