Tuesday, December 5, 2017

Medicare Advantage

I'm covering retirement health insurance in four parts:
  1. Original Medicare,
  2. Medigap, a private Medicare supplement,
  3. Medicare Advantage, and
  4. Typical Medicare insurance bundles.
After paying off our home mortgage our standard deduction was higher than our itemized. After retiring the itemized was higher, mostly from buying health insurance.

Medicare health plans

Medicare calls plans from private companies that provide Original Medicare Part A and Part B benefits "Medicare Health Plans". The most popular type of Health Plan is Medicare Advantage.1

Original Medicare revenue sources are payroll taxes on employers and employees, premiums, general revenue, Social Security benefit taxes, and interest. Medicare Advantage sources are the same, but Medicare pays the plans a total amount per enrollee, rather than individual fees for services.5

Medicare Advantage (Part C)3

Enrollment

• You must be enrolled in Medicare Part A and Part B first, then enroll in a Medicare Advantage plan.

Access to Services

• Network providers, referrals for specialists, and prior authorization for certain services.
• Out-of-network care at a higher cost.
• Emergency and urgent care outside the service area, but not follow up or routine care.
• Plan changes can be made only during the annual open enrollment period.

Costs

• The Part C premium is the monthly payment to an insurance company or health care plan for Part B and any additional coverage.
• Out-of-pocket costs vary and may include a yearly deductible, coinsurance or copayment for services, an out-of-network provider charge, and other types of cost sharing.
• Cost sharing for chemotherapy, dialysis, and skilled nursing care cannot be more than traditional Medicare charges.
• There is a maximum out-of-pocket limit on cost sharing.
• Plans may change benefits, premiums, and copays yearly.
• You can compare costs of available Part C plans in your area on Medicare.gov.

Benefits

• Plan benefits must be at least equal to traditional Medicare.
• Some plans may cover services which are not covered by traditional Medicare, such as dental, hearing and vision care.

Things to know about Medicare Advantage Plans

  1. You're still in the Medicare Program, you still have Medicare rights and protections, and you still get complete Part A and Part B coverage.
  2. Your out-of-pocket costs are typically lower in a Medicare Advantage plan, so this option may be more cost effective for you.
  3. You can only join or change a plan at certain times during the year. In most cases, you're enrolled in a plan for a year. You can join even if you have a pre-existing condition, except for End-Stage Renal Disease (ESRD).
  4. You can check with the plan before you get a service to find out if it's covered and what your costs may be.
  5. Following plan rules, like using network providers, facilities, or suppliers and getting referrals, can keep your costs lower.
  6. Providers can join or leave a plan’s network anytime during the year. Your plan can also change the providers in the network anytime during the year. If this happens, you may need to choose a new provider.
  7. Does the plan's network include providers for all categories of services, or only some? If you have to see providers who aren't part of the plan's network, you may pay more.
  8. Does the plan offers benefits Original Medicare doesn't cover, like vision, hearing, dental, or prescription drug coverage? Do you have to pay more for these extra benefits? If the plan doesn't offer drug coverage, you can get coverage by joining a Part D Prescription Drug Plan.
  9. Each plan can have a different annual out-of-pocket limit, and the limit can change each year.
  10. If the plan decides to stop participating in Medicare, you'll have to join another Medicare health plan or return to Original Medicare.
In 2017, the majority of the 57 million people on Medicare are covered by traditional Medicare, with one-third (33%) enrolled in a Medicare Advantage plan. Since 2004, the number of beneficiaries enrolled in private plans has more than tripled from 5.3 million (13%) to 19.0 million in 2017 (33%).

Medicare Advantage enrollment varies widely across the states, and by county. In six states, 40 percent or more of Medicare beneficiaries are enrolled in a private plan (CA, FL, HI, MN, OR, and PA) as well as Puerto Rico where 74% of beneficiaries are in a private plan. In 3 states (AK, VT, and WY), fewer than 10 percent of all Medicare beneficiaries are in a Medicare Advantage plan (Figure 2).
Although the fine print on the Kaiser Family Foundation information above says it includes all Medicare Health Plans, they call it Medicare Advantage because it is largely that.

Medicare Medical Savings Account

Another type of Medicare Health Plan is the Medicare Medical Savings Account (MSA),1 which combines
  1. A high-deductible health plan: The first part is a special type of high-deductible Medicare Advantage Plan (Part C). The first part is a special type of high-deductible Medicare Advantage Plan (Part C). The plan will only begin to cover your costs once you meet a high yearly deductible, which varies by plan.
  2. A Medical Savings Account (MSA): The second part is a special type of savings account. The Medicare MSA Plan deposits money into your account. You can choose to use money from this savings account to pay your healthcare costs before you meet the deductible.
In addition to the Medicare services that all Medicare Advantage Plans must cover, some plans may cover extra benefits for an extra cost, like dental, vision, or long-term care not covered by Medicare. Medicare MSA Plans do not cover Medicare prescription drugs; this would require a separate Part D Prescription Drug Plan.2

This plan is similar to high-deductible health insurance and Health Savings Account plans available privately before retirement. One review said "Medicare MSA plans are not appropriate for all beneficiaries; specifically, beneficiaries expecting to incur higher medical expenses could find that a traditional Medicare Advantage plan makes more financial sense." The Medicare MSA was introduced in 2007, and by 2014 there were only 11,774 enrolled nationally,4 compared to 19 million total Medicare Health Plan enrollees in 2017. That's 3 orders of magnitude difference. And for the efforts of managing your own Medicare plan, you get to file another tax form.

Next: Typical Medicare insurance bundles

Expanded Medicare Glossary

Resources

References

1 "Different types of Medicare health plans", Medicare.gov, retrieved November 28, 2017.
2 "Medicare Medical Savings Account (MSA) Plans", Centers for Medicare and Medicaid Services, retrieved November 28, 2017.
3 "Choosing Between Traditional Medicare and a Medicare Advantage Plan", Center for Medicare Advocacy, retrieved August 7, 2016.
4 "Medicare Medical Savings Accounts: An alternative to traditional Medicare Advantage", Robert J. Pipich, Ruokai Chen, Milliman, Inc., 14 December 2015, retrieved 11/21/17.
5 "The Facts on Medicare Spending and Financing", Juliette Cubanski and Tricia Neuman, July 18, 2017.

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