The Different Types of Medicare Advantage Plans
This article was updated on: 02/29/2016
There are many types of Medicare Advantage (also known as Medicare Part C) plans. Medicare Advantage plans provide an alternative way to receive your Original Medicare, Part A and Part B, benefits. With Medicare Part C, you get the same coverage as Original Medicare provides (except for hospice benefits), but through a private Medicare-approved insurance company. Many Medicare Advantage plans offer benefits beyond Original Medicare, like prescription drug coverage or routine dental service benefits.
The more common types of Medicare Advantage plans include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-For-Service (PFFS) plans, and Special Needs Plans (SNPs). Less common plan options include HMO Point-of-Service (HMO POS) and Medical Savings Account (MSA) plans. Each Medicare Advantage plan offers plan-specific benefits. Thus, it is important to compare plan benefits to find out which one is right for you.
Since Medicare Advantage plans are offered by private insurance companies approved by Medicare, there are a number of differences between the plans, including costs, additional coverage (such as routine vision and dental, hearing, or wellness coverage), and rules for getting services. Not every plan may be available in the area where you live.
Health Maintenance Organization (HMO)
- An HMO is a type of health-care plan that generally requires you to select a primary care doctor.
- In most cases, you need to get a referral to see a specialist.
- If you don’t follow the plan’s rules for services, you may have to pay the full costs of care.
- Except under certain circumstances, you’re typically not covered for services obtained outside of the plan’s network of Medicare providers.
- While the rules of an HMO health policy may be relatively restrictive compared to other plans, the restrictions may be offset by lower plan costs.
Preferred Provider Organization (PPO)
- With a PPO plan, you can generally go to any doctor or hospital, but will pay less if you use doctors and hospitals that belong to the plan’s network.
- PPO health plans typically don’t require a referral for care by a specialist. However, if you use out-of-network health care providers or specialists, you may be required to pay a higher portion of the cost for covered services.
- Compared to an HMO plan, a PPO plan may be less restrictive. However, the monthly premium for a PPO plan may be higher.
Private Fee-For-Service (PFFS)
With a PFFS plan, you will not need to choose a primary care doctor, and referrals are generally not required for treatment by specialists. However, not all Medicare providers accept the plan.
At one time, PFFS plans were the fastest growing segment of the Medicare Advantage market. These plans were very popular because they were not tied to a specific doctor or hospital network. In 2011, changes in Medicare law required certain PFFS plans to have networks of providers. So, if you are considering a PFFS plan, make sure you’re clear with that particular plan about which providers you can go to and what the requirements are.
Special Needs Plans (SNPs)
Special Needs Plans (SNPs) are available for those who qualify with specialized health needs or who are in other specific situations (like living in a nursing home). These plans tailor benefits and coverage to meet the specific needs and conditions of the people they serve. You might be eligible for an SNP if any of the following conditions applies to you. This is not a complete list of all possible qualifications for an SNP.
- You have a severe or disabling chronic condition, such as chronic heart failure or dementia.
- You’re enrolled in both Medicare and Medicaid.
- You live in an institution such as a nursing home.
For details about qualifying for an SNP, see Medicare.gov.
HMO Point-Of-Service (HMO POS)
An HMO Point-of-Service plan is a slightly different and less common version of the HMO plan. Unlike a traditional HMO, an HMO Point-Of-Service plan usually lets you go to an out-of-network provider, but at a higher out-of-pocket cost. This benefit can make the plan function more like a Preferred Provider Organization plan.
Medical Savings Account (MSA)
An MSA is less common than the other types of Medicare plans. In an MSA, a high-deductible health plan is combined with a bank account for you. Medicare deposits a particular amount of money each year into the bank account, and you can use the money to pay for any expenses related to your health care throughout the year.
Be aware that Medicare deposits are often less than the annual deductible. This means that if you need a lot of care, you might have to spend more than the amount originally deposited into the account.
How do the plans differ?
Different Medicare Advantage plans have different rules for obtaining services. Some policies may require you to get a referral from your primary doctor if you want to see a specialist. In these cases, if you don’t get a referral, the specialist’s services might not be fully covered. Similarly, with some plan types, if you get any health care services from out-of-network providers, the plan may decline to cover the services, or your out-of-pocket costs may be higher.
Another disparity between Medicare Advantage plans is how much you pay for different medical services. Some Medicare Advantage plans charge a monthly premium on top of your Medicare Part B premium, and annual deductibles, copayments, and coinsurance can also vary significantly between plans. No matter what type of Medicare Advantage plan you have, you need to continue paying your Medicare Part B premium.
When you compare Medicare Advantage plans, keep in mind the type of health services you need, how often you get them, what medications you take, and the copayments or coinsurance amounts for these drugs and services under the different plans.
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