In 1997, a program called Medicare Choice was established through the Balanced Budget Act of 1997 before being renamed to Medicare Advantage (MA) or Part C plans in 2003. When these plans first began, many people encountered issues, frustrations, and, in some cases, large financial bills. Fortunately, many of these earlier issues have since been resolved, and the plans are now highly regulated. Today, consumers can choose from a variety of Medicare Advantage Plans designed to give them more protection and rights.
As an advisor, it’s crucial to stay up to date on Medicare Advantage Plans, especially if it has been some time since you have reviewed the options. Although MA plans are not perfect for every situation, they do offer some unique and valuable options. To abide by Medicare regulations, MA plans must cover the same benefits as Original Medicare and have an out-of-pocket maximum. Many plans use a network, which may have narrow coverage through an HMO system, while others have a broad network and may even allow for out-of-network coverage.
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Benefits of Medicare Advantage Plans
A unique quality of many MA plans is they come with added value benefits. In fact, you may have heard commercials about many of these benefits, such as dental, vision, hearing, and Part B premium givebacks. However, it’s important for you to understand what specific benefits are offered on the plans in your client’s area. While some will have comprehensive dental, many only include a cleaning or two through a narrow network of dentists. Some plans may also offer other benefits, such as transportation to and from doctor appointments, meals after a hospital stay, gym memberships, and over-the-counter drug benefits.
Choosing the Right Medicare Advantage Plan
In some areas, Medicare Advantage Plans are strong with rich benefits, broad networks, and low out-of-pocket maximums. Clients in these areas should certainly consider purchasing an Advantage Plan. You can help them weigh the risks and costs and ensure they’re making an informed decision. In other areas, however, a Medicare Advantage premium can easily be over $260 per month, even for someone 65 years of age. When you do the math, sometimes the MA plan with prescription drugs makes more financial sense.
Here are the factors you should consider for each client:
- Can they afford a Medicare Supplement premium?
- Do they have a large HSA account with funds available to pay co-pays and coinsurance if needed?
- Are they comfortable paying copays and coinsurance as they use the plan?
- Are their doctors and clinics in the plan’s network?
- If the client is planning to travel, what is the plan’s travel coverage?
- Are there any special health considerations?
- What are the extra benefits of the plan, and will they use them?
Statistics show a MA member spends an average of $1,545 per year for out-of-pocket expenses. While this amount could be more, most find that unless they are extremely ill, the amount spent during the year on copays and coinsurance will be less than premiums spent on a Medicare Advantage Plan combined with a Prescription Drug Plan. While MA plans are not for everyone, they are often a good choice if not the best choice. As always, suitability is key in assisting any client. There is no one right plan for everyone.
If you have not reviewed MA plans or if it’s been a while, we encourage you to take a peek at the plans in your area. While you might find they are not the best choice for some of your clients, you might also be pleasantly surprised at what you find. If you want to discuss any of these plans or other Medicare Supplements, schedule a call with me. I look forward to hearing from you!