Medicare Replacement Plans - Medicare Part C
If you are new to the Medicare world, you are probably curious about all your options. There is Original Medicare, Supplemental Medigap plans to go alongside your Original Medicare and Medicare Part D plans for prescriptions. Then there are the Medicare Part C plans. These are often referred to as replacement or Advantage plans. While Original Medicare is managed by the Centers for Medicare & Medicaid Services (CMS), Medicare pays private insurance companies to manage Part C plans.
What Is A Medicare Replacement Plan?
Medicare replacement plans are the Part C health insurance plans that take the place of your Medicare Part A & B coverage. These Medicare Advantage plans cover all the same services as Original Medicare but often come with additional benefits. Sometimes these plans cost extra, and sometimes they cost only your normal Part B premium.
Replacement plans for Medicare come in a variety of models that often differ from the fee-for-service model of Original Medicare. This includes HMO (health maintenance organization) plans that limit you to a small network of providers and require referrals to see specialists or PPO (preferred provider organization) plans that limit you to a network but rarely require referrals. There are also medical savings account plans (MSA) that have a high deductible but which give you a bank account deposit to use towards your annual health spending.
Do You Still Need Original Medicare With Medicare Advantage
You cannot have both Original Medicare and an Advantage plan. A Medicare replacement plan takes the place of all your Original Medicare benefits. It is one or the other situation. You will need to review the benefits of available replacement plans to determine the best fit for your life.
What Your Replacement Insurance May Cover
Besides all the normal things covered by Original Medicare, Medicare replacement plans may cover additional benefits such as dental, vision, hearing and hearing aids, alternative therapies like acupuncture, Part D prescription coverage, as well as some home equipment, transportation for health-related needs, disease management, and counseling. The benefits vary from one Advantage plan to the next, so you will need to do your research.
Original Medicare is directly managed by CMS and includes Part A for hospital care and Part B for medical services. It is a comprehensive medical plan, similar to many commercial plans you may be familiar with. Original Medicare does not include coverage for dental, vision, or routine hearing screens. Also, prescription coverage is purchased separately. Original Medicare coverage falls under the fee-for-service model of health insurance. This means you are free to see any providers that accept Medicare. Under this model, Medicare has pre-arranged fees they will pay the doctor or provider, and the amount you will owe, usually only 20% of the charges. You can purchase a supplemental, or Medigap, plans to offset the out-of-pocket costs of Original Medicare.
The out-of-pocket expenses under most Medicare plans are reasonable. Any service that is not a covered benefit, say Dental care, will cost you unless you purchase one of the Medicare replacement plans that include that benefit. Medicare has a small, annual deductible and then normally covers 80% of all Medicare-covered services. If you have an Advantage plan, it may cost the same or more, and sometimes, it may cost less. HMO plans, for instance, often cost less because they limit you to a small network of providers. In those plans, your primary care doctor has to give you a referral to see a specialist. You have less choice, but you pay less money. It is important for you to weigh these different costs and benefits to determine the best plan for you.
Prescription Drug Coverage
Most Medicare replacement plans come with some prescription coverage, which is a great benefit. This removes the need for you to find additional coverage. If you stay with Original Medicare, or your Advantage plan does not include prescription coverage, you can purchase a separate prescription plan for Medicare beneficiaries known as Medicare Part D. You are not required to purchase a Part D plan, but these plans can save you a great deal of money if you have a high prescription bill. Private contractors manage all Part D plans. Most of these contractors are the same companies who administer the Medicare Advantage coverage. If you are looking at Medicare replacement plans that don’t include prescription coverage you will want to look at separate Part D plans.
Compare Medicare Advantage Plans
Medicare Advantage plans come with a variety of options and vary in the additional benefits they can offer. It is important for you to consider your needs - do you need hearing aids for instance - and find an Advantage plan that works for you.