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Medicare Advantage De-Mystified

“I’m worried I lost my Medicare coverage,” Beverly told me. She went to her chiropractor. When her chiropractor billed Medicare for services, the claim was denied. Both Beverly and her provider called Medicare to learn why the claim was rejected. Both came away believing Beverly was not insured. “How can this be?” Beverly asked. “My other doctors are covered.”

CoupleI made two telephone calls to understand the situation. As I suspected, Beverly does have Medicare coverage. She has a Medicare Part C plan, not “Traditional Medicare.”

What does this mean?

First, here is a very brief overview of Medicare options and terms.

Traditional Medicare, also called Original Medicare, is managed by the federal government and is comprised of:

  • Part A (hospital coverage). There is no charge if you paid Medicare payroll taxes for at least 10 years while you were working.
  • Part B (doctors, outpatient, equipment coverage). A premium based on your income is paid to Medicare. Most people have the premium deducted from their monthly Social Security benefits.
  • Part D (prescription drug coverage). These insurance plans are purchased directly from Medicare-approved private insurance companies.
  • People who have Traditional Medicare often purchase a Medicare Supplemental Insurance Policy, commonly called “Medigap,” from a private insurance company. Medigap helps pay costs Traditional Medicare does not such as co-payments, coinsurance and deductibles.

An alternative to Traditional Medicare is Part C, called Medicare Advantage plans, provided by private companies approved by Medicare. These plans combines Part A and Part B. Most include Part D, but some don’t. Some offer extra coverage such as vision, hearing, and dental. People with Medicare Advantage plans cannot purchase Medigap insurance.

It is understandable why Beverly and her provider believed Beverly was not covered. When I called, I discovered the representatives with whom I spoke didn’t necessarily understand the terminology. Nor did they explain it.

  • When I asked the Medicare Advantage plan insurance company representative whether Beverly has a Medicare Part C plan, she insisted Beverly does not. The representative called it a comprehensive plan that combines Parts A, B and D. “But it’s not Part C,” she said.
  • The Medicare representative told me Beverly does not have Traditional Medicare. I knew to ask, “Does she have a Part C plan?” The answer was “yes.” I believe when Beverly and her chiropractor were told “she does not have Traditional Medicare,” they heard, “she does not have Medicare.” The representatives with whom they spoke did not explain.

The open enrollment period for Medicare health and prescription drug insurance coverage began last month and continues through December 7th. During this time, Medicare-eligible people can join or change Medigap and Part D insurance providers. They can switch from Traditional Medicare to a Medicare Advantage plan and vice versa.

I currently see private insurance companies advertising Medicare Advantage Plans. Many great plans are offered. I know people who love this insurance. But, if you choose to buy this type of Medicare coverage, learn how the plan works before you sign up.

Some key points:

  • Medicare Advantage plans have networks of providers. Unlike Traditional Medicare, to have your care covered, you can only see the providers in your plan’s network. Beverly’s chiropractor is not in her insurance plan’s network.
  • You may need to get a referral to see other doctors or specialists.
  • Different plans can charge different out-of-pocket costs such as deductibles, co-payments and coinsurance.
  • Each plan has its own rules. To get services you must follow your plan’s rules.
  • There are different types of Medicare Advantage plans such as Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), and Private Fee-for-Service plans (PFFS). They key is whether your providers are covered by the plan you are considering.
  • Medicare Advantage plans are not free. Some plans are sold by insurance agents. I have heard some agents say there is no premium. This is misleading. There is a premium. It is the same you would pay for Part B if you had Traditional Medicare. With a Medicare Advantage plan, Medicare collects the money and sends it to your insurance company on your behalf.
  • Some plans charge an additional premium that you pay directly to the insurance company.

Beverly was relieved to know that she does have Medicare coverage. And, even though her insurance does not cover her chiropractor, in general she is happy with her plan.

There are many great Medicare Advantage plans on the market. Because they differ from Traditional Medicare it is worthwhile to learn about them before you buy. My preferred reference is the booklet, Medicare & You, which the U.S. government mails to Medicare recipients every fall. You can get the electronic version on the home page of www.medicare.gov.

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