What is Medicare Advantage?

Written by , April 17, 2012

What is Medicare AdvantageThe Medicare program was added to the Social Security program in 1965 to ensure that older Americans receive adequate health care services, regardless of whether they are insurable or can even afford their own private insurance. Since the Medicare program came into being there have been a number of different changes and modifications to its scope.

One relatively recent change is the Medicare Advantage program, which became part of the Medicare program in 2003. A prior version of Medicare Advantage, previously known as “Medicare+Choice,” actually came into being in 1997.

Here’s a basic overview of the terms of the Current Medicare Advantage program, and how it differs from traditional Medicare coverage?

  • Original Medicare Overview. Traditional Medicare coverage includes a component for in-patient hospital stays, as well as some types of nursing home and hospice care. This coverage is known as “Part A.” Original Medicare coverage also includes a component for certain types of doctor’s services, outpatient care and medical supplies. This coverage is known as “Part B.” There are deductible and coinsurance payments due for certain covered services, and the retiree must also pay a monthly premium for the Part B coverage. Services may be rendered at any hospital or facility that accepts Medicare reimbursement.
  • Medicare Advantage Overview. In contrast to traditional Medicare coverage, a Medicare Advantage Plan is much more similar to private insurance coverage. Medicare Advantage covers both Part A and Part B-type insurance, and a covered individual will select coverage that’s provided by a private insurance company which has been approved by Medicare. With Medicare Advantage a covered individual must use the doctors and hospitals which participate in the plan. In this way, coverage under Medicare Advantage is similar to participating in an HMO or PPO system. In addition, individuals who elect to be covered by a Medicare Advantage plan may also have to pay a monthly premium for the coverage, in addition to their Part B premiums.
  • Desirability of Medicare Advantage. Why would a person choose a Medicare Advantage Plan over traditional Medicare coverage, particularly when such coverage might require the payment of additional monthly premiums? First, there are a number of different insurance companies that have plans with a $0 premium (in other words, the covered individual will only be required to pay their standard Part B premiums, but nothing else). In addition, some people find that the quality of care they receive from Medicare Advantage providers is superior to what they’d get from traditional Medicare coverage. Finally, since an increasing number of hospitals and doctors are declining to participate in the standard Medicare coverage program, there may be a very limited availability of services. Medicare Advantage may simply be only way for an individual to get the health care they need.
  • Deciding which type of Medicare coverage is right for you can be a difficult decision. Make sure to take a look at all of the benefits and limitations of each before you decide.

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