What Is Medicare Part C and How Does it Work?

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So far, I have discussed Medicare Part A, Medicare Part B and Medicare Part D.  Surely, there must be a Medicare Part C.  There is and it is called Medicare Advantage.

Medicare Advantage should be called “Medicare Replacement”.  It is actually a combination of Medicare Parts A & B, all rolled into one and some of them even include Medicare Part D. That’s where the simplicity ends, however. To enroll in a Medicare Advantage plan you must leave Original Medicare.  You will no longer be covered by Original Medicare.

However, you will still have to pay Social Security $134/month per Medicare Beneficiary in your household.  That is the Medicare Part B premium everyone must pay, even if you cannot use Medicare Part B because you’re no longer enrolled in it.  

Instead, you will be enrolled in a Medicare replacement plan sold by a private insurance company.  All Medicare Advantage plans are offered by private insurance companies.  And, just like Medicare does not write Medicare Supplements, they also don’t sign you up for Medicare Advantage plans. either.  For that, you need to pick the right plan, with the right insurance company and, it will help you enormously to have the right insurance agent.

There are basically three categories of Medicare Advantage plans, Private Fee For Service (PFFS), Preferred Provider Organizations (PPO’s) and Health Maintenance Organizations (HMO’s).

Private Fee for Service Plans (PFFS)

Private Fee For Service Plans (PFFS’s) were, in the beginning, supposed to mirror Medicare Part A & Part B. But, as they have evolved, they have taken on more of the attributes of a Preferred Provider Organization Plan or PPO.

PPO’s vs HMO’s

Perhaps this would be a good time to explain the difference between a PPO and an HMO.  Both have Networks of Doctor’s, Hospitals and other Medical Care Providers.  With a PPO, however, you can use a Doctor who is not in the Network and still get benefits.  Typically, you will pay a portion of your medical expenses in such a situation (usually referred to as the “Out-of-Network Deductible”) before your plan pays and the percentage paid by the plan would be reduced from 80% to 60%, for example.

And herein lies the problem with a PFFS plan. Unlike Original Medicare, which you can supplement with an insurance policy (a Medicare Supplement policy) to help cover the things not covered by Original Medicare, there is no insurance product you can buy to help pay for the percentages of your medical expenses not covered by your PFFS plan.

If you’re in a Medicare HMO, you MUST use ONLY the medical care providers that are in their Network.  If you seek care outside of that Network, you’ll be on your own for that bill.  No help will be forthcoming from anybody.

PPO’s and HMO’s can also include MA’s (Medicare Advantage plans) which cover the Hospital and the Doctors only, MAPD’s (Medicare Advantage/Prescription Drug plans) cover, as their title infers, Hospitals, Doctors and Prescription Drugs. PFFS’s (Private Fee For Service plans) cover Hospitals and Doctors only. If you sign up for a PFFS, you will need a stand –alone Prescription Drug Plan (PDP).

If you want Hospital, Doctor and Prescription Drug coverage all in one plan, you must purchase an MAPD.  That is attractive to some folks because of its simplicity and, generally speaking, lower cost.  However, these are HMO (Health Maintenance Organization) type policies and that means that you MUST use the services and supplies provided by Hospitals, Physicians and other health care providers that are in the plan’s Network.

That may be problematic because not all medical care providers are in all networks. And, if you travel to West Overshoe, TX to visit your daughter, no-good son-in-law and darling grandchild(ren) and you wind up going to the Doctor with a sudden case of gastroenteritis because the Mexican Food place they took you to didn’t agree with you or have to have a splinter removed from your finger before it becomes infected, you may find that there are no medical care providers in West Overshoe, TX or the surrounding area that are in that network.

Of course, if it is a true emergency, i.e. a threat to life or limb, any provider you see for that medical emergency must accept your plan, network or no network.

MAPD plans have copays for just about every medical expense you can have. For example, a typical MAPD plan has a $15 copay for each office visit, a $150/day copay for each day you spend in the hospital, although that is usually limited to 6 days per confinement, a separate copay for each lab test, a separate copay for each X-Ray, etc., etc. ad nauseum. By law, those copays cannot exceed $6,700 per year, per person.  Some plans offer smaller out-of-pocket limits but $6,800 is the maximum expense you can incur in any Medicare Advantage Plan.

An MA (Medicare Advantage plan) covers only Hospital and Doctor bills. You cannot buy a stand alone prescription drug plan to go with an MA plan. This coverage is specifically for people who are currently taking no medications or, at least very minimal medications, and are willing to take the chance that they won’t have any significant medication expenses at least until the next Annual Election Period (currently between October 15th and December 7th of each year).

The advantage to taking this kind of Medicare Part C plan is the lower premiums.  In some cases, the premium is $0, although you must still pay your Medicare Part B Premium, $134/month, to Social Security. Some Medicare Advantage Plans used to pay all or a part of your Medicare Part B premium for you.  I honestly don’t know if any of them still do.

If you want to have a Medicare Advantage plan that more closely resembles the coverage you may be used to, the PFFS (Private Fee For Service) plan may be a little more to your liking. And, you can add a stand-alone prescription drug plan to that coverage.

Why this plan and not an MAPD?  Good question!  Here’s a good answer!  PFFS’s pay very similarly to how Medicare pays so more medical care providers accept them.  Moreover, with a PFFS plan, your Doctor does not have to join any Network.  He does have to accept the plan’s terms for payment if he accepts you as a patient and accepts your plan.  However, he or she is free to accept the plan on you but absolutely no one else, if he or she so chooses.  Conversely, he or she can accept it on absolutely everyone else, but not you.  He or she is also free to accept it on you for this week but not next week!   Confusing, isn’t it?   All the more reason to avoid Medicare Advantage Plans altogether.

The Drug Formulary (list of covered medications) on the MAPD plan that may be available may not be as attractive to you as another one which you could buy on a stand-alone basis.  That would mean that, since you cannot have a stand-alone PDP and a MA plan at the same time, you would have to choose a PFFS plan and then get the drug plan you want, separately.

One caution here…

As I have said previously, The Obama Administration is taking $716 Billion out of Medicare’s funding over the first ten years of Obamacare to help fund Obamacare.  By 2020, the number of people on Medicare will literally double, as compared to 2010, because the Baby Boom Generation will all finally have aged into Medicare.  One of the areas that Medicare has already announced that they will be making some serious cutbacks in is reimbursements to Doctors who accept Medicare Advantage patients.  It is for this reason that more and more Doctors are electing to NOT accept Medicare Advantage patients.

Keep another very important point in mind…You cannot have a Medicare Advantage plan and a Medicare Supplement at the same time. You can pay for both but you will only be able to collect benefits from the Medicare Advantage Plan.  That is because, when you sign up for a Medicare Advantage plan, you are actually leaving Original Medicare.  Remember, Medicare Advantage plans are Medicare Replacement policies sold by private insurance companies.  If you carry a Medicare Supplement policy in addition to the Medicare Advantage plan, you will have spent good money on a Medicare Supplement from which you can collect absolutely nothing.  Again, Medicare Supplements supplement Original Medicare.  If you have a Medicare Advantage plan, you have left Original Medicare and there are, therefore, no benefits for your Medicare Supplement policy to supplement.

With any Medicare Advantage Plan, you would still have copays that you would be required to pay, up to a maximum of $6,800 per year. I just can’t imagine any Medicare Supplement that would cost you that much money in premiums or deductibles. It is for this reason and, because fewer and fewer Physicians are accepting any Medicare Advantage plans that I do not recommend any of these plans.

There is a saying in the health insurance sales community. “If you can afford a Medicare Supplement, you have no business signing up for a Medicare Advantage Plan”. Truth is, these plans may be the best thing available for a person of very limited means. In the absence of a plan like one of these, those folks might not have any insurance at all. So it does have its place.

Believe it or not, you can have a “do over”

So many people have been dissatisfied with Medicare Advantage plans that Medicare has set up a method by which you can change your mind but, like everything else with government health care, there are stipulations.

First, if you enrolled in a Medicare Advantage plan during the Annual Election Period (also known as the AEP) between October 15th and December 7th, and then decide that you don’t want that coverage after all, you can disenroll during the Disenrollment Period which is between January 1st and February 14th.

You must then be returned to Original Medicare and, if your disenrollment from the Medicare Advantage plan included disenrollment from that plan’s prescription drug coverage, you will be allowed to enroll in a stand-alone PDP.  If you disenroll from your Medicare Advantage plan in January, the disenrollment and return to Original Medicare will take effect on February 1st.  If you disenroll between February 1st and February 14th (the last day of the Medicare Advantage Disenrollment Period), your disenrollment and return to Original Medicare will take effect on March 1st.

You can also return to your original Medicare Supplement, if you had one. All you will have to do is call Medicare at 1-800-MEDICARE (633-4227) and tell them that you want to disenroll from the Medicare Advantage plan you took out during the AEP.

Then, if you have cancelled your Medicare Supplement, call them (their number will be on the back side of your Medicare Supplement ID card) and tell them you’ve changed your mind and want to remain with them.  As long as they are still offering Medicare Supplements, they have to take you back, no matter your health.