Traditional Medicare is a fee for service health insurance plan for people over 65 and with certain disabilities. Fee for service means the health care provider is paid a fee for the healthcare service. Traditional Medicare allows you to use any doctor or hospital that accepts Medicare. There are deductibles, copays and the 20% which you are responsible for paying.
Most people will purchase a Medigap insurance policy to pay some costs not paid by Medicare. But what about people who do not qualify or cannot afford a Medigap policy? Medicare Advantage is a way to receive your Medicare benefits that is different from Traditional Medicare. It provides a means to control out of pocket expenses without a Medigap policy.
Medicare Advantage plans are not Medicare supplement or Medigap policies. They are a completely different form of Medicare that is designed, insured and administered by a private insurance company that is contracted and approved by Medicare. Medicare Advantage Plans have Part A, B and sometimes Part D benefits. MA plans are different from Traditional Medicare in several ways.
Unlike Traditional Medicare fee for service, Medicare Advantage plans may provide benefits through a network of doctors and hospitals that are under a contract to provide benefits. These networks can be PPOs or HMOs. PPOs are doctors and hospitals that contract with the plan to provide services at a discount. HMOs are a group of doctors and hospitals that are under contract to manage the member’s healthcare. Not all doctors and hospitals will participate in these plans for various reasons. Those who do benefit by having patients sent to them by the plan.
Medicare Advantage PPOs allow you to uses doctors and hospitals that are outside of their network, but you may have to pay more. HMOs will not normally allow you to use providers that are not in the plan except in the case of an emergency. If you are in an HMO and go out of network, you must pay the full cost of care.
Medicare Advantage plans also have different copays and coinsurance amounts than Traditional Medicare. Because of this, standardized Medigap insurance will not work with MA plans. You must pay your copays until you reach your annual out of pocket limit. Copays for a week in the hospital run between $1,500 and $2,000. There are copays for doctor visits and 20% coinsurance for some services. If your copays and the 20% add up to the out of pocket limit during the calendar year, the Medicare Advantage plan will usually cover the rest of the approved costs for the remainder of the year. The out of pocket limit is usually around $6,700 per year in Mississippi.