Since the beginning of the year, open enrollment for Medicare Advantage plans has been in full swing. The key to making a good choice is to understand exactly how Advantage plans operate.

Medicare pays some health care costs for individuals age 65 and above. Most people are familiar with Part A, which covers hospital services and Part B, which covers physician services. Together, these two parts - A and B - cover costs incurred by an individual for a range of services. Unfortunately, many hospitals and physicians are reimbursed at a rate that rarely covers the real cost of providing these services.

Most seniors carry some type of Medigap insurance plan, meaning that the insurance pays most of the costs not covered by Medicare Parts A and B. There is a range of Medigap supplemental insurance products available for purchase. Some carry deductibles, some cover services not covered by Medicare - such as ambulance costs - and some offer hybrid coverage that takes advantage of various health delivery systems.

How Advantage plans differ

In the 1980s, health professionals began to offer a package of health care services to individuals and companies in exchange for one standard monthly or yearly fee, regardless of services actually used. Medicare Advantage plans work off this same premise. When you choose an Advantage plan, you sign a contract which assigns your Medicare A and B benefits to a third party which agrees to provide medical services. You will continue to pay your monthly Part B premium and you may have an additional premium from the company offering the Advantage plan. Advantage plans may include Part D or prescription drug coverage as part of their plan - or they may not. In addition, Advantage plans often cover services not offered through Medicare. This could be very beneficial to some individuals. On the other hand, you may be asked to stay within a network or make regular co-payments on some services. 

Advantage plans may be a perfect choice for your situation or they may not offer the flexibility you want and need. Regardless of how you choose, it’s far more important that you make your choice with the full knowledge that Advantage plans are not a 'Medicare Billing Service,’ nor are they an additional benefit to Part A and B coverage. Advantage Plans transform Part A and B (and sometimes Part D) into a combination package.

The Minnesota Senior Federation’s publication, Health Care Choices, describes in detail how different Medigap, Medicare Supplement and Advantage plans work within the Medicare system in Minnesota. Refer specifically to pages 20 and 21 of the 2008 edition, or call our Health Plan Information Center at 651/783-5045 or toll-free at 866/783-5045.