If you have Part A and Part B, you can join a Medicare Advantage Plan, sometimes called “Part C” or an “MA plan.” This type of Medicare health plan is offered by Medicare-approved private companies that must follow rules set by Medicare. Most Medicare Advantage Plans include drug coverage (Part D).

Below is an overview of Medicare Advantage plan types. 

HMO (Health Maintenance Organization):

A Health Maintenance Organization (HMO) is one of the least expensive types of health insurance. It has low premiums and deductibles as well as fixed copays for things like doctor visits. HMO’s require you to choose doctors within their network for any routine or follow-up care (NOTE: emergency care is always covered in-network regardless of where the event occurs). When you sign up for an HMO plan, you’ll select a primary care physician (PCP) whom you’ll see for regular checkups. Your PCP will need to give you a referral before you can see a specialist (for example: a dermatologist or orthopedic doctor). Because all your health services are funneled through your PCP, it’s important to find one you trust. HMOs can be a very good value as long as the doctors and medical centers you would like to see are all in the same network.

EPO (Exclusive Provider Organization):

An Exclusive Provider Organization (EPO) is a lesser-known plan type. Like HMOs, EPOs cover only in-network care, but networks are generally larger than HMOs. They may or may not require referrals from a primary care physician. Premiums tend to be higher than HMOs, but lower than PPOs.

POS (Point of Service):

As with an HMO, a Point of Service (POS) plan requires that you get a referral from your primary care physician (PCP) before seeing a specialist. However, this plan type does allow you to see out-of-network providers, albeit at a higher cost share. This is an important difference if you are managing a condition and one or more of your doctors are not in network. 

HMO-POS:

You may see a type of Medicare Advantage plan called “HMO-POS”. This type of plan is a hybrid of both plan types. It essentially operates as an HMO with some limited out of network coverage features.

PPO (Preferred Provider Organization):

Preferred Provider Organization (PPO) plans tend to have higher premiums than other MA plan types. However, the 2 main features of PPO plans are: 1) PPO plans will allow you to see out of network providers and still be covered (albeit at higher out of pocket costs to you); and 2) allow you to see specialists without a referral. Copays and coinsurance for in-network services are typically higher than other plan types. Out of network coinsurance can cost up to 50% of medical expenses up until you reach the plans’ out of pocket limit (the out of pocket limit is the most you could be financially responsible for in a given year). PPO plans are a good option for those who want more flexibility with their provider choices and don’t mind paying higher premiums and cost sharing.

PFFS (Private Fee For Service):

Medicare eligible people who are enrolled in a PFFS plan are able to receive Medicare covered services from any medical provider who accepts Medicare. However, the medical provider must accept the plan’s terms and conditions for payment before providing any services (except for emergencies). So it is important that PFFS enrollees confirm whether or not their preferred providers will accept the plan before enrolling. Cost sharing on a PFFS plan may include deductibles, copays and co-insurance and no referrals are needed to see specialists.

Some PFFS plans have networks, others do not. When it comes to non-network providers, enrollees may end up paying more for services. For example, non-network providers can charge PFFS enrollees up to 15% above the Medicare allowable amount. 

PFFS plans may or may not include Part D prescription drug coverage. If a PFFS plan does not include Part D drug coverage, the enrollee would have to purchase a standalone Part D drug plan in order to receive Medicare prescription drug coverage. 

It is important to note that PFFS plans are not Medigap (Medicare supplement) plans and they are not the same as original Medicare Fee For Service.

MSA (Medical Savings Account):

Medicare MSA’s are high deductible health plans that include a medical savings account. The funds in the savings account can only be used to pay for qualified medical expenses. Medicare makes contributions to the savings account (the amount Medicare contributes varies by plan). Any money left in the account at the end of the year is rolled over to the next year. Once the deductible is met, the plan pays 100% for Medicare covered services. If an enrollee uses all the funds in the savings account before the deductible is satisfied, the enrollee then must pay 100% of charges until the deductible is met. MSA’s do not cover pharmacy drugs, so in order for an enrollee to have Part D pharmacy drug coverage they would need to enroll in a standalone drug plan as well.

NOTE: Not all plan types are available in every region.

Medicare supplements, also called "Medigap plans", are insurance policies underwritten and issued by private health insurance companies. Medicare supplements are designed to ‘fill in the gaps’ which you are responsible for under Medicare parts A and B. There are a total of 12 standardized Medicare supplement plans which are designated by letter: A, B, C, D, F, F high deductible, G, G high deductible, K, L, M and N (*Note: supplement plans E, H, I and J were eliminated in recent years due to changes in Medicare introduced by congress). Because these plans are standardized, the benefits and medical provider choices are the same regardless of the insurance company offering it. 

How Much Does It Cost?

Medicare supplement plan premiums depend on a few different things, among them are: the area in which you live, your age, the type of supplement plan and the issuing insurance company. As mentioned above, supplement plan benefits are the same no matter which company is offering it. However, there can be significant differences in premiums between competing insurers.

What Does It Cover?

Medicare supplement plans are ways to help pay for most of - or all of - the costs you are responsible for associated with Medicare Parts A & B. This includes things like your Part A deductible, Part B deductible, Part A per day co-pays, 20% Part B coinsurance, possible excess charges, and so on. An important thing to note is that Medicare supplements only cover services in conjunction with Medicare Parts A & B. If a service is not covered under Part A or Part B, a Medicare supplement policy will not cover those services either. In other words, a Medicare supplement policy follows Medicare Parts A & B like a train and caboose.

Things To Consider Regarding Medicare Supplement Plans

Premiums tend to be higher than other Medicare plan options (e.g.: Medicare Advantage plans). The premium will also increase as you get older (you can expect your premium to increase roughly 3 - 5% on average per year). You will also have to enroll into a standalone prescription drug plan in order to gain Part D prescription drug coverage – which will be an additional premium.

Medicare Part D prescription drug coverage typically covers medications you have filled at a pharmacy (as opposed to medications that are administered at a doctor’s office or hospital – which usually fall under Part B). There are only two ways to get Part D coverage: by purchasing a standalone prescription drug plan or by enrolling into a Medicare Advantage plan that includes Part D coverage. To be eligible for a standalone prescription drug plan you must first have Medicare Part A and/or Part B and live in the plan service area. To be eligible for a Medicare Advantage plan with Part D coverage you must have both Medicare Parts A & B and live in the plan service area. 

What Costs Are Associated With Part D?

Most drug plans charge a premium which varies from plan to plan. Your Part D plan premium is in addition to your Part B premium. If you are enrolled in a Medicare Advantage plan (e.g.: an HMO or PPO) the premium for your plan may include your Part D premium. 

Part D Deductibles

The Part D deductible is the amount of money you are required to pay out-of-pocket for covered medications before your policy starts paying. Deductibles can be different from plan to plan and some plans may have $0 deductibles.

Drug Copays and Coinsurance

A copay or coinsurance is the amount you pay for medications after your deductible is met (if your plan has a deductible). Drugs are typically grouped into cost sharing “Tiers” with corresponding co-pays or co-insurance. Generally, the lower the drug tier, the lower the co-pay.

For example, Tier 1 drugs are typically preferred generics and will have the lowest co-pays. Tier 2 drugs are usually non-preferred generics and will have a higher co-pay then Tier 1. Tier 3 are generally categorized as preferred brand drugs with a higher copy than Tier 2, and Tier 4 drugs are usually non-preferred drugs with an even higher co-pay. Many drug plans will also list Tier 5 as specialty drugs (such as injectables) which you may be responsible for a percentage of the full cost (known as a “coinsurance”).

Part D Out-Of-Pocket Cap

When your total out of pocket costs for your medication(s) reaches the Part D out-of-pocket cap as determined by CMS, you will pay $0 for your medications for the remainder of the year.

Do I Have To Have Part D Coverage?

The short answer is no. But if you decide not to enroll in a Part D plan when you are first eligible and you do not have other creditable drug coverage (like from an employer or union plan) or receive a Low Income Subsidy, you may end up having to pay a Part D Late Enrollment Penalty (LEP). Medicare calculates the amount of your Part D LEP by 1% of the national average premium (also called the "national base beneficiary premium") times the number of months you didn’t have Part D or creditable drug coverage. The LEP would apply for the rest of your life.

Things To Consider

Before choosing a drug plan, it is important to determine not only if the medications you are taking are covered by the plan you are considering, but also what tier your medications may fall under. These factors will have a direct impact on what you will be paying for your medications throughout the year.

A Special Needs Plan (SNP) provides benefits and services to people with specific severe and chronic diseases, certain health care needs, or who also have Medicaid. SNPs include care coordination services and tailor their benefits, provider choices, and list of covered drugs (formularies) to best meet the specific needs of the groups they serve.

SNPs are either HMO or PPO plan types, and cover the same Medicare Part A and Part B benefits that all Medicare Advantage Plans cover. However, SNPs might also cover extra services for the special groups they serve. For example, if you have a severe condition, like cancer or congestive heart failure, and you need a hospital stay, an SNP may cover extra days in the hospital. You can only stay enrolled in an SNP if you continue to meet the special conditions of the plan.

Who can join an SNP?

You can join an SNP if you meet these requirements:

• You have Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance).
• You live in the plan's service area.
• You meet the eligibility requirements for one of the 3 types of SNPs (or a subset of one of these groups): Dual Eligible SNP (D-SNP), Chronic Condition SNP (C-SNP), Institutional SNP (I-SNP)

Eligibility requirements for SNPs:

Plan availability varies by geographic location (state and county), which SNP types or chronic conditions the plan covers, enrollment periods and other requirements. You can only stay enrolled in an SNP if you continue to meet the special eligibility rules for the SNP.

Dual Eligible SNP (D-SNP) 

You’re eligible for both Medicare and Medicaid. D-SNPs contract with your state Medicaid program to help coordinate your Medicare and Medicaid benefits, depending on the state and your eligibility. Some D-SNPs, called "integrated D-SNPs," combine both your Medicare benefits and most or all of your Medicaid benefits and services through a single plan. There are different types of integrated D-SNPs, but all of them must:

• Give you one member ID card that works for both your Medicare and Medicaid coverage. 
• Offer a single health risk assessment that covers both programs. 
• Provide you with a care coordinator or case manager to help manage your health care and develop a personal care plan (a customized plan that covers your medical and social needs, health goals, and coordination of your care). 
• Have one process for both appeals and complaints (grievances) for any issue related to your Medicare or Medicaid coverage. 

Chronic Condition SNP (C-SNP)

You have one or more of these severe or disabling chronic conditions:

• Cancer
• Certain autoimmune disorders
• Certain cardiovascular disorders
• Certain chronic and disabling mental health conditions
• Certain chronic gastrointestinal diseases
• Certain chronic lung disorders
• Certain neurological disorders
• Certain severe hematological disorders
• Chronic alcohol use disorder and other substance use disorders
• Chronic heart failure
• Chronic kidney disease and End-Stage Renal Disease (ESRD)
• Dementia
• Diabetes mellitus
• HIV/AIDS
• Stroke

Institutional SNP (I-SNP)

You live in the community but need the level of care a facility offers, or you live (or are expected to live) for at least 90 days in a row in a facility like a:

• Intermediate care facility
• Long-term care hospital
• Nursing facility
• Psychiatric hospital
• Rehabilitation hospital
• Skilled nursing facility
• Swing bed hospital
• Other facility that offers similar long-term, health care services and whose residents have similar needs and health care status as residents of the facilities listed above

Where are SNPs offered?

Each year, different types of SNPs may be available in different parts of the country. Insurance companies decide where they’ll do business, so SNPs may not be everywhere in the U.S.

Program of All-inclusive Care for the Elderly (PACE) is a Medicare and/or Medicaid comprehensive medical and social services program available in some states. PACE helps eligible older adults who need nursing home-level care meet their health care needs in the community by giving them coordinated care and support services (instead of having them go to a nursing home or other care facility)

If you join PACE, a team of health care professionals will work with you to help coordinate your care.

PACE covers all Medicare (and Medicaid) covered care and services and anything else the health care professionals in your PACE team decide you need to improve and maintain your health - including your prescription drugs. The team personalizes your care based on your medical, physical, social, and emotional needs and preferences.

Here are some of the services PACE may cover:

• Adult day primary care (including meals/special dietary needs and recreational therapy)
• Dentistry
• Emergency services
• Home care
• Hospital care
• Laboratory/x-ray services
• Medical specialty services
• Mental health counseling
• Nursing home care
• Nutritional counseling
• Occupational therapy
• Personal care/support services
• Physical therapy
• Prescription drugs
• Preventive care
• Primary care (including doctor and nursing services)
• Social services
• Speech therapy
• Transportation to and from the PACE center and medical appointments

*Source: Medicare.gov