Since it began in 1965, Medicare has provided a basic level of health insurance for the vast majority of seniors. That system evolved into Medicare Part A, which includes hospitalization and rehabilitative care after hospitalization and Part B, which includes doctors visits, durable medical equipment and certain home healthcare services.
The Medicare system is not perfect, but it is a functional and predictable basic health insurance program for everyone. Since Medicare Parts A and B have been around a long time, medical care providers generally know what they are going to be reimbursed for Medicare.
With the Balanced Budget Act of 1997, the government attempted to privatize Medicare with the creation of Medicare Part C plans, called Medicare+Choice, which would be the private insurance versions of Medicare Parts A and B.
These private insurance health plans for Medicare did not catch on very well until after January 1, 2006, the effective date of the Medicare Prescription Drug Improvement and Modernization Act of 2003. With that Act, the government mandated Medicare Part D prescription coverage and changed the name of Medicare+Choice to Medicare Advantage. At that time, many individuals who signed up for Medicare Part D prescription coverage also unknowingly signed up for a Medicare Part C Advantage plan.
Basically, Medicare Part C is privatized medical insurance that replaces Medicare Parts A and B. If you have a Medicare Part C Advantage plan, you do not have Medicare Parts A and B, even if you have a Medicare card that says you do. Look at your health insurance card. If it says “Advantage,” you most likely have Medicare Part C and do not have Medicare Parts A and B.
If you have signed up for a Medicare Advantage plan, your Medicare coverage is now governed by the private health insurance contract you entered into with the insurance company. There are numerous Medicare Part C Advantage plans around and coverages vary from state to state, county to county and plan to plan, even within the same insurance carrier.
When Part C Advantage plans first came out, they were very popular with insurance companies because of generous government subsidies used as an incentive to privatize Medicare. Many insurance companies found that they could make lots of money by sponsoring these plans.
However, it was determined that these subsidies were not making it down to the Medicare participants. In response to this, provisions in the Patient Protection and Affordable Care Act, aka Obamacare, severely cut these subsidies. As a result, it is reported that many insurance companies are increasing co-pays and/or premiums and/or limiting coverages.
Medicare Part C programs are often times PPOs, preferred provider organizations. If you incur non-provider or out-of-network medical expenses, you may have higher co-pays or no coverage at all. Most Part C programs generally have less covered medical expenses than Medicare Parts A and B and usually have higher co-pays and deductibles. I have not heard of any Part C Advantage plan that has at least as good of coverages as original Medicare Parts A and B.
Even though these Medicare Part C programs cover less than original Medicare Parts A and B, you cannot purchase a Medicare supplement insurance policy to pay for non-covered medical expenses. So typically you would have higher out-of-pocket costs with a Medicare Part C Advantage plan than with original Medicare Parts A and B.
Because of this disparity in coverages, the Obamacare health care legislation included specific provisions to address this issue. It prohibits Medicare Part C Advantage plans from imposing higher cost-sharing requirements for certain Medicare covered benefits, including chemotherapy, dialysis services and skilled nursing care, than those charged under original Medicare Parts A and B.
The legislation also requires Medicare Part C Advantage plans that provide extra benefits to give priority to cost-sharing reductions, wellness and preventive care, and lastly to the benefits not covered under original Medicare Parts A and B.
Because of the reduced subsidies and increased coverage requirements, some insurance companies are getting out of the Part C Advantage plan business altogether. It is estimated that the number of Part C Advantage plan enrollees will be cut in half under the Obamacare legislation.
So why would you want to enroll in a Medicare Part C Advantage plan with less coverage than original Medicare Parts A and B that you are replacing? The answer is, you would not, unless you are required to do so because you are a member of some retiree group which forces you into a Medicare Part C Advantage plan.
If you have a Medicare Part C Advantage plan, you should contact your health insurance carrier and ask for a copy of the insurance contract, including a listing of all covered expenses, to review.
If your Advantage plan coverage is less than traditional Medicare Parts A and B or you have some sort of condition or ailment which is not covered by your particular Medicare Part C Advantage program, you should seriously consider changing or dropping your Medicare Part C Advantage plan. This can be done during the annual enrollment period which is November 15 through December 31, 2010. The monthly cost of Medicare Part A (usually free), Part B (usually $96.40) and a Medicare supplement (can be at least $111.00), may be less than the co-pays under your Medicare Part C Advantage plan.
There is also a special period for making changes to your coverage after December 31. Between January 1 and February 14, 2011, if you are in a Medicare Part C Advantage plan, you can leave your plan and switch to original Medicare Parts A and B. If drug coverage was part of your Medicare Part C plan that you dropped, you will also have until February 14 to join a Medicare Part D prescription drug plan.
Health care costs are often times the largest expenses for seniors today. Don’t short change yourself. Make sure you have adequate health care coverage.
By: Matthew M. Wallace, CPA, JD
Published edited December 12, 2010 in The Times Herald newspaper, Port Huron, Michigan as: Where’s the advantage in Medicare Part C plan?