There are six types of Medicare Advantage Plans, but only three apply to most seniors, including Health Maintenance Organization (HMO) plans, Preferred Provider Organization (PPO) plans, and Private Fee-for-Service (PFFS) plans. The three less common options are HMO Point-of-Service plans, Medical Savings Accounts, and Special Needs plans. In this article we will be discussing the most common plans.
Medicare Advantage (MA) Plans are sold by private health insurance companies. Every MA plan is approved by Medicare and provides the same basic benefits as your Original Medicare Parts A and B. However, there are many number of differences between MA plans, including premiums, deductibles, copayments, additional coverage (e.g., vision, hearing, dental, prescription drugs), and rules for obtaining services. When comparing plans, you should focus on the level of coverage and benefits that you need the most.
Health Maintenance Organization (HMO) Plans
A Medicare Advantage HMO Plan is managed care health insurance that puts your primary care doctor in charge of all referrals. That means that you must see your primary care doctor first before you go to any specialists that you may need for particular services. If you do not follow the HMO’s referral rules, you will pay the full cost to see the specialists. Also, except in an emergency, you are not covered for services that you obtain outside of the plan’s provider network. Although these rules may seem to be restrictive, you will see the benefit in the plan’s lower costs.
Preferred Provider Organization (PPO) Plans
Unlike an HMO, with a Medicare Advantage PPO Plan you can generally obtain health care services from the doctors and facilities of your choice. If you go outside of the plan’s network you may be required to pay a higher portion of the fees, but not the entire bill. Also, PPO plans do not require to get a referral from your primary care doctor before you see a specialist. The less restrictive care comes at a price. Monthly premiums for a PPO plan are generally higher than an equivallent HMO plan.
Private Fee-for-Service (PFFS) Plans
A Medicare Advantage PFFS Plan work like your Original Medicare. You do not need to choose a primary care doctor and referrals are not required for you to see the specialists of your choice. The bad news is that not all Medicare providers accept the plan due to lower reimbursements.
Once the fastest growing segment of the Medicare Advantage health insurance market, PFFS plans are now in the decline due to regulations put in place by ObamaCare. Starting in 2011, Medicare regulations required PFFS plans to establish provider networks in all but the most rural counties. As a result, many PFFS plans chose to stop offering their insurance to Medicare beneficiaries.
How Do MA Plans Differ?
All MA plans have different rules for obtaining services. Some plans require you to get referrals, while others don’t. In such cases, if you do not get a referral in advance, your visit to the specialist will either not be covered or you will be required to pay more out of pocket. With other plans, when you use services from an out-of-network provider your out-of-pocket costs may be higher, or the plan may decline to cover the services altogether.
Another major difference is the amount you are required to pay out of your own pocket for medical services. Look at out-of-pocket costs carefully. Some plans charge a monthly premium on top of your Medicare Part B premium. However, a zero dollar premium should not be your only consideration. Annual deductibles, copayments and coinsurances vary significantly between plans. Keep in mind the health services you need, how often you get them, and what your total out-of-pocket-costs will be for those services under the different plans.