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What is a Medicare Advantage plan and how does a Medicare Advantage plan compare to a stand-alone Medicare Part D plan?



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Question: What is a Medicare Advantage plan and how does a Medicare Advantage plan compare to a stand-alone Medicare Part D plan?
Category: Medicare Advantage Plans (MAPD)

Answer: Medicare Advantage plans provide coverage of your Medicare Part A (in-patient and hospitalization care) and Medicare Part B (out-patient care and doctor visits) - plus Medicare Advantage plans usually include some additional benefits like optical, hearing, fitness, and dental.  Medicare Advantage plans are also known as Medicare Part C plans.

Medicare Advantage plans can be divided into two groups: (1) Medicare Advantage plans with prescription drug coverage (MAPD) and (2) Medicare Advantage plans without prescription drug coverage (MA).

In comparison to Medicare Advantage plans, stand-alone Medicare Part D prescription drug plans (or PDPs) only provide prescription drug coverage.

Medicare Eligibility and joining a Medicare Part D (PDP) or Medicare Advantage plan (MA or MAPD)

PDP Eligibility:
  You must have either Medicare Part A and/or Medicare Part B to be eligible for a Medicare Part D prescription drug plan (PDP). Medicare Part D monthly premiums are paid in addition to your Medicare Part A (if any) and/or Part B premiums.

MA/MAPD Eligibility:  On the other hand, you must be enrolled in both Medicare Part A and Medicare Part B to enroll in a Medicare Advantage plan. Your Medicare Advantage plan monthly premiums (if any) are paid in addition to your Medicare Part A (if required) and Medicare Part B premiums.

Joining a Medicare plan in your Service Area
The only location-related requirement for joining a Medicare Part D or Medicare Advantage plan is that you need to live in (or be a permanent resident of) the Medicare plan's Service Area.

PDP Service Areas:  A Medicare Part D plan's service area is either a state or multi-state region (for example, both Pennsylvania and West Virginia are in the same CMS Region 6 and both states offer the same stand-alone Medicare Part D plans - whereas Florida is the only state in CMS Region 11). You can view all of the stand-alone Medicare Part D plans in your service area using our PDP-Finder tool:  PDP-Finder.com (begin by choosing your state abbreviation).  Here is an example link showing all Medicare Part D plans in Florida: PDP-Finder.com/FL

MA/MAPD Service Areas:  A Medicare Advantage plan's service area is much smaller and usually a ZIP Code region or county. In some very populated areas (such as Los Angeles or New York City), a Medicare Advantage plan's service area may be only a part of a city or county. You can view all of the Medicare Advantage plans in your area using our Medicare Advantage Plan Finder (or MA-Finder.com).  As an example, here are all the counties in Florida with links to the available Medicare Advantage plans: https://q1medicare.com/MedicareAdvantage-PartCHealthPlanMAPDHMOPPOFlorida.php.  And here is a link to all of the Medicare Advantage plans in ZIP Code 44319 (Summit County, Ohio): https://MA-Finder.com/44319. If you are using our online Medicare Advantage plan search tool at MA-Finder.com - just enter your ZIP and "Click to Find Plans".

Are there health-related enrollment questions or anything about pre-existing health conditions?
There are no health-related questions when joining a stand-alone Medicare Part D prescription drug plan (PDP).

The only Medicare Advantage plan health-related question is whether you suffer from End Stage Renal Disease (ESRD) or kidney failure - you cannot join a Medicare Advantage plan with ESRD - but, you also cannot be forced out of an Medicare Advantage plan if you develop ESRD.  However, if you are trying to join a Medicare Advantage Special Needs Plan for a specific Chronic Condition (such as Diabetes or ESRD) or a dual-eligible Medicare/Medicaid SNP, then you are required to have the "condition" or "need" before joining the plan (and to remain enrolled in the SNP).

Medicare Advantage plans with $0 premiums or a $0 premium

Like the Medicare Part D prescription drug plans, the Medicare Advantage plans are administered by private insurance carrier and compensated partially by the Federal Government.  Because of low region medical costs, some Medicare Advantage plans do not charge a monthly premium (or have a $0 premium).

Medicare Advantage "dividend" plans rebate back a portion of your Medicare Part B premium
A few Medicare Advantage plans actually rebate a portion of your Medicare Part B payment back to you (sometimes called a "dividend" plan) - this means you do not pay any monthly premium ($0 premium) and actually get a portion of your Medicare Part B premium "rebated" back to you in the form of a dividend.  In other words, in a few areas of the country, you may find a Medicare Advantage plan that actually pays you (or returns a portion of your Part B premiums) for your Medicare Part A, Medicare Part B, and Medicare Part D coverage.

A Maximum Limit on your Medical Spending
One of the biggest benefits of a Medicare Advantage plan is that there is a limit to your out-of pocket medical spending that is set each year (or MOOP).

As a reminder, if you have Original Medicare Part A and Medicare Part B, there is no limit or cap on what you can spend each year on your Part A and Part B coverage.  However, with your Maximum out-of-pocket limit (MOOP), your private Medicare Advantage plan will limit your potential medicare spending each year to some level such as $3,400, $5,000, or $6,700 - depending on your chosen plan.

The Different Structures of a Medicare Advantage plan
Medicare Advantage plans (MAs and MAPDs) can be further defined by how the private insurance carriers choose to implement the Medicare Part A and Part B coverage.

Some Medicare Advantage plans are PPOs (Preferred Provider Organizations) - other MAs are organized as HMOs
(Health Management Organizations) - and still other MAs are set up as PFFSs (Private Fee for Service Organizations).  A number of key differences exist between the organization of a PPO, HMO, and PFFS. All three have distinct advantages and disadvantages.
  • HMOs (Health Management Organizations) - try to keep costs down by having a more restrictive health care provider network (meaning you will pay more when going outside the network).

  • HMO-POS (an HMO Point of Service) - this HMO has a more flexible network structure, allowing HMO members to use providers outside of the network (usually at a higher cost) and may not count the out-of-network costs toward the member's MOOP (or Maximum out-of-pocket limit - see below).

  • PPOs (Preferred Provider Organizations) - have a more flexible healthcare provider network and usually have in-network and out-of-network costs sharing.

  • PFFSs (Private Fee for Service Organizations) - have no established network, and you can use any healthcare provide who accepts the terms and conditions of the Medicare Advantage plan.

  • Medicare Medical Savings Accounts (MSAs) - unlike other Medicare Advantage plans (MAs), MSAs are made up of a high-deductible health plan and a medical savings account funded by an annual tax-free deposit. MSA members can use the medical savings account to pay for healthcare costs before the health plan deductible is met. MSA members can enroll in any available stand-alone Medicare Part D plan (PDP) for their drug coverage.
When considering an MA or MAPD, a Medicare beneficiary should be sure to learn about these plan differences and how the choice of a particular Medicare Advantage plan may affect their health care.

Additional Donut Hole Coverage?
Although somewhat rare today with the implementation of the Donut Hole discount, some stand-alone Medicare Part D plans or Medicare Advantage plans still offer some form of Donut Hole (or Doughnut Hole) coverage (for either or both brand name and generic medications). We have Donut Hole coverage details in both our PDP-Finder and MA-Finder.

The Private Market and Medicare Advantage plans
From a very general perspective, Medicare Part D plans and Medicare Advantage plans were both introduced to take advantage of the competitive forces existing in a private market to help control the medical expenses. As noted in an older (August 13, 2007) CMS Press Release:

"[M]any beneficiaries have access to a Medicare Advantage plan with lower prescription drug premiums. It will be important for beneficiaries to compare their coverage options for 2008 based on overall cost, coverage, and convenience in order to select the plan that best meets their needs. MA-PD premiums continue to be lower than PDP premiums. On average, in 2007, the MA-PD premiums prior to rebates are about $7 lower than those for PDPs. In 2008, they will average $11 lower. The lower MA-PD bids and premiums reflect the effects of aggressive competition as well as lower costs resulting from better care coordination and drug benefit management techniques. In practice, many MA-PD plans also apply a portion of their rebates from Parts A and B to reduce their Part D premiums, in many cases to zero."

(CMS Press Release 08/13/2007)
This entire CMS Press Release can be found as part of our Blog here: https://Q1News.com/34.html

Is there competition within the Medicare Advantage plan market?
An August 2015 Commonwealth Fund study entitled "Competition Among Medicare’s Private Health Plans: Does It Really Exist?", seriously question whether enough Medicare Advantage plans are offered to provide for a competitive environment. The study notes in its summary:

"Using a standard measure of market competition, our analysis finds that 97 percent of markets in U.S. counties are highly concentrated and therefore lacking in significant MA plan competition. Competition is considerably lower in rural counties than in urban ones. Even among the 100 counties with the greatest numbers of Medicare beneficiaries, 81 percent do not have competitive MA markets. Market power is concentrated among three nationwide insurance organizations in nearly two-thirds of those 100 counties." [emphasis added]

(source: https://www.commonwealthfund.org/publications/issue-briefs/2015/aug/competition-medicare-private-plans-does-it-exist)

Marketing Compliance and Medicare Advantage plans
On another note, as some Q1Medicare site visitors noticed back in 2007, PFFS Medicare Advantage plans received a great deal of press due to allegations of unethical marketing activities. You can read more about that here: Plans Suspend PFFS Marketing; Plans adopt strict guidelines in response to deceptive marketing practices. Since this time, Medicare has increased enforcement and oversight of Medicare plans and such marketing practices are more limited today - as are the availability of PFFS plans.


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Tips & Disclaimers
  • The Medicare Advantage and Medicare Part D prescription drug plan data on our site comes directly from Medicare and is subject to change.
  • Medicare has neither reviewed nor endorsed the information on our site.
  • We provide our Q1Medicare.com site for educational purposes and strive to present unbiased and accurate information. However, Q1Medicare is not intended as a substitute for your lawyer, doctor, healthcare provider, financial advisor, or pharmacist. For more information on your Medicare coverage, please be sure to seek legal, medical, pharmaceutical, or financial advice from a licensed professional or telephone Medicare at 1-800-633-4227.
  • We are an independent education, research, and technology company. We are not affiliated with any Medicare plan, plan carrier, healthcare provider, or insurance company. We are not compensated for Medicare plan enrollments. We do not sell leads or share your personal information.
  • Benefits, formulary, pharmacy network, provider network, premium and/or co-payments/co-insurance may change on January 1 of each year. Our PDP-Compare.com and MA-Compare.com provide highlights of annual plan benefit changes.
  • The benefit information provided is a brief summary, not a complete description of benefits. For more information contact the plan.
  • Limitations, copayments, and restrictions may apply.
  • We make every effort to show all available Medicare Part D or Medicare Advantage plans in your service area. However, since our data is provided by Medicare, it is possible that this may not be a complete listing of plans available in your service area. For a complete listing please contact 1-800-MEDICARE (TTY users should call 1-877-486-2048), 24 hours a day/7 days a week or consult www.medicare.gov.
  • When enrolling in a Medicare Advantage plan, you must continue to pay your Medicare Part B premium.
  • Medicare beneficiaries with higher incomes may be required to pay both a Medicare Part B and Medicare Part D Income Related Monthly Adjustment Amount (IRMAA). Read more on IRMAA.
  • Medicare Advantage plans that include prescription drug coverage (MAPDs) are considered Medicare Part D plans and members with higher incomes may be subject to the Medicare Part D Income Related Monthly Adjustment Amount (IRMAA), just as members in stand-alone Part D plans. In certain situations, you can appeal IRMAA.
  • You must be enrolled in both Medicare Part A and Part B to enroll in a Medicare Advantage plan. Members may enroll in a Medicare Advantage plan only during specific times of the year. Contact the Medicare plan for more information.
  • If you are enrolled in a Medicare plan with Part D prescription drug coverage, you may be eligible for financial Extra Help to assist with the payment of your prescription drug premiums and drug purchases. To see if you qualify for Extra Help, call: 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048, 24 hours a day/ 7 days a week or consult www.medicare.gov; the Social Security Office at 1-800-772-1213 between 7 a.m. and 7 p.m., Monday through Friday. TTY users should call, 1-800-325-0778; or your state Medicaid Office.
  • Medicare evaluates plans based on a 5-Star rating system. Star Ratings are calculated each year and may change from one year to the next.
  • A Medicare Advantage Private Fee-for-Service plan (PFFS) is not a Medicare supplement plan. Providers who do not contract with the plan are not required to see you except in an emergency.
  • Disclaimer for Institutional Special Needs Plan (SNP): This plan is available to anyone with Medicare who meets the Skilled Nursing Facility (SNF) level of care and resides in a nursing home.
  • Disclaimer for Dual Eligible (Medicare/Medicaid) Special Needs Plan (SNP): This plan is available to anyone who has both Medical Assistance from the State and Medicare. Premiums, co-pays, co-insurance, and deductibles may vary based on the level of Extra Help you receive. Please contact the plan for further details.
  • Disclaimer for Chronic Condition Special Needs Plan (SNP): This plan is available to anyone with Medicare who has been diagnosed with the plan specific Chronic Condition.
  • Medicare MSA Plans combine a high deductible Medicare Advantage Plan and a trust or custodial savings account (as defined and/or approved by the IRS). The plan deposits money from Medicare into the account. You can use this money to pay for your health care costs, but only Medicare-covered expenses count toward your deductible. The amount deposited is usually less than your deductible amount, so you generally have to pay out-of-pocket before your coverage begins.
  • Medicare MSA Plans do not cover prescription drugs. If you join a Medicare MSA Plan, you can also join any separate (stand-alone) Medicare Part D prescription drug plan
  • There are additional restrictions to join an MSA plan, and enrollment is generally for a full calendar year unless you meet certain exceptions. Those who disenroll during the calendar year will owe a portion of the account deposit back to the plan. Contact the plan provider for additional information.
  • Medicare beneficiaries may enroll through the CMS Medicare Online Enrollment Center located at www.medicare.gov.
  • Medicare beneficiaries can file a complaint with the Centers for Medicare & Medicaid Services by calling 1-800-MEDICARE 24 hours a day/7 days or using the medicare.gov site. Beneficiaries can appoint a representative by submitting CMS Form-1696.