Medicare Managed Care: Understanding Your Options

In this article...
  • Medicare enrollees may choose a Medicare Managed Care plan administered by a private insurer. Know your options regarding this alternative to Original Medicare.

Seniors who’ve reached the qualifying age of 65 have choices when it comes to Medicare coverage. In lieu of receiving benefits through Original Medicare, beneficiaries can choose a Medicare Managed Care plan administered by a private insurer. These plans may offer additional benefits and cost savings, and sometimes tailor coverage to a specific population. But, before enrolling in a plan, it's important to understand what Medicare Managed Care is and what options are available.

What Is Medicare Managed Care?

Medicare Managed Care is another name for Medicare Advantage or Part C. This federal healthcare coverage is administered by plan-approved private providers who must follow Medicare guidelines. For seniors who enroll in them, managed care plans take the place of Original Medicare coverage.

Managed care plans must provide the same basic benefits an Original Medicare participant receives. However, unlike Original Medicare, which offers essential medical care and hospitalization coverage under separate plans known as Parts A and B, Medicare Managed Care bundles these benefits into one plan. In addition, many managed care policies include prescription drug benefits. Under Original medicare, these benefits must be purchased separately as Part D plans. 

What Are the Four Types of Medicare Advantage Plans?

Seniors who choose to enroll in Medicare Managed Care can select a plan that best suits their healthcare needs and overall budget. These plans may have different provider networks, referral guidelines, drug formularies and out-of-pocket costs. Although availability may vary by region and insurer, the four most common types of managed care plans are:

  • Health maintenance organization plans: HMOs provide network-based coverage that requires participants to receive services from plan-approved facilities and practitioners, except in an emergency. Enrollees must typically choose a primary care physician to coordinate care, and may need referrals to see a specialist. Managed care HMOs often include prescription drug coverage.
  • Preferred provider organization plans: Although PPOs also maintain a network of providers, participants may choose to receive out-of-network care at a higher cost. PPOs often include prescription drug coverage.
  • Private fee-for-service plans: PFFS plans let participants seek care from any provider or facility that accepts the plan’s preset payment amount, and referrals aren’t required for specialists. However, providers who don’t agree to payment terms may refuse treatment, even to established patients, except in cases of emergency. If a PFFS plan doesn’t include prescription drug coverage, participants may purchase a Part D plan.
  • Special needs plans: SNPs are designed for specific populations, such as individuals with certain medical conditions or characteristics. They typically feature networks and drug formularies that meet its population’s needs.

In some areas, Medicare beneficiaries may have other, less common options, such as HMO POS and medical savings account plans. 

What Costs Are Associated With Medicare Managed Care?

Medicare Managed Care participants may incur the following out-of-pocket costs:

  • Monthly premium payments: Participants typically pay monthly Part B and Medicare Managed Care premium payments. However, some plans have a $0 premium, and may also cover some or all of the Part B premium, significantly reducing an enrollee’s out-of-pocket costs.
  • Yearly deductibles: Plans often include an annual deductible, which participants must meet before they'll receive coverage for healthcare services and prescriptions.
  • Copays and/or coinsurance: After a participant has met their annual deductible, they’ll typically pay a copay or coinsurance each time they receive a covered service. These charges may take the form of a flat fee per visit or a percentage of the cost of services.

A participant’s overall out-of-pocket costs generally reflect the type and frequency of care they receive, and whether services are rendered by in- or out-of-network providers. Some managed care plans also feature yearly out-of-pocket maximums, which limit how much a participant has to pay for care.

What Are the Advantages and Disadvantages of Medicare Managed Care?

A senior's medical and budgetary needs often play a part in deciding what type of plan is most advantageous. However, when compared to Original Medicare, Medicare Managed Care plans may have several distinct advantages and disadvantages.

Advantages of Medicare Managed Care

Medicare Managed Care plans differ widely by type, but many plans offer these advantages:

  • Bundling: Rather than requiring enrollees to purchase separate policies for general medical, hospitalization and prescription drug coverage, Medicare Managed Care plans bundle all three benefits into one policy.
  • Additional benefits: Medicare Managed Care plans sometimes offer benefits beyond basic medical coverage, including hearing, dental, vision and gym memberships.
  • Choices: Through Medicare Managed Care, participants may choose from several types of plans, including policies that permit in- or out-of-network care. Some plans also tailor coverage for individuals with specific medical needs, providing specialty networks and drug formularies.
  • Out-of-pocket limits: Unlike Original Medicare, Part C plans typically set annual out-of-pocket maximums, limiting the amount a participant has to spend on services and supplies each year.

Disadvantages of Medicare Managed Care

Seniors who are considering a Medicare Advantage plan may also want to consider the program's potential disadvantages, which may include:

  • Limited provider selection: Original Medicare participants may seek care from any physician or facility that accepts Medicare. However, many Part C plans require participants to remain in-network for services.
  • Required referrals: Unlike Original Medicare, many Part C plans require participants to get a referral before they can see a specialist.
  • No Medigap: Original Medicare participants may purchase a Medicare supplement insurance plan, sometimes referred to as Medigap, which helps defray out-of-pocket costs such as copays, coinsurance and deductibles. However, Medigap plans aren’t available to Part C enrollees.

How Can You Sign Up for a Medicare Managed Care Plan?

If you’re turning 65 and want to sign up for a Medicare Managed Care plan, you must first enroll in Medicare Parts A and B. The initial enrollment period begins 3 months before your 65th birthday and lasts for 7 months. Once you're signed up, you’ll be eligible to participate in a Medicare Managed Care plan.

You can find available policies in your area by searching Medicare’s plan finder. After selecting a plan, you may purchase coverage directly through the insurer’s website or by scheduling an appointment with a Medicare agent or broker. When enrolling, make sure to have your Medicare card available so you can provide your Medicare number and Original Medicare coverage date.

If you’re already enrolled in Original Medicare, you may switch to a Medicare Managed Care plan during the annual open enrollment period, which runs from October 15 to December 7. Participants who currently have Part C coverage may switch to a different policy during this period. Current Medicare Managed Care participants may also switch coverage during the dedicated Medicare Advantage open enrollment period, which runs annually from January 1 to March 31.

Seniors who’ve lost their current healthcare coverage or have experienced certain major events, such as a move to a new address, may qualify for a special enrollment period.

Can You Switch Back to Original Medicare From Medicare Advantage?

Yes. During the open enrollment or Medicare Advantage open enrollment periods, Medicare Managed Care enrollees may switch back to Original Medicare.

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