Medicare isn't a single kind of plan that all enrollees are stuck with. It offers many choices, and one of the most compelling options is frequently overlooked, as many people are not aware of it. That's the Medicare Advantage plan. Let's learn more about it by exploring the answer to the "What is Medicare Part C?" question.
Backing up a bit, remember that while Medicare often goes by just one name, it actually has many parts and offers eligible Americans many choices. Traditional (or "original") Medicare includes Part A (hospital coverage) and Part B (physician/medical insurance). Many enrollees also sign up for Part D (prescription drug coverage), which comes in many forms, too. And on top of that, some folks add on a private Medigap plan to pay for more of what Medicare doesn't cover.
That's a lot, but we're not finished. Because there's still that mysterious Medicare Part C.
What is Medicare Part C?
Part C refers to Medicare Advantage plans, which debuted in 1995 in order to offer Americans of a certain age (those 65 and older) more options than just Medicare. These plans are bound by government regulations -- but they're offered and administered by private insurance companies, such as UnitedHealth Group (NYSE: UNH) or various Blue Cross Blue Shield organizations. The Medicare program pays these insurers a set sum per enrollee to provide coverage, and the insurers design and price their plans accordingly.
A Medicare Advantage plan must offer at least as much coverage as Medicare (i.e., Part A and Part B benefits, respectively covering hospital and medical services), but it will often sport more than that, such as vision care, dental care, and/or prescription drug coverage, in order to attract customers.
You can generally switch in or out of Medicare plans once a year. Image: MedicareMall.com, Flickr
What you need to know about Medicare Part C
First off, if the idea of declining original Medicare coverage and opting for Medicare Part C is scary, know that it won't be a permanent decision. At least once a year, you will be able to switch between them, during the usual enrollment period.
Here are a few more things you need to know:
- You're still in the Medicare system, with the same coverage, rights, and protections as those in original Medicare plans.
- Medicare Advantage plans can't charge more than original Medicare plans for certain services such as chemotherapy, dialysis, and skilled nursing facility care.
- Some (but not necessarily all) Medicare Advantage plans will require you to get a referral to see a specialist within its network of doctors. (This may sound limiting, but many plans feature big networks with excellent doctors.) Seeing a doctor outside the network might cost more.
- When you're limited to a plan's network of doctors, it will typically limit you geographically to where the plan is based. If you travel a lot, you often won't be near in-network doctors.
- Medicare Advantage plans feature yearly caps on your out-of-pocket costs for medical services. Once you've hit that limit in spending, any covered services will be free. Compare plans, though, because the limit can be different between them, and can change from year to year. The average out-of-pocket cap was recently $5,223, but many plans feature limits below $3,000.
Overall, Medicare Advantage plans are well worth checking out. Many Americans agree, because Medicare Advantage plans already make up 31% of the Medicare market, and that share is growing.
What to do
Now that you know about Medicare Part C, Medicare Advantage plans, consider checking to see which ones are available in your area. You can go to the Medicare website and click on the "Find Health and Drug Plans" button to start the process. Learn about plans available to you and see whether any make the most sense for you.
