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Medicare: Advantage 101

Medicare Advantage: Types Of Plans

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Medicare Advantage health insurance is offered through the following types of plans:

  • Original Fee-For-Service Medicare
    • Similar to the old indemnity type insurance plan, Original Fee-For-Service Medicare allows you to use any licensed doctor or other health care provider, and hospital or other facility that accepts Medicare.
    • For a description of the coverage, see Medicare -- Schedule of Benefits.
    • Many people purchase Medigap coverage to supplement the benefits paid by Medicare.
  • Medicare HMO (Health Maintenance Organization)
    • The most common Medicare Advantage product on the market.
    • The government agrees to pay an HMO a flat, monthly fee. In return, the HMO guarantees to provide you all the medical care you need within the benefit schedule provided by the HMO.
    • Just like private HMOs, Medicare HMOs limit your choice of medical provider to doctors, hospitals, and other medical providers who have contracts with the HMO.
    • In addition to copays and deductibles, Medicare HMOs can charge an additional premium.
    • If you are considering switching to a Medicare HMO, see HMO for a thorough discussion of an HMO and how it works.
    • For special rules concerning Medicare Advantage HMOs, click here. 
  • Medicare POS (Point Of Service)
    • A Medicare POS plan lets you choose when you need care (the "point of service") whether to seek it within the plan's network or to pay more money and go outside the network.
  • Medicare PSO (Provider-Sponsored Organization)
    • A Medicare PSO is very much like an HMO except that PSOs are run by doctors and hospitals.
  • Medicare PPO (Preferred Provider Organization)
    • A Medicare PPO is similar to a Point-of-Service plan: you get almost full coverage if you use network providers, and you receive some coverage for care you get from out-of-network providers. 
  • Medicare Private Fee-for-Service (PFFS) Plans
    • A PFFS plan allows you to obtain care from almost any doctor or hospital, but at a higher rate than Original Medicare pays. You'll likely pay more for your care than under Original Medicare because doctors are permitted to charge more than under Original Medicare. 
  • Medicare Fraternal Benefit Society Plan
    • Religious Fraternal Benefit Society Plans are plans offered exclusively to members by a Religious Fraternal Benefit Society. 
  • Medicare MSA (Medical Savings Account)
    • Medical Savings Accounts were created with the idea of providing an inexpensive alternative to regular health insurance for generally healthy people who rarely needed medical care, while still providing catastrophic protection in the event of a serious medical problem.
    • For people who require ongoing medical care due to either a serious or chronic medical condition, Medical Savings Accounts lose their financial advantage.
    • Veterans and people with Medicaid cannot choose this option.
    • Members of MSAs have freedom of choice about choice of doctor, facilities and other medical providers.
    • Medicare pays the premium for an insurance policy with a high deductible (from $1,500 to $6,000 per year). Medicare deposits the difference between the cost of your premium and what it pays for the average beneficiary in your area into your tax-sheltered Medical Savings Account (MSA).
    • You pay medical bills from the MSA until the deductible is reached.
    • There is no limit on what doctors or hospitals can charge you.
    • You have to make up out of your own pocket any difference, with tax deferred deposits to the MSA, between the deductible and what Medicare has paid into your MSA.
    • You may use any excess in your account for any reason. However, unless the money is used to pay medical expenses, you must pay income taxes on withdrawals.
    • See Medical Savings Accounts for more information on how MSAs work
  • Medicare Social/HMO Demonstration Project
    • The Social/HMO Demonstration Project is a pilot project funded by the Health Care Financing Administration and more than 20 private foundations.
    • The  purpose of the tests is to find out whether a single delivery system-based on the HMO model-can provide and coordinate all of an elderly member's health care needs by providing preventive, acute, and long-term care services as an alternative to nursing home care.
    • A Social HMO is an organization that provides the full range of Medicare benefits offered by standard HMOs plus additional chronic care/extended care services. Membership offers other health benefits that are not provided through Medicare alone or most other senior health plans. Services include:
      • Care coordination
      • Medical case management
      • Prescription drug benefits
      • Chronic care benefits covering short term nursing home care, home and community based services such as homemaker, personal care services, adult day care, respite care, and medical transportation.
      • Other services may be offered such as eyeglasses, hearing aids, and dental benefits.
    • There are currently only four Social/HMOs currently operating: Kaiser Permanente in Portland Oregon, SCAN in Long Beach California, Elderplan in Brooklyn, New York, and Health Plan of Nevada in Las Vegas, Nevada. Unlike regular Medicare HMOs, Social/HMOs can and, with the exception of the plan in Las Vegas, do restrict membership to Medicare recipients age 65 and older.  

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