Medicare Advantage (MA) plans have played a larger role in the Medicare program as the share of Medicare beneficiaries registered in Medicare Advantage plans has steadily climbed over the past few years. The trend in enrollment growth is continuing in 2017 and has occurred despite a deduction in payments to plans that was enacted by Affordable Care Act of 2010 (ACA).
Medicare Advantage plans are a private alternative to original Medicare. Recent data show that one-third of Medicare beneficiaries enrolled in Medicare Advantage plans in 2017.
Enrollment is projected to continue to grow over the next decade, rising to 41 percent of all Medicare beneficiaries by 2027. You might be wondering why an increasing number of people are choosing Medicare Advantage plans over traditional Medicare. I’ve listed the reasons below:
- Low or Zero Premiums
In 2017, the average MA-PD enrollee pays a monthly premium of only about $36, which is even $1 per month less than in 2016. Medicare Advantage plans all have low or zero premiums. You’ve read that right – some have zero premiums. You just have continue paying your Part B premium.Actual premiums paid by enrollees varies across and within countries, by Plan type and benefits offered. Average premiums range from $28 per month for HMO plans to $55 per month for local PPO plans and $41 per month for regional PPO plans.
HMO plans usually restrict coverage to in-network services with these exceptions: emergency care, out-of-area urgent care, and out-of-area dialysis. On the other hand, PPO plans provide more coverage when you use in-network providers, but still offer some coverage if you need an out-of-network provider.
- A Maximum Limit to Your Out-of-pocket Costs
The Medicare Advantage plans limit your out-of-pocket expenditure under Medicare Parts A and B. In the year 2017, the average out-of-pocket limit is $5,219 for MA-PD enrollees. If you have an HMO plan, you’ll probably have even lower out-of-pocket limits than those with PPO plans.With Medicare alone, there is no limit as to how high your out-of-pocket costs can go in any given year. Once you have paid medical expenses out of your own pocket totalling the out-of-pocket limit set by your plan, your Medicare Advantage plan will pay all of your medical expenses for the remainder of the year at 100 percent. This is one of the most important reasons that you would be better off with an MA plan, compared to just original Medicare by itself.
Looking to the future, Medicare Advantage plans enrollment and penetration rate will continue to grow over the next decade. If you wish to limit your out-of pocket expenses, a great option is a Medicare Advantage plan. This is less expensive than original Medicare with a Medicare supplement plan, while still limiting your out-of-pocket costs. However, keep in mind that MA plans do restrict which doctors you can see, whereas with original Medicare plus a Medicare supplement plan, you have virtually zero out-of-pocket costs, and can see any doctor who accepts Medicare.
Wiley Long is founder and president of Medigap Advisors, and is passionate about helping people navigate the confusing waters of Medicare. He is the author of The Medicare Playbook: Designing Your Successful Health Coverage Strategy, a clear and simple explanation so you can make the most of your Medicare coverage. For more information visit www.MediGapAdvisors.com.