Medicare Advantage plans at 65

Medicare Advantage Plans

Do you know how Medicare Advantage Plans are different than Medicare Supplements?

Did you think there wasn’t really much of a difference at all?  Maybe you even thought they meant the same thing.

Back in Chapter 4, we went over how Medicare Supplement plans work.  Those plans are also called Medigap plans.

In this chapter we’re going to look at the nuts and bolts and see how these MAPD plans work.  They are very, very different from Medigap plans.

And if we go back to our chart that shows the big picture of Medicare, we see again that we can either pick one plan or the other.

Medicare Advantage plans

So what makes these plans so different from Medigap plans?  Let’s first take a look at how they’re defined…

MAPDs Defined

MAPDs are comprehensive healthcare plans offered by private insurance companies used in replacement of Original Medicare (Parts A & B) to provide healthcare coverage for medical, inpatient, and often prescription expenses.  They’re often called Part C of Medicare.

Does that term “replacement” scare you a little?  More on that later.

All MAPDs have a group of doctors, hospitals, and other healthcare providers that accept that particular plan.  Otherwise, depending on your plan, you may either have to pay more to see a doctor that doesn’t participate as an in-network provider, or you may not be covered at all.

Providers that take Original Medicare don’t have to take MAPDs.  They can pick and choose which ones they do.  And, they can change their mind at any time.

When you have an MAPD, you no longer have Original Medicare.  This means you don’t need to show your Medicare card at the doctor, only your MAPD card.

With an MAPD, every time you use your plan for care, you are following the plan’s rules.  You pay the copays they tell you, you see which doctors they work with, and are eligible for benefits that the plan determines.  This means with an MAPD you no longer have the Original Medicare out-of-pocket (OOP) amounts we went over in Chapter 1, but rather have OOP amounts that the MAPD chooses.

Now you still need to have enrolled in Parts A & B in order to enroll in an MAPD.  Most MAPDs also charge a monthly premium (just like Medigap plans) in addition to Medicare premiums.  The plans use this premium and some of your Original Medicare dollars as funding in order to provide your healthcare coverage.

Alright, let’s check out two of the most common types of MAPDs and see how they’re different from each other…

Preferred Provider Organizations (PPO)

A PPO is one of the most popular types of MAPDs.  With a PPO you usually have a fairly large network of healthcare providers to choose from, although not nearly as large of a choice of doctors that accept Original Medicare.

If a provider accepts that particular PPO, they’ll either be considered in-network or out of network.  For out of network providers, you’ll pay more in OOP expenses like copays and coinsurance when you see them.  You usually can see any doctor you want to without getting a referral first.

Health Maintenance Organizations (HMO)

An HMO is another popular type of MAPD.  HMOs will have networks that are much smaller than PPOs.  If the provider you want to see doesn’t take your HMO, then you’re not covered at all, even by Original Medicare.  This is because when you join an MAPD you’re agreeing to follow their rules, not those of Original Medicare.

One thing to point out with any MAPD is that in any emergency situation and most situations where you need urgent care, your MAPD will still cover you just as if you are in-network.  This is even true if the hospital or facility you get treated at is not in the network.

HMOs usually require you to get a referral from your primary care physician (PCP) to see a specialist.  Because of this, your PCP is often called a “gatekeeper” for your healthcare.  It makes it easier for them to manage your care since they know everyone in-network you’re seeing.

HMO’s will sometimes have what’s called a point-of-service or POS option.  This POS option will give you the option to go outside of the immediate HMO network to get certain types of care.  But, you likely will pay a higher OOP cost to see these providers.  This makes this type of an HMO a little more similar to a PPO.

Because HMOs have more of these restrictions like smaller network size and getting referrals, they don’t cost as much as PPOs.  They will have lower monthly premiums, deductibles, and/or max OOP amounts compared to PPOs.

So if you’re leaving Original Medicare, and agree to be covered by these types of managed care plans, there have to be good reasons to pick these options right?  I mean, what’s the catch?  Well, let’s take a look in what I like to call…

The Good, the Bad, and the Ugly of MAPDs

First let’s look at…

The Good

MAPDs do give you some added benefits over Original Medicare with a Medigap plan.  The biggest advantage is:

A lower average monthly premium

On average, MAPDs have lower premiums than Medigap plans.

A few reasons for this are that in many areas you can get an MAPD for $0 additional premium.  Now you still have to pay your $148.50 monthly Medicare premium.  But you can get an MAPD plan for $0 and it can still has to cover all services that Original Medicare would cover.

The biggest benefit to getting a $0 premium plan is that every MAPD has a max OOP amount for each calendar year.  This means if you have a bad health year, the plan will have a cap on the amount of money you’re responsible for coming up with for deductibles, copays, and coinsurance.  If you just went with Original Medicare and no Medigap plan because you didn’t want to pay a monthly premium for secondary insurance, you would be responsible for all the Part A & B OOP costs with no limit!

$0 premium MAPD

Another reason that MAPD premiums tend to be lower is because premiums are not based on your age.  A 65 year-old pays the same monthly amount as a 95 year-old.  Compare this to Medigap plans that tend to increase as you get older because the premiums are usually based on your age.

One more reason MAPD plans will have lower premiums is because most of them include prescription drug coverage in the plan.  This means the plan not only covers Part A & B services like inpatient and doctor’s services, but also Part D coverage similar to standalone plans (PDP) we looked at in the last chapter.

MAPD drug coverage

Remember that if you want Part D coverage with a Medigap plan, you also have to get a PDP.  This involves paying two separate premiums.  With an MAPD, you only have one premium.

Dental, Vision, and Hearing benefits

We learned back in Chapter 1 that Original Medicare doesn’t cover any dental, vision, or hearing costs that aren’t medically necessary.  However, a lot of MAPDs offer things like teeth cleanings or routine eye exams once or twice a year for no copay.  They can even throw in a small benefit like $100 in any given year towards glasses or maybe $500 every few years towards a new set of hearing aids.  Usually the more expensive the MAPD premium is, the richer the benefits.

MAPD dental
MAPD vision

Easier to coordinate care

It can be a bit easier to coordinate your healthcare with a managed care MAPD especially like an HMO.  HMOs usually require your primary doctor to give you a referral to see a specialist, so he or she knows what other healthcare providers you’re seeing and why.  They’re usually able to keep up with all of your tests and treatment results since the doctors usually operate in the same network.

If you have Original Medicare, you have to take a bit more responsibility and make sure your primary doctor stays up to date on what’s going on with your health.


Most MAPDs will throw in things like free gym memberships at participating locations, or a discount on exercise equipment if you like to workout at home instead.  Sometimes they’ll even include some rides to and from your medical appointments or even a certain dollar amount to use toward installing safety equipment in your home like grab bars in the shower.

So far these plans seem too good to be true, right?  Well, keep reading…

The Bad

Higher potential OOP amounts

Even though MAPDs can usually save you money every month in premiums, they have much higher potential OOP amounts.

With MAPDs, pretty much every time you use your plan, you’ll pay something.  Now, some plans will cover things for $0 copays like visits with your primary doctor, routine blood work, Medicare-covered preventive tests, or a teeth cleaning.  But, in general, you’ll have some type of copay for every visit, test, treatment, outpatient procedure, surgery, day in the hospital, physical therapy visit, etc.

Every time you pay OOP, it goes toward your max OOP.  These max OOP amounts usually range anywhere from $2,000 - $10,000.  Like I mentioned above, if you have a PPO your max OOP tends to be larger than if you have an HMO.  Also, if you have a PPO and get treatment out of network, you’re looking at much larger OOP amounts and limits.

So, if you have a bad health year or you’re managing one or more chronic conditions that require hospital stays or expensive medical treatments, you could spend several thousands of dollars each year on OOP expenses in addition to both Medicare and MAPD premiums.

It’s also worth noting that the max OOP amount does not include Part D OOPs.  This means the amount you pay in copays when you have your prescriptions filled work very much the same as they do with a standalone PDP as described in the last chapter.  There is no max OOP with any Part D coverage.  This may be a bit different than the current plan you’re on because a lot of group or individual non-Medicare plans tend to lump prescription and healthcare OOP amounts together.


Network restrictions

Every MAPD will have a list of healthcare providers that accept that particular plan.  This selection of providers will be much smaller than your choice of who you could see if you had Original Medicare with a Medigap plan.

These restrictions can be very different based on the MAPD and based on where you live.  Some MAPDs won’t cover you at all if that doctor doesn’t accept your plan; some will offer limited coverage out-of-network but at higher OOP amounts.

Restrictions will almost always limit your choices outside of your state, often limit who you can see outside of your region in your state, or even outside of the county you live in.


We mentioned above how it can be easier for your care to be coordinated if you have an MAPD because it’s easier for everyone in your network to get on the same page.  If your doctor has to refer you every time you want or need to see another provider, then he or she can manage your full healthcare picture a bit easier.

But I find that most people consider this an inconvenience.  It can be hard enough to get an appointment to see the type of specialist you want to.  Now once you start to add in the wait times of getting a hold of your PCP, then the days and weeks it could take to get the referral approved, the chance it could be denied and you have to meet with your PCP first, or not getting to see the exact specialist you want to, all of this can make the referral process a big headache.  (And now you might need a referral to get the headache looked at…sorry, just kidding)


We’ve already covered the out-of-network restriction issues with MAPDs.  So just keep them in mind if you’re someone that likes to travel, especially within the U.S.

If you’re a snowbird and like to spend several of your winter months in the warmer states, you may have a large fraction of your year where the numbers of providers available to you that accept your plan are little to none.

You’re always covered in an emergency situation.  But even then you’re expected to notify your plan as soon as possible of your situation.  And, they will likely limit your coverage to the actual emergency.  So if you need follow up visits, tests, therapy, etc., you likely need to go back home to pay the lower in-network rates or possibly be covered at all.

Higher Drug Costs

We showed in the last chapter how to use the Medicare Plan Finder to find the most cost-efficient drug plan for you based on what prescriptions you plan to be on the rest of the year and which pharmacy you’ll use to pick them up at.  This method allows you to pick the best coverage from usually over 20 available plans.

However, with most MAPDs you must take whatever Part D drug coverage comes with the plan.  You usually can’t select a separate standalone drug plan (PDP) to go with the part of your MAPD that covers hospital and doctors services.  Usually the MAPDs with the richer Part D coverage have a more expensive premium.  This means you’ll often spend more for Part D OOP costs with an MAPD than with a PDP.

The Ugly

MAPDs can be dangerous.  I almost compare them to a car with a lot of bells and whistles, a lot of creature comforts, but doesn’t provide nearly as good of protection if you’re in a crash.

Ok, that might be a little extreme.  But you get my point.

The old adage says “You get what you pay for”.  How comprehensive do you expect a healthcare plan to be that you pay nothing for?

Like any insurance, you don’t realize what you have until you actually have to use it, to make claims on it.  Saving money every month in premiums is nice, but what are your options when you are going through something where you actually have to rely on your insurance to cover you?

Another thing to keep in mind is if you would take all the money you’re saving in premiums for a rainy day, so to speak.  If you spend $100 less per month for an MAPD compared to what you’d spend for a Medigap plan + PDP, are you putting that money aside to use if or when you have OOP expenses?  In my experience, most people don’t.

There’s always going to be trade-offs.  On the one hand you get low premiums, some dental and vision benefits, and a free gym membership.  On the other hand, you’re severely limited to your choice of healthcare providers, nationwide hospitals, and treatment clinics, and exposed to thousands of dollars every year in potential out-of-pocket expenses.

In addition, when you’re turning 65, you can choose any Medicare plan you want to with no health questions.  If you pick an MAPD and start to experience their downsides, it’s likely at a time in your life where you’re going through health issues.  Like we talked about in Chapter 4, Medigap plans are allowed to ask health questions if you apply for them later.  So the very time you need a Medigap plan the most will be the time where it would be the hardest to qualify for.

MAPD Prescription Drug Coverage

We already talked about how most MAPDs cover prescription drugs (Part D), but what kind of coverage do they offer?

Well, the first thing to point out is that they will still have the 4 phases of coverage we went through in the last chapter.  As a recap, those 4 phases are:

  1. Deductible, anywhere from $0 - $445 maximum
  2. Initial Coverage Level, until total full drug cost is $4.130 for the year
  3. Coverage Gap (or Donut Hole), until your True Out-Of-Pocket (TrOOP) reaches $6,550 for the year
  4. Catastrophic Coverage, for the rest of the year

And just like with standalone PDPs, there are no maximums on how much you could spent on Part D copays and coinsurance.

Usually the more expensive your MAPD premium is, the better your Part D coverage will be.  This means higher premiums generally mean lower drug copays for you, and vice versa.

You can still go thru the Medicare Plan Finder we went into great detail with last chapter.  In fact, the pictures I've used in this chapter have come from the Plan Finder.  The only change you need to make to look at MAPDs instead of PDPs is to check the 2nd box that says “Medicare Health Plans with drug coverage” in Step 4 of 4: Refine Your Plan Results.  You can also check the 2nd box that says “Medicare Health Plans without drug coverage” if you want to look at plans without Part D included.

Medicare Plan Finder - MAPDs


So now that we’ve gone through each of your two options for Medicare secondary insurance, which one is going to be best for you?  That’s what we’ll dive into in the next chapter.

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