Medicare was created in 1965 when people over 65 had a tough time finding private health insurance coverage. Medicare has made access to healthcare a mandated right for all Americans at the age of 65. Consequently, older Americans are healthier, living longer, and taking better care of themselves.
How Is Medicare Advantage Part C Funded
Unlike Medicare Parts A & B and Part D, Medicare Advantage (Medicare Part C) is provided by private insurers. Each year a set amount is allocated for each Medicare Advantage enrollee to the private insurers by the government for health care expenses. It doesn’t matter how high or low the enrollee’s costs are, the amount is the same for each person.
The funds for Medicare Advantage come from the same place as the funds for Original Medicare. The Medicare Hospital Insurance, also known as the HI Trust Fund, gets its money from payroll taxes. The HI Trust fund pays for hospital stays, hospice care, and skilled nursing facilities.
The Medicare Supplemental Medical Insurance, or SMI Trust Fund, receives money from Congressional allocations, and from premiums for Part B ($134 in 2018) and Part D. This covers prescription drugs, outpatient care (doctor’s office visits), some preventive services and durable equipment.
The average premium paid by users of the Medicare Advantage (Medicare Part C), according to the Kaiser Foundation, is $43.48 a month in 2018. The Part B mandatory premium, which can vary based on income, is $134 per month. The two combined will cost approximately $177 per month for Medicare coverage for Part C enrollees, which includes prescription drug coverage under Part C.
Things To Consider When Choosing Medicare Advantage (Part C)
One in three Medicare enrollees is signed up for Medicare Advantage (Medicare Part C). The upside of Medicare Advantage is that it’s a lower cost alternative to Original Medicare Parts A & B and Prescription Drug Coverage Part D, based on the monthly premiums paid for the plan.
However, the co-pays and out-of-pocket expenses can be higher. Also, Medicare Advantage insurance plans allow their users only to see doctors that are in their network of providers and often requires pre-authorization for procedures. There can be plan rate hikes as well.
Many seniors choose Part C because of prescription drug coverage at no additional cost. For those who are on many medications, this can be a significant saving in monthly expenses.
- Medicare Advantage Part C caps out-of-pocket expenses at $6700 per year – and with some plans, that amount can be lower. Original Medicare doesn’t have an out-of-pocket maximum.
- Some Medicare Advantage plans cover vision and dental care.
- If you are still working when you turn 65, it’s not a good idea to choose Medicare Part C. You could lose your employer-sponsored coverage if you opt for Medicare Advantage.
- For those who like flexibility and choices when it comes to their medical care, Part C is not a good option. A better choice would be Medicare Parts A & B, Prescription Drug Coverage Part D, and a Medigap plan to help pay for the deductibles and co-pays.
- Your initial 7-month enrollment for Medicare Advantage begins three months before you turn 65, the month of your 65th birthday, and three months after you turn 65.
Enrollees In Medicare Advantage Are Increasing
In 2017, 34.6 percent (20.4million) of Medicare recipients enrolled in a Medicare Advantage Plan (Part C). That’s a significant increase over 2009 (pre-ACA) when 23% (10.5 million) signed up for Part C.
It’s important to think carefully about what your priorities are when it comes to your medical care and what will work best for your lifestyle, your budget, and your health. For more information on Medicare Advantage and Medigap plans and what will be the right decision for you, fill out this form.