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Many Medicare beneficiaries elect Medicare replacement plans. Most don’t realize what they’re giving up to join that type of policy. When you decide to join a Medicare Advantage Plan, you’re replacing Original Medicare. Then your claims become the responsibility of the insurance carrier you choose. Medicare pays the insurance company a lump sum annually for each person they enroll in an advantage plan.
How Does a Medicare Replacement Plan Work
Since Medicare replacement plans receive funding from the government, the premiums are low; some are $0. However, in most cases, you have to pay your Medicare Part B premium in addition to any premium by the Medicare replacement plan. Then, the insurance company will handle your claims and coverage determinations instead of Medicare.
If Medicare would’ve approved coverage for a service and the replacement plan denies it, the only thing you can do is file an appeal. Although, it’s much easier to get Medicare to cover something than to get a private insurance company to approve a service.
What Are Some Additional Benefits of Medicare Replacement Plans?
There are some benefits to having a Medicare replacement plan. Medicare states that these plans must cover at least the same benefits as Original Medicare. Sometimes they will throw in additional benefits. Dental, vision, and hearing are usually the main benefits these types of plans use to entice Medicare Beneficiaries.
In most cases, the coverage is minimal and only covers preventative needs. Most seniors that enroll in these benefits need to have something a little better than preventative benefits. Another benefit some plans use to attract members is a gym membership or transportation benefits to assist the beneficiary in getting to their doctor’s appointments.
Is a Medicare Advantage Plan the Same as A Medicare Replacement Plan?
Do Medicare Replacement Plans Have Restricted Networks?
Yes, these plans restrict you to the insurance company’s network of doctors, specialists, and hospitals. Original Medicare gives beneficiaries the freedom to see any doctor nationwide that accepts Medicare.
In most Medicare replacement plans, there are no out of network benefits unless in an emergency. Keep in mind that the emergency room doesn’t count as an emergency unless admitted. The plan administrator makes that decision. Your entire visit could be entirely your responsibility with no assistance from your insurance.
Of course, some Medicare replacement plans are PPO Networks that allow you to see out of network providers, at a higher cost.
This is better than having no coverage but still can be a considerable burden on Medicare Beneficiaries living on fixed Incomes. In most cases, you must see the primary doctor get a referral for a specialist.
These plans lock you in for a calendar year starting January 1st; then, the doctors and providers can leave the networks at any time.
Does Medicare Advantage Replace Medicare?
Do Specialty Hospitals Accept Medicare Replacement Plans?
Most specialty hospitals do not take Medicare replacement plans. This is due to not wanting to accept the low payment from those plans. This means that when you come down with a significant illness, it will severely limit your choices of where you can go for treatment.
With major illnesses, you are covered much more comprehensive with Original Medicare and a Medigap plan. While the Medigap will cover the majority if not all of the medical costs, over 50% of the price dealing with a major illness can be non-medical.
You should consider a critical illness plan that can provide you with living benefits. A lump sum tax-free payout if you are diagnosed to help offset these non-medical costs.
Can I Switch From a Medicare Replacement Plan Back to Original Medicare?
The Medicare Advantage Open Enrollment Period runs from January through March. It’s an opportunity for beneficiaries to change from Advantage back to Original Medicare. Recipients can also change coverage during the Annual Enrollment Period.
Also, during Special Election Periods, beneficiaries can change coverage. Determining eligibility can be challenging. When you work with a Medicare expert, you’ll save time and money. Our agents can identify your eligibility for coverage, help you find a policy, and enroll you in the plan.
Once you switch from Medicare Advantage back to Medicare, you’ll use the Medicare card at the doctors instead of the Advantage card.