Medicare Advantage Plans exist as a managed care alternative to Part A and B. Below, we discuss what these plans are, why Medicare created them, and why they are still in use today.
Why Were Medicare Advantage Plans Created?
Advantage Plans were implemented under President Bill Clinton with the Balanced Budget Act. This law created Part C of Medicare.
Private policies have been a part of Medicare since the 1960s. However, this is the first time the plans saw significant regulation. This law was one of many creating substantial changes to the Medicare system.
History of Medicare Advantage
Originally called Medicare+Choice, what is now Medicare Advantage, or Medicare Part C, began with one goal in mind. That goal is to reduce the spending costs of the Medicare program. With the passage of the Medicare+Choice provision in 1997, private insurance companies can assume 100% of risks associated with Medicare beneficiaries on their Advantage plans.
In 2003, Medicare Part D creates another level of complexity to now Advantage plans. The program added prescription drug coverage during this time. Today, most Advantage Plans offer prescription drug benefits.
Why Are Advantage Plans Widely Used?
Often referred to as All-In-One plans, Medicare Advantage is popular amongst beneficiaries who want all their benefits in one policy. Advantage plans typically have low monthly premiums, which attracts beneficiaries looking for coverage on a tight monthly budget.
In 2021, nearly 26 million Medicare beneficiaries enrolled in an Advantage plan. This number fluctuates as the plans become stricter with networks and high out-of-pocket costs each year.
Benefits of an Advantage Plan
Significant benefits of Advantage plans include low monthly premiums, a limit to your out-of-pocket maximum, and additional benefits including dental, vision, and hearing, as well as prescription drug coverage on select plans.
Medicare Advantage plans exist as a useful alternative for those who are not going to the doctor or hospital regularly and want catastrophic coverage in case of an emergency event.
Accompanied by copayments, coinsurance, deductibles, and more, Medicare Advantage plans often reduce month-to-month spending but often exceed the annual costs of Original Medicare with a Medicare Supplement policy.
What is the Purpose of an Advantage Plan?
The overall purpose of Medicare Advantage is twofold. First, it transfers the beneficiary’s risk to a private insurance company, thus saving money for Medicare. Secondly, it expands the benefits of Original Medicare while lowering costs for its beneficiaries.
Essentially, these plans allow beneficiaries to not think about where to go to get healthcare. Advantage plans include networks for doctors, hospitals, and facilities that the policyholder can utilize. They also offer additional benefits allowing the policyholder to use one I.D. card when receiving all forms of care.
The Future of Medicare Advantage
The future of Medicare Advantage remains unclear. With annual changes to the Part C program, we can expect advancements in the future. With Medicare Advantage’s initial objective being to reduce spending for the beneficiary, we hope that the future of Part C reflects its original mission.
How Do I Know if Medicare Advantage is Right for Me?
MedicareFAQ serves as a resource for all things Medicare. To review your current coverage, you can use our online rate comparison form or call the number above to speak with a knowledgeable licensed agent.
We work with beneficiaries nationwide, helping them understand everything there is to know about Medicare coverage. We ensure that each of our clients is satisfied with the information they receive and we recommend the best coverage to fit their needs.