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Medicare Part C Benefits: Medicare Advantage Plans

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Medicare is a socialized insurance program that is funded by the Federal Government and was first established during the 1960’s. Originally, Medicare included two Parts, Part A and Part B, and was both funded and administered over solely by the Government. However, beginning in 1997, a new part of Medicare was added that allowed those on Medicare to opt to use a private insurance plan, instead of the traditional federally run plans. These plans are called Medicare Advantage Plans and are under Part C of Medicare Benefits.

What Are Medicare Advantage Plans?

The idea behind Medicare Advantage Plans is that the actual plan itself is run by private insurance companies. The plans are still funded by the Federal Government, but are actually administered over by the private health industry. Medicare Advantage(MA) Plans, were added onto Medicare as part of the Balanced Budget Act of 1997 and in 2003, Prescription Drug Coverage was added as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

Like traditional Medicare Plans, such as Part A Benefits, the insured usually has to pay a premium when using an MA plan. MA plans are also required to cover anything that regular Medicare would, but are given a good deal of leeway in how they implement their insurance program. So, for example, an MMA plan is required to help cover the cost of a doctors visit, but they may require a higher co-pay than traditional Medicare.

Many Medicare Advantage Plans will also cover some things that traditional Medicare does not, in an effort for the Private Insurance Companies to get people to use their programs.

Dangers of Using Medicare Advantage Plans

Since the private insurance companies run MA plans and are allowed to make some changes to what they charge or how they cover certain things, it is important to be very careful when choosing a plan. It is important to compare the benefits and costs of the plans to traditional Medicare, taking into account the needs of the insured. It is also important to compare the different Medicare Advantage Plans available, as they can differ too.

Again, because MA Plans are run by Private Insurance instead of the Government, many patients find that they have difficulty getting items covered and must fight the insurance companies, who are, after-all, out to make a profit. Each year, a great deal of those who signed up for MA plans, wooed by the extra perks, like dental coverage, decide to switch to the Federally run programs, with about a third of these people citing problems getting coverage through the private insurance companies.

Cost to the Taxpayers

In addition to many finding that the for-profit Medicare Advantage Plans do not provide adequate coverage and making claims is often met with resistance from the private insurance industry, these plans are also much more expensive to the taxpayers.

On average during 2005, these plans cost the taxpayers about 12.5% more than traditional Medicare, with the private insurance companies usually earning at least 6% profit.

When you take into account the fact that so many people are dissatisfied with MA plans and the added cost to tax payers, it makes it very hard to support allowing Private Insurance to become involved with Medicare. However, as can be seen from the current health care debate, Private Insurance Lobbyists have a very deep hold on the Senate and the President.

Medicare Part D Benefits-Prescription Medicine

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Medicare went into effect during the mid-sixties and for about forty years, did not provide any real coverage for prescription medicine. This changed on 01 January, 2006, when coverage of prescription medicine was added as a result of the Medicare Prescription Drug improvement and Modernization Act that was passed in 2003, but did not go into effect right away.

Today, Prescription Drugs and Medications are offered as Part D Medicare Benefits, which helps cover the cost of some medications.

Who is Eligible for Part D Benefits?

Enrollment in Part D Benefits is not required and instead is offered as a voluntary plan for those who are eligible to receive Medicare. However, those that do not enroll in it right away when they first become eligible, may face an increase of premiums if they decide to enroll later. Usually, a 1% increase in Part D premiums is added for each month that a patient does not enroll in Part D.

Who Runs Part D Prescription Plans?

While Medicare is, of course, funded federally, Part D is actually run by private insurance companies that are reimbursed through Medicare. There are two basic options, which allow a patient to either enroll in a Medicare Advantage Plan, which will mean that their entire Medicare Benefits will be administered by private insurance companies, or they can opt for a stand-alone Prescription Drug Plan, leaving their other benefits, like Part A and Part B, to be administered by the Government.

It is important to note that Medicare Advantage Plans are given some leniency in how they offer Medicare Benefits. They are still required to cover everything that Medicare Covers, but the private insurance companies are given flexibility in how they offer this coverage. In the end, this means some plans might offer lower co-pays for hospital stays, while offering higher rates on other things like durable medical equipment. As a result, before signing up for a Medicare Advantage Plan, it is imperative to compare its coverage and premiums both to traditional Medicare, as well as other Medicare Advantage Plans.

How Much Does Medicare Part D Cost?

In terms to the cost of premiums and out of pocket expenses, there is a deductible of around $275 that must be met, as well as a limit of about $2,500 that is the ceiling of how much medication will be covered each year. Of this $2,500, the patient must pay 25% or about $625.

After the initial ceiling of $2,500 is reached, the patient then must cover the next $2000 out of their own pocket, but once their total prescription costs is over $4300, Medicare will offer the patient a discount on their generic and brand name medications. Of course, this coverage gap, which is often called the Donut Hole, sneaks up on many patients, who are not completely aware that of the initial $2500 limit.

As a result of the coverage gap, many people find that it is very important to budget their medications throughout the year, paying for less expensive generics out of pocket and only using Medicare for their more expensive medications. This makes a lot of sense when you consider that Target and a few other larger companies often offer $4 generics, which would end up costing a lot more with Medicare.

Are All Drugs Covered by Part D Benefits?

No, only drugs that have been approved by the Federal Drug Administration(FDA) will be covered. There are also a number of medications that have been approved by the FDA, but are not covered by Medicare. This includes barbiturates, drugs like Viagra or those used to induce female fertility, drugs for hair growth, drugs to help with weight loss or weight gain, and prescription strength vitamins.

Problems with Part D Benefits

One of the biggest problems with Part D is that the government is literally not allowed to negotiate the cost of medications with the Prescription Drug Makers. Instead, in what is surely an indication of how important corporate lobbying is, Medicare must pay what ever the prescription drug makers require, even though other organizations, like the Veterans Administration(VA), pay a great deal less for the same drugs.

Also, when you take into account the Donut Hole, which means that Medicare will only cover the first $2500 and then offer assistance for anything over $4500, it ends up leaving the average citizen holding the bag as it were. It also means that if someone spends $4500 a year on medication, the true discount by using Medicare is only 50% of the cost.

There have also been studies that those who use Medicare Advantage Plans are 40% more likely to die than those who use similar plans offered by the VA, in what could be a strong argument against using a for profit health-care system. Source.