Medicare Advantage (MA) plans contract with Medicare on an annual basis. Medicare pays each MA plan a fixed monthly amount for each member. This amount varies by county and is readjusted each year based on a Medicare formula. In turn, the MA plan must provide, at minimum, all Medicare-covered services. The MA plan may also offer additional services not covered by Medicare, such as preventive care, hearing aids, dental care and eye exams. These additional services vary by geographic area.
Many MA plans also charge a monthly premium that can vary by region. This is in addition to paying your Medicare Part B monthly premium. Most MA plans also require a copayment for services, such as doctor visits. Sometimes these copayments are lower than the cost-sharing in Original fee-for-service Medicare, and for certain services, they are more.
As of January 2011, however, MA plans can no longer charge more than Original fee- for-service Medicare for kidney dialysis, chemotherapy and skilled nursing facility (SNF) stays. This change is due to health care reform.
Also as of January 2011, MA plans must establish a mandatory maximum out-of-pocket (MOOP)amount for all Medicare Parts A and B services. After meeting the MOOP, the plan will cover 100% of your remaining Medicare-covered costs for the rest of the calendar year. In 2012, the mandatory MOOP will be $6,700, but plans can voluntarily set a lower MOOP at $3,400 and have more flexibility in setting their cost-sharing amounts.
Many MA plans offer prescription drug coverage. These plans are often referred to as MA-PDs. Other plans do not offer Medicare Part D drug coverage and are referred to as MA-only plans. If you enroll in an MA-PD, you do not need to enroll in a stand-alone Prescription Drug Plan (PDP). If you join an MA-only plan, you may or may not be allowed to join a separate Medicare Part D plan, depending on the type of MA plan you choose.
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