What is a Medicare Part C plan?
A Medicare Part C (also called Medicare Advantage) plan is a private insurance policy that replaces Medicare Part A and Part B. In other words, if you enroll in a private Medicare Part C plan, you no longer receive coverage through Medicare Part A or Medicare Part B.
Medicare Part C plans are regulated by the federal government, which requires every plan to provide at least the same coverage as the government-run Medicare Parts A and B. Medicare Part C plans eliminate some Medicare co-payments and deductibles, just as a Medigap insurance policy does. And like Medigap policies, Medicare Part C plans provide coverage for some gaps in Medicare Part A and Part B coverage. For that reason, if you enroll in a Medicare Part C plan, you don't also need to buy a Medigap policy.
Keep in mind that each Medicare Part C plan is slightly different, depending on what that plan's private insurance company chooses to offer beyond basic Medicare.
Why look at Medicare Part C plans? The slightly broader coverage than Medicare Part A and Part B is one reason, but the main benefit is cost. Total out-of-pocket expenses with a Medicare Part C plan are usually lower than expenses with the combination of traditional Medicare Parts A and B plus a Medigap insurance policy. (But there are also real disadvantages with Part C plans; see What are the disadvantages of Medicare Part C plans?)
Who's eligible for Medicare Part C coverage -- and what types of plans are included?
If you're eligible for Medicare Part A and Part B, you can join a Medicare Part C plan instead. To join one, though, the plan's insurance company must be offering it in the region -- usually a county or group of counties -- where you live. And that particular plan must be accepting new enrollees.
Medicare Part C plans come in two basic types:
- Managed care
Medicare Part C managed care plans: There are several kinds of managed care plans, but they all operate under the same basic rule: You get full coverage only if you see a healthcare provider who is a member of the plan's "network." The most common, least expensive, but most restrictive Medicare Part C managed care plans are health maintenance organizations (HMOs). There are also Medicare Part C preferred provider organizations (PPOs) and Part C HMOs with a point-of-service (POS) option that add certain variations to basic HMO rules.
Medicare Part C fee-for-service plans: A Medicare Part C fee-for-service plan works differently than a managed care plan, without the same "network" limitation of managed care. Instead, a Medicare Part C fee-for-service plan allows you to see any provider, but only if that provider accepts the plan's restrictions on the particular medical service and accepts the amount the plan is willing to pay for that service.
How does a Medicare Part C managed care plan work?
Medicare Part C managed care plans are required to cover any medical service that would be covered under Medicare Part A and Part B. Also, many Medicare managed care plans add some coverage (though usually not much) that isn't covered by Part B. Each plan decides what extras it will offer (see "Do Medicare Part C plans offer broader coverage than Medicare Part A and Part B," below).
With Medicare Part C HMO plans, there are important restrictions on how you get your care:
- To get coverage from a Medicare Part C HMO plan, you can obtain care only from doctors, hospitals, and other healthcare providers who belong to the HMO's official "network" -- meaning providers who are under contract with the HMO.
- A Medicare Part C HMO plan won't pay for care by a specialist unless referred by your HMO-network primary care physician.
- Under a Medicare Part C HMO plan, you might not be covered for certain kinds of care unless the plan approves that care in advance.
- You have limited rights to appeal a decision made by the Medicare Part C plan with regard to the care they won't cover.
Two other types of Medicare Part C managed care plans, slightly different from HMOs, are available in some places. One is an HMO plan with a point-of-service (POS) option; the other is a preferred provider organization (PPO) plan. With either of these Medicare Part C plans, you can see a provider outside the plan's network, or see a specialist without first getting a referral -- but the plan will pay a smaller amount of the bill. These plans are less common than Medicare Part C HMOs and might not be available where you live.
How does a Medicare Part C fee-for-service plan work?
Medicare Part C fee-for-service plans don't restrict your choice of doctors to a specific network list, the way managed care plans do. With a fee-for-service plan, you can go to any doctor that participates in Medicare. And if your doctor refers you to a specialist, you don't need the fee-for-service plan's permission in order to get coverage. But Medicare Part C fee-for-service plans have significant restrictions of their own, which might make a Part C managed care plan better for you if your primary care physician and most other doctors in your area belong to that managed care plan.
Restrictions imposed by Medicare Part C for fee-for-service plans:
- For each medical service you want covered, the doctor or other provider must accept whatever limits the plan places on the treatment; and the doctor must agree to whatever payment the plan offers. If a doctor doesn't accept the plan's terms and payment amount, the plan won't cover your care from that doctor.
- Even though you've received covered care once, there's no guarantee that the next time the plan will approve the same care or offer the provider the same payment. Similarly, a doctor isn't required to accept the plan's terms again, just because he or she did so before. So, with a fee-for-service plan, you won't know until the time comes whether you'll be able to get covered care from a particular doctor or other provider.
- Some Medicare Part C fee-for-service plans require you to pay a co-payment of up to 15 percent of the amount the plan approves for the particular service.
- Some fee-for-service plans have provider networks, just as managed care plans do. With these plans, you're not restricted to network doctors or other providers, but you'll pay a higher co-payment if the provider isn't in the plan's network.
Do Medicare Part C plans offer broader coverage than Medicare Part A and Part B?
With most Medicare Part C plans, you can get slightly broader coverage than with basic Medicare Part A and Part B. For example, almost all Medicare Part C plans cover routine physical exams. Some offer short-term custodial care -- meaning nonmedical help with activities of daily life -- in a nursing facility or at home, which traditional Medicare doesn't cover. Also, some plans provide coverage for eye and hearing care, expanded physical therapy, chiropractic, and various kinds of preventive care.
What do enrollees typically pay for a Medicare Part C plan?
Some Medicare Part C plans charge no premium. However, you still have to pay Medicare Part B's monthly premium; Medicare uses these funds to provide financial support to the Medicare Part C plans. Other Medicare Part C plans charge their own added monthly premium. This added premium, though, is usually substantially less than what you'd pay for a Medigap supplemental insurance policy.
With a Medicare Part C plan, you don't have to pay Medicare Part A and Part B deductibles and co-payments. But the Medicare Part C plans have their own deductibles and co-pays. So, when considering a plan, be sure to investigate these payments as well as the monthly premiums.
What are the disadvantages of Medicare Part C plans?
Although Medicare Part C plans have both cost and coverage benefits, they also have serious drawbacks. With Medicare Part C managed care plans, the limits on which providers you can see may be the most important. If you want to consult a doctor who's not in the plan's network, you'd have to pay some or all of the cost yourself. (This is less of a problem with large managed care plans, especially in urban areas. That's because most doctors participate in the networks of the big managed care plans.)
If you're considering a Medicare Part C managed care plan, one of your first steps should be to see if your regular doctors are in the plan's network. If not, and you want to stay with your doctors, that plan isn't a good one for you.
If you're considering a Medicare Part C fee-for-service plan, ask your regular doctors if they have any experience with the plan, and if so whether they usually accept the plan's terms and payments. If not, that plan may not be right for you.
Another problem with a Medicare Part C managed care plan can arise if you want to see a specialist. If the Medicare Part C managed care plan itself decides the specialist isn't necessary, you'd have to pay for the visit out of your own pocket. Likewise, if the plan decides certain care not provided by your primary care doctor -- for example, extensive physical therapy or home healthcare -- isn't necessary, the plan won't pay for it even if a doctor prescribes it.
There might also be a problem with a Medicare Part C plan if you often spend time in more than one place -- traveling, at a second home, or staying with other family members. Coverage by a Medicare Part C plan is usually limited to the region where you live. Outside the region, you'd be responsible for some or all nonemergency bills.
Finally, there's the risk that you'll be dropped from a Medicare Part C plan. Over the past few years, many people with a Medicare Part C plan have suddenly found themselves without coverage when the plan decided to stop operations in their region. Plans regularly pull out of areas where their profits aren't making them happy. If you're dropped in this way, you aren't completely out of luck -- some other options are available -- but scrambling for other coverage can be difficult.
Where can I get more information about Medicare Part C plans?
The official Medicare website has a feature called the Medicare Personal Plan Finder that can direct you to Medicare Part C plans available where you live. It also gives information about each plan's general terms.
But to know exactly what a plan offers and what all its costs and restrictions are, you have to contact the issuing insurance company itself and carefully read its written materials. You can get help deciphering plan materials by contacting your [local State Health Insurance Assistance Program (SHIP) or Health Insurance Counseling and Advocacy Program (HICAP), which provide free expert assistance.