Medicare Advantage

Medicare Advantage (Medicare Part C, MA) is a capitated program for providing Medicare benefits in the United States. Under Part C, Medicare pays a sponsor a fixed payment. The sponsor then pays for the health care expenses of enrollees. Sponsors are allowed to vary the benefits from those provided by Medicare's Parts A and B as long as they provide the actuarial equivalent of those programs. The sponsors vary from primarily integrated health delivery systems to unions to other types of non profit charities to insurance companies. The largest sponsor is a hybrid: the non profit charity AARP using UnitedHealth. Part C plans are required to offer coverage that meets or exceeds the standards set by Medicare Parts A and B, but they do not have to cover every benefit in the same way (actuarial equivalence is required). The major advantage of a public Part C Medicare Advantage plan is that each features an out of pocket annual spend limit of the beneficiary's choosing, typically ranging from $1500 to about $8000 in 2023. The lower the limit the higher the premium as with insurance of all types. Many Part C plans with a high limit have no premium (but the Part C enrollee still has to pay a Part B premium if otherwise required). Original Medicare Parts A and B do not include such out of pocket spend limit protection. Plans must be approved by the Centers for Medicare and Medicaid Services (CMS). If a MA plan changes some benefits, the savings must be passed along to consumers by lowering co-payments for doctor visits (or any other plus or minus aggregation approved by CMS). Coverage must include inpatient hospital (Part A) and outpatient (Part B) services. Typically, the plan also includes prescription drug (Part D) coverage. Many plans also offer additional benefits, such as hearing or dental coverage or vision services not covered by Part B of Medicare. Such plans typically require a higher premium. Those who do not enroll in a Part C plan receive coverage for Part A and Part B services. Many purchase private supplemental coverage (Medigap) to cover the large co-pays, co-insurance and deductibles in Original Medicare Parts A and B, and enroll separately in Part D for coverage of prescription drugs. Public Part C Medicare Advantage plans also include nominal co-pays and co-insurance but there are no deductibles