Definition of a Medicare Advantage Plan

Medicare Part C--Medicare Advantage---provides Medicare recipients more options for using their Medicare coverage. Medicare contracts with private companies to provide Medicare-covered services under different Advantage plans. Recipients can choose from a variety of plans, many of which charge no additional premium.

Why an Advantage

• Advantage plans normally provide additional services beyond original Medicare, such as dental coverage and glasses. Plans save beneficiaries money by eliminating or reducing deductibles, coinsurances and copayments. For example, Medicare Part A assesses a $1,100 deductible for an inpatient hospital stay. One Advantage plan, SCAN, collects a $100 deductible, saving the enrollee $1,000.

How Plans Work

• Under their Medicare contracts, private companies provide all Medicare-covered services except hospice care, which Medicare still provides. The companies receive a fixed fee from Medicare for each Medicare recipient who chooses their plan. The majority of Advantage plans fall into three categories--health maintenance organization--HMO, Preferred Provider Organization, or PPO, and Private Fee for Service Plan, or PFFS.

Advantage Plan Differences

• HMO and PPO Advantage Plans can offer extra services because they have their own networks of hospitals and doctors. Plan enrollees must receive their Medicare-covered services within the plan's network. HMOs also require members to select a primary care physician, who must approve all referrals to specialists. PFFS plans do not use their own doctor and hospital networks. HMO's and PPO enrollees account for almost 80 percent of Advantage plan members.