The Federal government has released some information that will impact many insurance companies across the United States. The rates for insurers payment for Medicare Advantage for 2017 have been released, and they are lower than expected. The Federal government announced in February that payments to insurance companies that offer these plans will go up.
The Federal government reimburses the private companies for every active Medicare Advantage plan they hold. The reimbursement for individual people is based on their risk factor. For instance, a person with any chronic condition will earn that insurance company a larger compensation. The rates will go up by 0.85% versus the 1.35% that was announced months ago. The businesses that sell these Medicare Advantage plans will see a small increase in their reimbursement, but only a minuscule one. Many companies were skeptical of the proposed original 1.35% to begin with, as it turns out, they were right to be skeptical.
Medicare Advantage plans (also called “Part C”) are offered by private insurance companies that have individual contracts with Medicare. Advantage plans give you both Part A and Part B Medicare as well as providing you with other benefits and services not covered by Original Medicare. These plans can cover any number of extra services like dental, vision, hearing, or health and wellness programs, but not all plans will pay for these extra services. While each plan covers different services, every Medicare Advantage plan covers Part D Medicare, which pays for prescription medications.
The Part C rates are based on trends, fees, and participants’ risk factors, as well as other variables. Sean Cavanaugh, the Center for Medicare and Medicaid Services deputy administrator and director of the Center for Medicare said that the rates for lower because of the change in the “normalization factor.”
As people age, they spend more time in the hospital, which equals more money towards medical bills and prescription drugs. Many seniors struggle to pay for these expenses, which is where Medicare Advantage plans can help. Medicare Advantage plans can reduce the size of the out of pocket costs associated with being on Medicare – or at the least, set a “cap” on what you pay. Every year these plans are gaining more popularity among consumers. Currently, around 3 in every 10 Medicare participants receive their Medicare through a Medicare Advantage plan.
If you’re looking into a Medicare Advantage plan, there are a few things you should know. The first thing you need to know is, not all plans are the same. Spend some time researching each plan offered in your area and decide which one works best for you. The next is that you are only allowed to join a plan at specific times during the year, you cannot join whenever you want. Be sure to plan ahead for your Medicare Advantage plan.
Regarding out-of-pocket expenses, while Medicare Advantage will cover the expenses left over from original Medicare, you still will have some out-of-pocket expenses. Each plan will have a different out-of-pocket expenses limit, and that limit could change every year.
If the Medicare Advantage plan isn’t a fit for you, other options are available that won’t leave you paying for massive hospital bills. Instead of enrolling in a Medicare Advantage plan, you can purchase a Medicare supplement policy (also called Medigap plan). Medigap plans are typically more comprehensive coverage, leaving you with fewer and smaller out of pocket costs than Medicare Advantage plans. The most comprehensive plans, like medicare Part F, can sometimes be more expensive than Medicare Advantage plans, but generally offer greater flexibility (there are no networks) and smaller and fewer out of pocket costs.
While most private insurance companies are not excited to hear that they won’t be receiving the size of increase they wanted, many are not surprised, as recent years have seen some reductions and many changes in Medicare Advantage reimbursement rates.
MedicareWallet.com is an unbiased, online resource for individuals turning 65 or already on Medicare. Our utmost goal is to provide information in a way that is user-focused, informative and ethical. With a combined 40 years of experience in the Medicare market, we can answer any questions about Medicare and Medigap insurance. Feel free to reach out to us at 800.376.0824 or by email at [email protected].