Medicare beneficiaries have the choice between traditional Medicare, which is administered by the federal government, or a private Medicare Advantage plan like an HMO or PPO. With Medicare Advantage, private insurers are contracted by the government to provide Medicare benefits to enrollees. The insurers are paid a set amount per enrollee each month, which varies based on factors like location, health status, and estimated costs. These payments are used to cover Medicare services, and often additional benefits and reduced cost sharing. Medicare Advantage plans must meet federal standards, including providing an out-of-pocket limit. They can also limit provider networks and require prior authorization for certain services.
In 2023, over 70% of individual Medicare Advantage plan enrollees with prescription drug coverage pay no premium other than the Medicare Part B premium. This is a significant advantage for beneficiaries. Medicare Advantage plans often offer benefits not covered by traditional Medicare, such as vision, hearing, and dental care. They can provide these extra benefits because they receive an average rebate of $2,350 per enrollee above their costs for Medicare services. This rebate has increased significantly in recent years. Medicare Advantage plans typically have defined networks of providers, unlike traditional Medicare.
Most Medicare Advantage enrollees are in plans with a quality rating of at least 4 out of 5 stars. This is partly due to over half of plans receiving ratings at or above this threshold. Nearly all enrollees have access to eye exams and/or glasses, hearing exams and/or aids, a fitness benefit, telehealth services, and dental care. Similarly, most enrollees in Special Needs Plans (SNPs) also have access to these benefits. However, benefits like the Part B drug rebate are less common for both individual plans and SNPs. It’s important to note that this analysis does not include employer-group health plans, as they do not submit bids and available data may not accurately reflect the benefits they offer. While these benefits are generally available, the specific services covered and the cost-sharing requirements can vary between plans. Some plans may have annual dollar caps on covered services or networks of providers to choose from for dental care.