Proposed Changes to Medicare Advantage Plans
Medicare Supplemental Insurance is not the sole Medicare-related coverage that may endure changes within the next few months due to the health care reforms proposed by President Obama. Medicare Part C Plans, commonly known as Medicare Advantage plans, may also be experiencing change.
Here’s a refresher on Medicare Advantage Plans:
Medicare Advantage Plans are Health Maintenance Organization (HMOs), Preferred Provider Organizations (PPO), Private Fee-for-Service Plans, or Medicare Special Needs Plans. In order to enroll with a Medicare Advantage plan, you need to have Medicare Parts A and Part B, and you may have to pay a monthly premium to your Medicare Advantage Plan for extra benefits that they offer. Advantage plans are privately provided. You should not be simultaneously enrolled in a Medicare Advantage Plan and a Medigare Supplement Plan as they counter one another.
Reports state that Medicare Advantage Plan payments to private health insurers will be frozen at 2010 rates for the entirety of 2011. The proposed health care laws stipulate $130 billion in cuts over the next decade to these plans to prevent government overcompensation of insurance providers.
Provided that next year’s payments can’t match rising health care costs, what could occur is that insurance companies will offset the loss of payment increases by increasing the premiums that their customers are required to pay.
Medicare Advantage Plans and prescription drug plan sponsors also must have significant differences between their products due to CMS regulation requiring the elimination of duplicate prescription and health plans. These differences run the gamut from plan types, client out-of-pocket costs, premiums, and formulary offerings.
Starting in 2014, Medicare Advantage Plans will have to spend 85% of health insurance premiums collected by insurers on providing health care to their customers as an additional limiting factor to overcompensation of insurance executives.
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