| Thu, Nov 08, 2012 @ 09:00 AM

Medicare Health Plans Through Private Insurance Companies

Posted by Medicare Made Clear

medicare private insurance informationPresident Lyndon Johnson signed Medicare into law in 1968 to help make health care affordable for older Americans. Congress expanded Medicare in 1972, making it available to people under age 65 with permanent disabilities.

Medicare is federal health insurance that consists of Part A (hospital insurance) and Part B (medical insurance). This was the only coverage option for beneficiaries for nearly 30 years. It’s often called Original Medicare or traditional Medicare.

Medicare Advantage Plans

Congress added Medicare Part C (Medicare Advantage) in 1997 to give beneficiaries more choices. Private health insurance companies, approved by Medicare, offer and administer Medicare Advantage plans.

Medicare Advantage plans must provide all the coverage of Medicare Parts A and B. Most include additional benefits, such as drug coverage and vision, hearing and dental care.

Insurance companies offer their plans regionally. The geographic region served by a plan is its service area. You may have several plans to choose from, depending on where you live.

While every Medicare Advantage plan must provide the minimum coverage required by Medicare, companies can create different total plan benefit packages to help meet customer needs. Plans may also require you to use a specific network of doctors or pay more for using out-of-network providers. So each plan is unique. It’s important to review and compare coverage and costs for plans you may be interested in.

Medicare Prescription Drug Plans

The Medicare prescription drug benefit is Medicare Part D. It went into effect in 2006 as part of the Medicare Modernization Act. The Act, in part, sought to make prescription drugs more affordable for beneficiaries. Congress passed the Act in 2003.

Private insurance companies approved by Medicare offer drug coverage through:

  • Medicare Advantage plans that include drug coverage
  • Standalone Medicare prescription drug plans that can work with Original Medicare or with certain Medicare Advantage plans that don’t include drug coverage

Medicare requires plans to cover certain common classes of drugs. Insurance companies negotiate prices with drug companies and decide which specific drugs their plans will cover. The companies also set their own member cost-sharing terms.

You may have several Medicare prescription drug plans from which to choose. It’s important to review and compare drug lists and costs to find a plan that may meet your individual needs.

Medicare Supplement Insurance Plans

Private companies have offered Medicare supplement insurance since the 1970s. These plans help cover some of the costs not covered by Original Medicare. You might hear them called Medigap plans or Medigap policies.

Medicare supplement plans might cover premiums, deductibles, coinsurance amounts or other out-of-pocket expenses. Prior to 2006 when Medicare Part B became effective, some Medicare supplement plans covered prescription drugs as well. If you have one of these plans, you can keep it. But the newer Medicare supplement plans can no longer offer drug coverage.

Medicare has standardized Medicare supplement plans and each has a letter. Plans with the same letter must offer the same benefits, regardless of where you live or which private company administers your plan (except for in Minnesota, Wisconsin and Massachusetts, which have their own standard plans). Costs can vary from plan to plan, though, so it’s important to do your homework before buying a plan.

Medicare supplement insurance works with Original Medicare. You don’t need and can’t be sold supplement insurance if you have a Medicare Advantage plan.

You Have Choices

Medicare offers many choices. It’s important to choose carefully, keeping in mind your health needs, budget and lifestyle.

For more information, contact the Medicare helpline 24 hours a day, seven days a week at 1-800-MEDICARE (1-800-633-4227), TTY 1-877-486-2048. If you have questions about Medicare Made Clear, call 1-877-619-5582, TTY 711, 8 a.m. – 8 p.m. local time, seven days a week.


Medicare.gov: Visit the official U.S. government site for Medicare.

Medicare Coverage Choices: Learn how the parts of Medicare work together.

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