Pros and Cons of Private Medicare Advantage Plans
Who should take advantage of these all-in-one senior health care plans?
Private Medicare Advantage plans can be a good deal for seniors looking for all-in-one medical and drug coverage. There are three types of policies -- Medicare HMOs, which charge the lowest premiums but impose the most restrictions on which doctors and hospitals you can use; regional preferred-provider organizations, which offer discounts if you use in-network doctors and hospitals; and private fee-for-service plans, which let you use any doctor or hospital that accepts the plan’s terms.
Medicare Advantage plans may charge lower premiums than you’d pay for Medicare plus a medigap policy and Part D prescription-drug coverage. But you could end up paying higher out-of-pocket costs throughout the year.
Some Medicare Advantage plans charge higher co-payments for big-ticket items such as hospitalization, or for critical services such as chemotherapy. Or they might not pay for the first 20 days in a skilled-nursing facility (which traditional Medicare covers). In addition, a plan may provide limited coverage if you travel out of state.
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Instead of simply responding to a sales pitch from an insurance agent or to an ad, check all of the Medicare options in your area. Compare plans using the Medicare Options Compare tool at Medicare.gov/mppf, looking at both premiums and total estimated costs for people like yourself.
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As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.
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