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How Does Medicare Advantage Work?

You may know that Original Medicare is paid for by the government—in part by payroll taxes from you and your employer, and money taken out of your social security checks. Medicare Advantage works differently.

With a Medicare Advantage plan, Medicare pays private insurance companies, such as Clover Health, a set amount each month to administer the plan. These companies have a contract with Medicare and must submit their Medicare Advantage plans to Medicare for review and approval every year.

When you receive medical care, the Medicare Advantage plan is responsible for paying the claims. The plan—not Medicare—processes and pays your claims. The plan also works with your doctors, hospitals, and pharmacies on your behalf to ensure you receive the care you deserve.

Types of Medicare Advantage Plans

  • HMO: Health Maintenance Organization
    • A preferred group of doctors, specialists, and hospitals (network) provide your healthcare, and a primary care physician (PCP) manages your care and refers you to specialists as needed. Many HMOs do not allow you to see providers outside of the plan’s defined network. In many cases, if you choose to go outside the network, you will need to pay for these services out of pocket.
  • PPO: Preferred Provider Organization
    • Similar to an HMO, you have a preferred group of doctors, specialists, and hospitals (network); however, you don’t need a referral to see a specialist. You may use providers outside the preferred network, but your costs may be higher.
  • PFFS: Private Fee-for-Service
    • You may use any Medicare-approved doctor or service provider that accepts the plan’s payment terms and agrees to treat you.
  • SNP: Special Needs Plan
    • This type of plan provides benefits and services to people with specific diseases, certain healthcare needs, or limited incomes. SNPs tailor their benefits, provider choices, and drug formularies to best meet the specific needs of the groups they serve.

When You Can Sign Up for Medicare

The initial window for enrolling in Medicare Part A and/or Part B is 7 months long. This period is also known as the Initial Enrollment Period (IEP). For most people it’s when they turn age 65. This 7-month period includes the 3 months before you turn 65, the month you turn 65, and the 3 months after you turn 65.

If you continue working past age 65:

  • If you have health insurance through your (or your spouse’s) employer and your company employs 20 or more individuals, you can postpone enrolling in Medicare Part B past age 65.
  • However, because Medicare Part A is free for most people, it pays to enroll in Part A as soon as you’re eligible, even if you have existing coverage. When you’re turning 65 and anytime after, you’re eligible for Part A even if you’re still working. If you aren’t automatically enrolled, you can sign up for free Part A, if you’re eligible, at any point during or after your Initial Enrollment Period.
  • If you’re covered by employer-based health insurance at the time you’re first eligible for Medicare, you’ll qualify for an 8-month Special Enrollment Period that starts either the month your employment ends or the month after employer coverage ends, whichever comes first.

Medicare Advantage Enrollment Periods*

Once you’re enrolled in Medicare, there are 3 enrollment periods in which you can join or change your Medicare Advantage plan:

Annual Enrollment Period (AEP): October 15–December 7

  • Allows Medicare Advantage enrollees to either switch to Original Medicare (plus a Part D plan) or switch to a different Medicare Advantage plan.
  • Allows those who are on Original Medicare or a Medicare Supplement Insurance (Medigap) plan to switch to a Medicare Advantage plan.

Open Enrollment Period (OEP): January 1–March 31

  • Allows individuals enrolled in a Medicare Advantage plan a one-time option to go to either a different Medicare Advantage plan or Original Medicare.
  • If you have Original Medicare only, you cannot use the Open Enrollment Period to select a Medicare Advantage plan.

Special Enrollment Period (SEP): Year-round (if you qualify)

You may be able to join, switch, or drop a Medicare Advantage or prescription drug plan outside the basic enrollment periods in certain situations, for example:

  • Left coverage from an employer or union
  • Moved to a new address that is not in your plan’s service area
  • Need extra help paying for prescription drugs

Note*: This is not a complete list of Special Enrollment Period qualifying circumstances.

Want to learn more about Medicare? Check out the following articles to answer your questions.

Understanding Medicare: Original Medicare vs. Medicare Advantage

What Are My Medicare Options?

How to Choose a Medicare Plan

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To learn more about Medicare or Clover Health’s Medicare Advantage plans, please give us a call at 1-855-203-1461 (TTY 711) 8 am–8 pm local time, 7 days a week.*