When you’re choosing Medicare coverage, either for the first time or during the annual open enrollment period, you’re faced with a lot of different Medicare plan options. Finding what works best for your health needs and budget involves understanding the different kinds of plans available. To help, in this article we’ll take a close look at Medicare Private Fee-for-Service (PFFS) plans.
What is a PFFS plan?
Medicare PFFS plans are a type of Medicare Advantage plan (also known as Medicare Part C coverage). Medicare Advantage plans are offered by private insurance companies and must provide all the coverage included in government-sponsored Medicare Part A and Part B. But they often offer additional benefits beyond those provided by Original Medicare, like some vision, dental, and hearing coverage, for instance.
Medicare Advantage includes several different types of health plan set-ups, much like those you might have seen in your employer-sponsored insurance options. Medicare Advantage Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) are the most common types of plans in most areas.
With HMOs, you must see providers in the plan’s network, and you need a referral from your primary care physician to see a specialist. With PPOs, no referral is necessary, and you may see providers outside of the network, although you will likely pay more out-of-pocket to do so.
With a PFFS plan, the insurer determines how much it will pay doctors, hospitals, and other healthcare providers. For you to receive full coverage, the providers must agree to these rates at the time they treat you. (That’s different than HMO and PPO networks of providers who have previously negotiated and agreed to rates with Medicare Advantage insurers.)
As with other Medicare Advantage plans, you’ll likely pay some out-of-pocket costs in the form of deductibles, copays, and coinsurance. How much is determined by the PFFS insurer? You may see any Medicare-approved provider who agrees to the plan’s terms, and you don’t need a referral to see a specialist.
How does a Medicare PFFS plan work?
With a PFFS plan, you may seek care from any Medicare-authorized healthcare provider who agrees to accept the plan’s payment or fee for the service provided. Sometimes these plans will have a network of approved providers. If you join a PFFS plan that has a network, you’ll likely pay less out-of-pocket when you see in-network providers. However, you can still choose to see an out-of-network provider who has agreed to accept the plan’s fees. As with other types of plans, you may have to pay more in copays and other out-of-pocket costs when you go outside the network.
If you see an out-of-network provider who hasn’t agreed to the plan’s terms, you may be responsible for the full cost, even if the provider is Medicare-approved. If you choose a provider who isn’t Medicare-approved, you may be responsible for the full cost.
Who is eligible for a PFFS plan?
Anyone who is eligible for Medicare can choose a Medicare Advantage PFFS plan as long as Medicare Parts A and Part B are included in the coverage. You become eligible for Medicare in the seven-month period starting three months before the month you turn 65, including your birthday month and ending three months after your birthday month. During this time, you can sign up for Original Medicare Parts A and B or a Medicare Advantage plan. If you turn 65 in July for example, you’ll have from April 1 to October 31 to enroll.
You also become eligible for a Medicare Advantage PFFS plan each year during the Medicare open enrollment period which runs from October 15 to December 7. During that time, you can change your coverage to a PFFS plan.
What will you pay for a Medicare PFFS plan?
Like all types of Medicare Advantage, premiums vary among PFFS plans, depending on your location and what extra benefits a particular plan offers. At a minimum, you can expect to pay your Medicare Part B premium ($148.50 per month in 2021) and any additional premium the insurer may charge. The insurer may also charge an additional premium if the plan offers prescription drug coverage. (If your plan doesn’t offer prescription drug coverage, you can buy a separate Medicare Part D prescription drug plan.)
Most PFFS plans charge a deductible–the amount you pay out-of-pocket before coverage kicks in–and copays or coinsurance for each medical service you receive. These amounts are determined by the insurer. And every PFFS plan must set an annual out-of-pocket limit. In 2021, the maximum out-of-pocket costs plan members can pay is $7,550. Plans may set lower limits than the maximum.
How do you access PFFS benefits?
Once you join, you’ll receive a benefit card from your PFFS insurer. You’ll use this card instead of your Medicare card when you go to a doctor, the hospital, etc. (Keep your Medicare card in a safe place to avoid fraud or in case you decide to return to Original Medicare in the future.)
Be sure to show your membership card each time you visit a healthcare provider. Why? Providers of all types can decide at any time that they will no longer accept the plan’s terms and conditions of payment.
If your PFFS plan has a network of providers and you plan to receive care from an out-of-network provider, you may want to request an advance coverage determination from the plan. This will confirm that the service will be covered and at what cost. The plan may pay less than the provider charges, in which case you’ll have to make up the difference. Taking this step before treatment can help you avoid unexpected denials and plan for larger-than-usual costs.
To learn more about the Medicare plan that’s right for you, speak to one of our agents.
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