A health plan is a type of health insurance that you buy in order to pay for the cost of medical treatment if you are ill or injured. There are two types of health insurances in the US, private and public. Most people use a combination of both. The US public health insurances are: Medicare, Medicaid, and Children’s Health Insurance Program.

Original Medicare is the US federal health insurance program for people aged 65 and older, as well as some younger people with disabilities. It is a fee-for-service health plan that has two parts: Part A (Hospital Insurance) and Part B (Medical Insurance).

Medicare Advantage (MA, also known as “Part C”) is a type of Medicare health plan offered by a private company that contracts with Medicare. These plans offer Part A, Part B, and usually Part D (Drug Coverage). MA Plans may offer some extra benefits that Original Medicare doesn’t cover. ActiveAging is specifically targeting the fast-growing MA health plan which has about 50% of US Medicare beneficiaries enrolled.

MA health plans are provided by Medicare-approved private companies who receive monthly capitated payments from the CMS (Centers for Medicare and Medicaid Services) to cover their members’ health expenses (physicians, hospitals, etc.). These payments are calculated annually based on a risk adjustment score, derived from a combination of demographics and diagnosed chronic conditions, which estimates each member next year’s annual health expense.  Once set, this score and payments are fixed for the rest of the year. As a result if a members health deteriorates, this may lead to substantial losses for the health plan.