When people think about Medicare, they think about the healthcare of an older generation. Baby boomers started to reach retirement age two years ago. The boomers as well as their older peers, are known as the “greatest generation.” This is the generation known known for sound decision making and practicing pragmatism. However, boomers aren’t the only ones who qualify for Medicare. Now that it is time that you compare medicare plans, it is important to note that when it comes to healthcare, it can be difficult to understand all of the different plans that come with Medicare, but making the right decision is important to saving money and worrying less about your coverage. Many seniors and or those who have recently become eligible for Medicare are also finding that they can get a private health insurance plan through Medicare Advantage and save money as well. Medicare Advantage plans are offered through private health insurance companies and must be approved by Medicare. They are also rated from one to five stars with five stars being an excellent plan.
If you are thinking of switching to Medicare Advantage Plan or if you will be eligible to enroll in Medicare soon, you should take a look at comparisons between Medicare and Medicare Advantage. By understanding what each type of healthcare can offer you, you may be able to get more benefits for a lower monthly premium. This guide goes through a few of the differences between Original Medicare and Medicare Advantage.
Original Medicare vs Medicare Advantage Plans, AKA Medicare Part C
Commonly known as “straight” Medicare by the medical community, Original Medicare (OM) comprises two parts. Medicare Part A provides services for hospital, nursing and hospice care. Medicare Part B provides services for physician care, labs, tests and durable medical equipment. Medicare Part D covers medical prescriptions and is purchased through commercial insurance providers. Under Original Medicare, providers carry the bulk of service responsibilities. They bill and are generally paid within 14 days of providing service. This is known as “Fee for Service”(FFS). FFS is a single-payer plan administered by the federal government. Once you turn 65 or after 24 months of receiving Social Security for a disability, you are automatically enrolled in Medicare. However, you have the option of choosing Medicare Part C (Medicare Advantage).
What is Medicare Advantage?
Medicare Advantage or “Medicare Part-C” was introduced with the specific purpose of driving down costs as it provided more options for consumers. These plans are managed and administered by private insurance companies, but they also still operate under Medicare and must be approved before being made available to the public. Medicare Advantage Plans must include the same benefits as Original Medicare. Any basic services available under Part A and Part B must also be included in a Medicare Advantage Plan offered by a private company. You can purchase Medicare Advantage plans during open enrollment periods or special enrollment periods. You can enroll, switch or change your plan only during these times of the year. You can find and compare Medicare Advantage Plans on Medical.net or you can also use Medicare.gov. It’s important when looking at Medicare Advantage plans that you read through the benefits and understand the costs. Confusion is one of the biggest challenges facing Medicare providers as they attempt to educate people regarding Medicare Advantage. Misinformation and poor understanding often increase stress, consumer costs and may delay treatment. There are three vital principles that must be understood to help eliminate unwelcomed surprises as you receive care appropriate to your need.
Myths About Original Medicare and Medicare Advantage
There are a few misconceptions floating around about Medicare and Medicare Advantage since changes from Affordable Care Act. Some of these myths include the following:
- People can enroll in Original Medicare or Medicare Part C at any time.
- Partly false
- People who age into Medicare and have Social Security benefts are automatically enrolled into Medicare Parts A and B (together, these form original Medicare).
- Unless a person qualifies for a special enrollment period, they must enroll in all other Medicare parts during the annual enrollment period.
- Medicare plans are available on HealthCare.gov or state health insurance marketplaces.
- Medicare.gov is the designated site where seniors and others eligible for Medicare or Medicare Advantage can sign up or enroll for Medicare benefits. You can also call 1-800-MEDICARE.
- You can contact a licensed broker or a carrier offering Medicare Advantage plans any time to speak about switching to Medicare Part C (Medicare Advantage).
- Original Medicare is free, Medicare Advantage is not.
- Original Medicare is like any other insurance plan, and there are costs. Out-of-pocket costs for Original Medicare include premiums, deductibles and copayments.
- You pay a premium each month for Part B whether you have Original Medicare or Medicare Advantage.
- Both plans have out-of-pocket costs, but Medicare Advantage plans have out-of-pocket spending limits.
- Everyone pays the same for Medicare whether Original or Medicare Advantage.
- Medicare costs vary based on your income and what plan you choose.
- Most people pay $144.30 for Part B premium in 2020 ($135.50 in 2019). This is the standard premium, and it applies to new enrollees as well. Those with higher incomes pay more, while those with limited incomes and resources may qualify for further assistance that will let them avoid out-of-pocket costs.
- Medicare Advantage plan premiums vary by plan and typically depend on the amount of prescription drug coverage you want.
- In addition, consumers must pay annual deductibles for Part B. The deductible for Part B in 2020 is $197 is 2019 is $185 for the year.
- Medicaid and Medicare are the same federal program.
- Medicare and Medicaid are very different programs.
- Medicare is health insurance for the elderly, disabled and individuals with end-stage renal disease.
- Medicaid is health insurance for individuals and families with limited income and resources. Medicaid typically covers individuals who fall below a certain percentage of the Federal Poverty Line
- Children are covered under the federal healthcare program known as CHIP, which is an extension of Medicaid.
- College students may receive healthcare from Medicaid.
- Medicaid is administered on a state level in conjunction with federal funding. Medicare is a federal program (with a private option in the form of Medicare Advantage).
- Payments to health insurance companies offering Medicare Advantage increased.
- Medicare Advantage payments were increased by 3.4% for 2019, which is more than the anticipated 1.84% that was projected. Thankfully, the premiums for 2020 are decreasing for many carriers.
- The Affordable Care Act made more than $200 billion in cuts to Medicare Advantage payments that will be phased in each year.
1. Medicare Advantage is Separate from Medicare
Know your coverage. Never assume or tell your doctor that Medicare covers you until you have checked your plan. It is important to note that once you have selected a Medicare Advantage (MA) plan, your private insurance company possesses your Original Medicare benefit. They become responsible for your coverage through plan administration and payment of claims. Through MA, you become the owner of a commercial policy equivalent to Original Medicare and are subject to all guidelines and limitations set forth by that plan. As a general rule, you will find that most medical offices accept Medicare. However, this is not the case with Medicare Advantage. Due to payment skepticism, providers are more reluctant to contract with Medicare Advantage. Additional constraints and paperwork complications only magnify the reluctance. Affordable Care Act changed some limitations facing Medicare Advantage, but you still should check with your medical care providers if a Medicare Advantage Plan would be acceptable. In some cases, you may also have to switch to a new primary care doctor if you go with Medicare Advantage. Under Medicare Advantage, the federal government no longer pays your claim for the Medicare benefit. When visiting your doctor, it is important that you inform the office staff prior to your appointment and use medical cards issued by your insurance carrier.
2. Coverage Conditions Vary
Medicare Advantage does not function on the same simple, “Fee For Service” principle employed by Original Medicare. However, they are required to offer the same coverage. This would include doctor visits, in/out patient services, emergency and preventative care. It also includes tests and labs, mental health and limited physical therapy. Additionally, MA must also provide limited services for home or nursing care. Some medical supplies and drug/alcohol treatments are also included. They can also provide additional services that include dental, vision and hearing part D. This is one of the biggest draws of Medicare Advantage. MA plans with the highest ratings typically have extra services like vision, dental and hearing. The confusion surrounding Medicare mostly has to do with political views and misrepresentation in the media. Medicare makes it so that those who need affordable healthcare can receive it automatically at a certain age or if they have a certain disability. It’s not a free program, but it is lower cost and does cover the basic medical services that most people need. It may not be the best option for long-term healthcare or help with chronic illness. Now that you understand a bit more about Medicare, you should also differentiate between the types of Medicare Advantage plans available to you.
Two Basic Medicare Advantage Plans: HMO and Non-HMO
Medicare Part C plans break down into different types that you can most commonly refer to as HMO and non-HMO. While some people prefer HMO because they are generally lower cost, non-HMO may allow you to see more doctors and hospitals that aren’t in a specific network. HMO: Patients must receive medical services through the network. Based on geographical location, patients enroll with their appropriate IPA or medical group. They are also assigned a primary care physician or PCP who is responsible for oversight of medical care, specialist referrals and issuance of authorization for service. There are choice and specialist limitations, and part D must be purchased through the same network. While you receive additional coverage with Part D, you still must pay a premium to cover Part B. Non-HMO (FFS or PPO): While this plan does not have the same restrictions as the HMO, it is important to note that services rendered outside the network or by non-contracted doctors can cost significantly more money. Medical professionals inside the PPO network may not necessarily accept MA patients. PPO plans are technically commercial plans. Therefore, it is wise to use caution when using “PPO” or “FFS” terminology in the context of Medicare. Also note that plan D can be purchased from a separate, non-HMO insurer. You still must pay for your Part B premium in addition to a monthly premium for a non-HMO plan.
3. Possibility of Higher Cost-Sharing Many people switch to MA plans only to find they no longer have access to their doctor or coverage for unexpected costs. However, prescription coverage proves very beneficial as they do not require the standard 20% Medicare copay and restrictions on yearly cost shares. However, deductibles, copays and out of pocket costs may be higher than Original Medicare. This ranges depending on the Medicare Advantage plan and health insurance carrier. Some plans do try to combine different services into one plan to offer more benefits, which can lead to a higher premium per month but lower co-pay. Medicare Advantage and commercial policies also offer a greater range of plan choice at potentially higher premiums compared to Original Medicare which only offers a single plan. To expand your Original Medicare coverage, you would have to purchase supplemental coverage including a separate plan called Medigap and another plan for prescription drug coverage.
Choosing Original Medicare or Medicare Advantage
Since Medicare isn’t just for individuals over the age of 65, there are a lot of people who have questions about how to get Medicare Advantage or Part C coverage in addition to Original Medicare. Those who have paid into Social Security for several years automatically qualify for Medicare at the age of 65, and you also start receiving social security payments. While Original Medicare is covered in Part A and B, Medicare Advantage is available in Part C. Understanding the differences between these plans can give you more robust healthcare coverage at a lower cost. However, it still depends on your medical care needs. Choosing between Original Medicare and Medicare Advantage comes down to what you want in a health insurance plan. While Original Medicare may not have extras, it’s more flexible as to what doctors you can see. One thing to consider is that the same services you receive under Original Medicare will also be included in any Medicare Advantage Plan. By taking a look at what’s offered in these plans in depth, you learn the costs, coverage and problems associated with each type of healthcare before open enrollment.
What’s Covered in Medicare Part A and Part B?
Original Medicare is known as Part A and Part B. Part A covers expenses from hospitalization. Part B covers bills from doctors and other expenses such as lab work and preventive screenings. You may still have to pay a premium in order to use these Medicare plans, but in most cases, Part A is free and you’ll pay a premium for Part B. Currently, the premium for 2019 is $135.50. The 2020 premiums have not been released yet.
What’s Covered in Medicare Advantage or Part C Plans?
Many individuals interested in Medicare actually find that Medicare Advantage plans are better because of the flexibility and choices when it comes to plan types and extra services. These plans are offered through private health insurance companies rather than through the government. They must cover the same services in Part A and B, but they also include extra coverage for things like prescription drugs, vision, dental and hearing. The crucial difference between these two is that you don’t have to purchase any supplemental insurance plans to get extra coverage and prescription drugs if you choose Medicare Advantage. With Original Medicare, you will pay extra and have to add separate plans like Medigap and Part D coverage in order to get all of the coverage that you need.
Comparing the Costs of Original Medicare and MA Plans
Most Medicare Advantage plans cost the same or much less than Original Medicare with supplemental coverage extras. Then there are some Medicare Advantage plans that offer more services but also have a higher premium. If you have ever bought a private health insurance plan on your own, then you will understand how to purchase Medicare Advantage plans. They are offered separately from other plans and can be compared easily on most sites like Medical.net. Each Medicare Advantage plan will offer a different monthly premium, coinsurance, co-pay and out-of-pocket limit. If you do end up with a lower premium for Medicare Advantage, you may have to pay a higher co-pay when you do visit a doctor or facility. Typically, studies have shown that Medicare Advantage plans cost no more than Original Medicare plans and still offer more freebies and extra services because private companies provide them. Breaking Down Coverage in Medicare and Medicare Advantage When considering which plan to purchase, you should learn about the basics of coverage for each type of plan. This is a quick look at all of the differences between the two and how each of them work. As the federal government sponsors them both, there are certain limitations to the coverage.
What’s Included In Original Medicare Plans?
These plans are for Part A and B. They do not include Part C or Part D. Original Medicare is completely offered through the federal government. You can use this type of Medicare everywhere that Medicare payments are accepted.
- Part A and Part B are included if enrolled in both.
- You pay a coinsurance and deductible when you receive healthcare. Medicare typically expects you to pay 20 percent of the cost for outpatient care (Part B coverage).
- Most enrollees must pay a premium for Part B. There aren’t any premiums for Part A if you meet the work requirement (40 credits). Nearly all (99 percent) of Medicare enrollees meet this requirement. .
- You can receive medical care from any hospital or doctor who accepts Medicare in the United States.
- You don’t need a referral to see a specialist.
- No pre-authorization is needed to get services.
- You can buy a Medigap policy if you want supplemental insurance.
- To get prescription drug coverage, you have to buy a separate plan from a private insurance company.
What’s Included in Medicare Advantage Plans?
Plans are sold by private companies approved by Medicare. Plans include Part A, Part B and typically, Part D or prescription drug coverage. However, some companies choose to sell this coverage separately.
- These plans have to cover the same benefits in Part A and Part B.
- Some companies provide extra benefits not included in Original Medicare.
- Plans vary by type with Medicare Advantage. Popular plans include HMOs, PPOs and PFFS.
- Under Medicare Advantage, you still receive Medicare, but it’s not called Original Medicare. You have a private plan with varying costs and restrictions set by a private company.
- Enrollees usually have flat copays for some services and a deductible before the plan pays benefits. .
- You pay the same premium price as you would for Medicare, but in some cases, you pay extra for services added to a Medicare Advantage plan that are not included in Original Medicare.
- If you have an HMO, you must see doctors and hospitals that are in the network.
- You may have to choose a specific primary care physician and get referrals or prior authorization to see other doctors and specialists.
- Medigap policies are not available to you.
- Plans do limit the amount of out-of-pocket cost, a limit that’s set by the federal government each year. In 2019, the limit was $6,700. After you reach these limits, you don’t pay anything for covered care. Some plans set their caps lower, but no plan can set a higher cap.
- Many Medicare Advantage plans offer Part D or prescription drug coverage. These are often called MA-PD plans.
While it may seem that Original Medicare is cheaper, the costs may be more advantageous in Medicare Advantage if you want to pay a little extra for additional flexibility and services. Vision, dental, hearing and wellness programs may be provided in Medicare Advantage but are not typically available in Original Medicare.
How to Switch to or From Medicare Advantage Plans
If you currently have Original Medicare and you want Medicare Advantage, you can make changes to your Medicare coverage during open enrollment periods. You can follow these rules to enroll or change plans with Original Medicare and Medicare Advantage.
- You can only switch Medicare Advantage plans and Original Medicare Plans during the fall Open Enrollment that starts October 15th and ends December 7th. New coverage starts January 1st. During this enrollment period, you can make changes to your coverage: adding, dropping or switching plans.
- New for 2019, the CMS has eliminated the former Medicare Disenrollment Period and replaced it with a Medicare Advantage Open Enrollment Period, which will allow you to change MA plans if you’re a current MA subscriber or switch from MA back to original Medicare. This period will run from January 1 through March 31. . If you switch to original Medicare during this period, you can also join a Part D drug plan.
- You may be able to qualify for a special enrollment period. These special enrollment times allow you to change health plans or add drug plans outside of the typical enrollment or disenrollment periods. You can qualify if a Medicare Advantage plan leaves your area or if you move from your plan’s service area. There’s also a special enrollment period if you want to switch to a 5-star Medicare Advantage plan from a current lower score plan.
Do You Need a Medigap Policy?
A Medigap plan is a supplemental insurance plan that you get from a private company to pay costs for you that aren’t covered in Original Medicare. These costs may include deductibles, co-payments and medical services received outside of the US. Medigap is an add-on for Original Medicare only and does not work with Medicare Advantage. Many people require supplemental coverage because they only receive the basic services under Original Medicare and are paying high out-of-pocket costs. Medigap tries to shrink the coverage gap, but you also have to pay another premium and deductible to have this supplemental coverage. Medigap doesn’t cover long-term care, dental, vision, hearing and wellness programs. They also do not cover prescription drugs in most cases. Medigap policies have a premium. If you frequently need services that are not provided in Original Medicare but don’t want to switch to Medicare Advantage, Medigap may be the best choice. However, these plans are only available to people who already have Part A and Part B. If you are currently on Medicare Part C, you won’t qualify for Medigap. There are standard Medigap plans that range from A through N (excluding E, H, I and J, which are no longer sold). If you choose Medigap plans, you still pay a premium. You’ll pay a premium for Medigap and a premium for Part B. The total cost of your plan will depend on the private company. It also depends on your age and location. If you pay your premiums on time, you can always renew your Medigap policy.
Which Medicare Plan is Better For You?
For those who rely on prescription drugs, Medicare Advantage is the best plan. Original Medicare does not provide any coverage for prescription drugs whether you have Medigap or not. Although you can add Part D coverage to an Original Medicare plan, it’s typically a much higher cost to do this. About 82 percent of Medicare Advantage plans already include prescription drug coverage. In addition, Medicare Advantage plans make it so there is a cap on out-of-pocket spending. No matter what, you can’t spend more money out-of-pocket after a certain limit. There is no out-of-pocket maximum for Medicare, which means that you can often pay more out-of-pocket.
As of 2018, Medicare Advantage plans included a $6,700 cap or less for out-of-pocket expenses. If you don’t want to pay the 20-percent coinsurance with Original Medicare, then you should also pick Medicare Part C. Medicare Advantage plans are structured differently and typically cost less for the value that you receive. You may be able to see more doctors and also pay a less premium per month. You may also only be responsive for co-pays when you visit a doctor or hospital. Under some Medicare Advantage plans, extra services are available. If you are looking for assisted living facilities, nursing home care, vision and dental, it’s best to pick a Medicare Advantage plan that already has those features built in.
When Medicare Advantage (Part C) Isn’t Always Best
In some cases, you should stick with Original Medicare. If you want to have a broad range of doctors, then you can find doctors and hospitals that accept Medicare and visit them for care at any time. In some cases, private Medicare Advantage plans do have an additional premium cost. If you want your cost to be as low as possible, then you should pick Original Medicare. However, this is only if you want the most basic coverage. If you are still employed and covered by an employer, then you should really get Original Medicare. You can pay higher premiums for choosing Medicare Advantage in these situations.
Making the Right Medicare Choice
The best way to pick between these plans is trying to estimate what you’ll need to see a doctor for and what types of services you require. By considering your medical history and speaking with your current doctor, you can get an idea of what plan will offer you the most choices for the value. If you do decide that you want Medicare Advantage, you can only enroll between October 15th and December 17th, which is open enrollment. If you qualify, you may be able to get special enrollment.
This website, along with others that we endorse such as MedicareEnrollment.com, can help you learn more about the Medicare program. If you think you need a little extra help, finding a licensed sales agent, who can help you determine what plan is right for you, is as simple as calling our toll free number and speaking to a licensed, Medicare professional. Or, if you would prefer to obtain some additional information from a government resource, you can always visit Medicare.gov for more details.
While Medicare Advantage plans are ideal for a large segment of the population, thorough research is still encouraged as you will not be eligible to make plan changes anytime you want. However, you can join, switch or leave your MA plan as often as you like during open enrollment, which runs from October 15 through December 7. You may also join an MA plan during the year if you become eligible or the plan has a 5-star rating, but you can only leave your MA plan and rejoin Original Medicare between January 1 and March 31 of every year.