For some people getting their Medicare benefits for the first time and making the choice between Original Medicare and Medicare Advantage (Medicare Part C) can be overwhelming.
If that’s you, relax. In this article, we’ll give you a clear-cut roadmap.
The Path You Choose Determines Everything
Let’s address the elephant in the room: doctor choice vs. cost vs. healthcare benefits vs. logistics. This is what making the decision between Medicare Advantage and Medicare is all about. Let’s go over these factors and enrollment, too.
With Original Medicare (Medicare Parts A and B), you have full control over your healthcare providers. You also have the ability to limit your out-of-pocket expenses by getting a Medicare Supplement (Medigap plan). However, Original Medicare does not offer the routine healthcare that most people need as they age, including dental care, vision care, and hearing care. Nor does it include prescription drug coverage.
With Original Medicare you will likely need to enroll in 4 or 5 different plans for coverage:
- Part A for hospital insurance
- Part B for medical insurance
- Part D for prescription coverage
- Medigap for supplemental coverage
- Dental and Vision policy for routine care
If you like this level of control, it’s available. Just remember, you will need to review all claims filed.
Medicare Advantage is more of an all-in-one plan. Plans include all of your Medicare benefits plus some extras.
The advantage of Medicare Advantage plansMedicare Advantage (MA), also known as Medicare Part C, are health plans from private insurance companies that are available to people eligible for Original Medicare (Medicare Part A and Medicare Part B). is that private insurance companies can include the additional benefits most people need. But these extra benefits are not free. And, private Medicare plans do not come with complete freedom of choice.
Going to The Doctor
Original Medicare allows you to choose any healthcare provider who accepts Medicare. This includes both your primary care doctor and specialists. Referrals are not required to see a doctor and you don’t have the worry about your doctor leaving a network.
The Kaiser Family Foundation states that only 1% of doctors do not participate in Medicare health insurance. Moreover, 83 percent percent of primary care physicians will accept Medicare patients. This means that you don’t need to change doctors if the doctor you see accepts Medicare patients.
Medicare Advantage plans are similar to the health insurance you had through your employer. Health maintenance organizations (HMOs), and preferred provider organizations (PPOs) are the most popular plan types. Both HMO and PPO plans use network providers.
Medicare Advantage plans are managed care plans. In most cases, you will have a primary care doctor who will direct and manage your care. When you need tests or a specialist, your primary care doctor will make a referral.
With an HMO plan, you must choose your doctor and specialists from the plan’s network. If you go out-of-network in an HMO, you pay all costs. With most PPO plans, if you use in-networkDoctors, hospitals, pharmacies, and other healthcare providers that agree to health plan members' services and supplies at a set price are in-network providers. With some health plans, your care is only covered if you get... doctors you get the best rates. You can go outside the plan’s network but you will pay more.
Original Medicare covers most medically necessaryServices or supplies that are needed for the diagnosis or treatment of your medical condition and meet accepted standards of medical practice. expenses, including hospitalizations, doctor visits, diagnostic tests such as X-rays or scans, blood work, and outpatient surgery. But there are certain things that it doesn’t cover, such as prescriptions, cosmetic surgery, routine vision, dental care, and hearing care. However, you can add a Medicare Part DMedicare Part D plans are an option Medicare beneficiaries can use to get prescription drug coverage. Part D plans provide cost-sharing on covered medications in four different phases: deductible, initial coverage, coverage gap, and catastrophic. Each... plan to get prescription coverage.
By law, Medicare Advantage (MA) plans must cover all of the benefits you are eligible for under Original Medicare. Some MA plans also offer services not covered by Medicare. These may include prescriptions, hearing, vision, and dental care. Some MA plans provide coverage for gym memberships and other wellness-related benefits.
The federal government has added allowable services to private insurance plans over the years, and they are not strictly medical care. For instance, health plans can provide home improvements like wheelchair ramps for people with disabilities. They can also include transportation to doctor’s offices, meals, and coverage for some over-the-counter medications. The services available vary by plan.
The Medicare program sets the premiumsA premium is an amount that an insurance policyholder must pay for coverage. Premiums are typically paid on a monthly basis. In the federal Medicare program, there are four different types of premiums. , deductiblesA deductible is an amount a beneficiary must pay for their health care expenses before the health insurance policy begins to pay its share., and coinsuranceCoinsurance is a percentage of the total you are required to pay for a medical service. for Part A (inpatient careInpatient care refers to care provided in a hospital or other inpatient facility. Inpatients are admitted and stay at least one night depending on their condition.) and Part B (outpatient careOutpatient Care is medical care that does not require an overnight stay at the hospital. Medicare Part B provides coverage for Outpatient Care.). In Part B, for example, the beneficiaryA person who has health care insurance through the Medicare or Medicaid programs. is responsible for 20 percent of all lab tests, doctor visits, medical supplies, and durable medical equipmentDurable medical equipment (DME) is equipment that is designed to last and can be used repeatedly. It is suitable for home use and includes wheelchairs, oxygen equipment, and hospital beds.. The 20 percent cost-sharing begins after the annual Part B deductible has been paid.
Part A costs are not a flat 20 percent as they are with Part B. Part A uses a benefit periodA benefit period is a method used in Original Medicare to measure a beneficiaries use of hospital and skilled nursing facility (SNF) services. With each new benefit period, the beneficiary is charged a new benefit... deductible, which reflects an average of 20 percent of hospitalization and inpatient recovery costs. After 60 days of hospitalization or skilled nursing care, a Medicare beneficiary begins paying Part A coinsurance.
The big risk with Original Medicare is that it does not have an annual out-of-pocket limit. And, it has a lifetime number of hospital inpatient days that it will cover. To eliminate this risk, you must buy Medicare Supplement insuranceMedicare Supplements are additional insurance policies that Medicare beneficiaries can purchase to cover the gaps in their Original Medicare (Medicare Part A and Medicare Part B) health insurance coverage. or join a Medicare Advantage plan.
Medicare requires that Medicare Advantage plan enrollees pay their monthly Part B premium and an additional premium (if any) for the MA plan’s additional services or coverage. Instead of paying the 20 percent coinsurance amount for doctor appointments and other Part B services, MA plans have set copayA copayment, also known as a copay, is a set dollar amount you are required to pay for a medical service. amounts. The same is true for Part A services. This may or may not result in lower out-of-pocket costsOut-of-Pocket Costs for Medicare are the remaining costs that are not covered by the beneficiary's health insurance plan. These costs can come from the beneficiary's monthly premiums, deductibles, coinsurance, and copayments. than Original Medicare. This is the number one reason why people think Medicare Advantage plans are bad.
Unlike Original Medicare, all MA plans have an annual out-of-pocket maximum. In most cases, plans with higher maximum out-of-pocket limits have lower monthly premiums.
Both Medicare and Medicare Advantage have ways of working with MedicaidMedicaid is a public health insurance program that provides health care coverage to low-income families and individuals in the United States. to assist low-income individuals. Medicare has its Medicare Savings Programs, whereas Medicare Advantage has Special Needs Plans.
Doctor choice, coverage, and costs are not the only differences between Medicare and Medicare Advantage. There are also differences in when you can enroll in Medicare Part CMedicare Part C is Medicare's private health plan option. Also known as Medicare Advantage, Medicare Part C plans are a type of Medicare health plan offered by companies that contract with Medicare to provide all... (and Part D). Plus, not all MA plans are available in all areas. Which means you cannot join a plan that’s not in your service area.
As with traditional health insurance, Medicare Advantage has an annual open enrollment periodDuring the Medicare Open Enrollment Period, Medicare Advantage and Part D plan members can change, switch, or drop a plan they chose during the Annual Election Period. OEP starts on January 1 and ends on March 31.. It starts every October 15 and ends on December 7. During this time you can join, change, or drop an MA plan. If you drop an MA plan and go back to Original Medicare, this is also the time when you can join a stand-alone Part D plan for prescription coverage.
In case you change your mind after open enrollmentIn health insurance, open enrollment is a period during which a person may enroll in or change their selection of health plan benefits. Health plan enrollment is ordinarily subject to restrictions., there is a second enrollment period called the Medicare Advantage Open Enrollment Period. This period, which runs from January 1 to March 31, allows individuals enrolled in an MA plan to switch or drop their plan, but only once. You can not use this open enrollment period to switch from Original Medicare to Medicare Advantage.
Traditional MedicareOriginal Medicare is private fee-for-service health insurance for people on Medicare. It has two parts. Part A is hospital coverage. Part B is medical coverage. has its own enrollment periodsEnrollment periods are designated time periods to enroll or disenroll from the various parts of Medicare. There are six Medicare enrollment periods., starting with a beneficiary’s Initial Enrollment PeriodThe Initial Enrollment Period is a seven-month period when new beneficiaries can enroll in Medicare without a penalty. Most people enroll in Medicare at age 65. (IEP) when they first qualify for their benefits. If a beneficiary misses their IEP, their next opportunity to get enrolled is during the General Enrollment PeriodThe General Enrollment Period (GEP) allows beneficiaries to enroll in Medicare Part A and Part B from January 1 to March 31 if they missed their Initial Enrollment Period. Beneficiaries can also enroll in a... (GEP), from January 1 to March 31.
How To Choose
We promised to give you 7 ways to help you choose between Original Medicare and Medicare Advantage. Here they are.
If You Are Healthy
If you are a healthy individual and have a family history of good health, Medicare Advantage plans with additional benefits are a very good value. A plan that offers prescriptions, dental, vision, hearing, and extra wellness benefits is a cost-effective all-in-one health plan if you take advantage of the services.
If You Have Chronic Health Conditions
If you have one or more serious health conditions, you have two choices.
If your chronic health condition is supported by a Medicare Advantage Special Needs Plan (C-SNP) in your area, it may be your best option to get coordinated care. If a C-SNP plan is not available to you, the best option is Original Medicare with a Medicare Supplement.
Serious chronic health conditions require regular care. That means more visits to your primary care doctor, specialists, and testing facilities. And with some conditions, your use of medical supplies and durable medical equipment will be higher, as well.
The benefit of Original Medicare and Medicare Supplement insurance in this situation is that you get to choose your providers, the bulk of your costs are paid in advance, and prior authorizationPrior authorization is a process used by health plans to control healthcare costs. Most HMO plans and some PPO plans require authorization before receiving certain treatments, medical services, or prescription drugs. and referrals are not required. However, you must coordinate much of your own care.
The benefit of a Special Needs Plan is that they do the best job of coordinating care. However, C-SNPs are very specific to health conditions and are mostly found in large, urban areas.
If You Have Medicaid
If you are a low-income individual with limited resources you may qualify for Medicaid. People who qualify for both Medicare and Medicaid are dual-eligibleDual-eligible beneficiaries are those who receive both Medicare and Medicaid benefits. It includes beneficiaries enrolled in Medicare Part A and/or Part B while receiving full Medicaid and/or financial assistance through a Medicare Savings Program.... for both program benefits. There are several ways to go.
Medicare itself has the Medicare Savings Program (MSP), which offers benefits for people with Medicaid. There are three different program levels, which pay Medicare Parts A and B premiums and shared costsAn amount patients pay for their share of the cost of medical service or supply, like a doctor’s visit, hospital inpatient visit, or prescription drug. for Medicare-covered services.
The MSP program helps make Medicare affordable for everyone. But, for those who prefer the private medical insurance option, there are Dual-Eligible Special Needs Plans (D-SNPs).
Dual Eligible Special Needs Plans only enroll individuals who are entitled to both Medicare and Medicaid benefits. The eligibility categories encompass all categories of Medicare Savings Program eligibility including:
- Full Medicaid (only);
- Qualified Medicare Beneficiary without other Medicaid (QMB Only);
- QMB Plus;
- Specified Low-Income Medicare Beneficiary without other Medicaid (SLMB Only);
- SLMB Plus;
- Qualifying Individual (QI); and
- Qualified Disabled and Working Individual (QDWI).
D-SNP plans may be a zero-dollar cost-sharing plan or a non-zero-dollar cost-sharing plan. All plans are required to include prescription drug benefits and cover most out-of-pocket expenses. Plans coordinate the additional healthcare needs covered by Medicaid that are not covered by Medicare.
If You Have Veteran Benefits
If you retired from military service, at age 65 you will qualify for Medicare Parts A and B, and you will automatically receive coverage from TRICARE For Life. There are no enrollment forms or fees for TRICARE For Life. TRICARE benefits include covering Medicare’s coinsurance and deductible for services covered by Medicare.
If you served, did not retire, but have Veteran’s Administration (VA) healthcare benefits, you have two options.
VA healthcare benefits are for life. However, your priority group benefits may change. Your priority group determines the level of benefits you receive and whether or not you pay a copay for services.
Most vets with VA health benefits who live near a VA hospital can use their VA facility for their healthcare needs. Even vets who are not close to a VA facility can take advantage of the VA’s new Community Care benefit. However, as the VA points out on its Community Care webpage, “Community care is based on specific eligibility requirements, availability of VA care, and the needs and circumstances of individual Veterans.” Which means, it can deny coverage if it wants to.
If you are a veteran with VA health benefits, plan carefully. Yes, it is technically possible to enroll in Medicare Part AMedicare Part A is hospital coverage for Medicare beneficiaries. It covers inpatient care in hospitals and skilled nursing facilities. It also covers limited home healthcare services and hospice care. (hospital insurance) only and use the VA for the remainder of your health insurance coverage. This will save you the cost of Medicare Part BMedicare Part B is medical coverage for people with Original Medicare benefits. It covers doctor visits, preventative care, tests, durable medical equipment, and supplies. Medicare Part B pays 80 percent of most medically necessary healthcare services. premiums, Medicare Part B coinsurance, and a Medicare Part D plan. However, if you move away from a VA hospital, and then need to enroll in Part B and Part D, you may be required to pay a penalty.
If You Have Retiree Health Benefits
Many large employers and unions offer their retirees health benefits in retirement, including employer Medicare Advantage plans and Medicare Supplements. The benefit of these plans is either a lower monthly premium and/or out-of-pocket expenses.
Whether or not retiree health benefits will benefit you are not is entirely dependent on all of the factors listed above. Unless your employer or union health plan covers all costs of all services, you still need to consider your financial situation. For example, if you qualify for Medicaid in retirement, Original Medicare or a D-SNP plan is still your best option. Likewise, if you have a serious chronic health condition, Original Medicare and a Medicare Supplement are your best option.
Frequently Asked Questions
- What’s the difference between regular Medicare and Medicare Advantage?
- What is the biggest disadvantage of Medicare Advantage?
- Why do people choose Medicare Advantage over Medicare?
- Is Medicare Advantage cheaper than Medicare?
- Does Medicare Advantage cover dental and vision?
- What is the difference between Medicare Advantage and Medicare Part D?
- What is Medicare Advantage?
- What are some benefits of Medicare Advantage?
Citations and References
- Explore your Medicare coverage options
- How to compare Medigap policies | Medicare
- Welcome to Medicare | Medicare
- Explore your Medicare coverage options
- A Snapshot of Sources of Coverage Among Medicare Beneficiaries in 2018 | KFF
- Medicare Advantage in 2022: Enrollment Update and Key Trends | KFF
- Medicare Advantage 2022 Spotlight: First Look – Appendix – 9824 | KFF
- A Snapshot of Sources of Coverage Among Medicare Beneficiaries in 2018 | KFF
- CMS Releases 2022 Premiums and Cost-Sharing Information for Medicare Advantage and Prescription Drug Plans | CMS