October 6, 2016
Is One Better than the Other?
Before making a decision regarding which form of Medicare is right for you, it is important to understand the difference between Original Medicare vs. Medicare Advantage.
Many beneficiaries are automatically enrolled in Original Medicare, which is divided into Part A (hospital benefits) and Part B (medical insurance), when they qualify for Medicare benefits. Instead of getting your Part A and Part B benefits directly through the government, you can get these benefits (except hospice care, which is covered by Part A) through a Medicare Advantage plan. Medicare Advantage plans often include additional coverage such as vision, dental, and prescription drug coverage.
Original Medicare (Part A and Part B)
Original Medicare is administered by the federal government and is available to all American citizens and permanent residents of five or more continuous years who have reached 65 years of age. You might qualify for Medicare benefits before age 65 if you have end-stage renal disease (ESRD), amyotrophic lateral sclerosis (ALS, also known as Lou Gehrig’s disease), or you have received certain disability benefits for two years or more from the Social Security Administration or the Railroad Retirement Board.
Medicare Part A (hospital insurance) inpatient hospital stays, care in a skilled nursing facility, hospice care, and limited home healthcare. Medicare Part B (medical insurance) covers services received from doctors and other qualified health care providers, outpatient care, limited outpatient prescription drug coverage, durable medical equipment, and certain preventive services. There are certain restrictions on Part A and Part B coverage; for example, you have to receive your care from Medicare-assigned healthcare providers. It’s usually a good idea to ask your provider whether your doctor visit, service, or medical supply is covered by Medicare before you receive it so you can be prepared for any out-of-pocket costs.
When enrolled in Original Medicare, you are free to be treated by any doctor or healthcare provider that accepts Medicare assignment. If you choose a provider that doesn’t accept Medicare assignment, you run the risk of paying up to 15% more for services rendered.
If you or your spouse have worked 10 years or 40 quarters and paid Medicare taxes while working, you will not have to pay a monthly premium for Part A. That doesn’t mean that Part A is completely free, as there are still other costs associated with the hospital insurance, such as coinsurance and a deductible.
You will pay the standard premium amount for Part B unless your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount. You are responsible for all costs until you meet the yearly Part B deductible. After the deductible is met, Medicare will begin to pay its share and you will generally pay 20% of the Medicare-approved amount of the service, if your doctor or other health care provider accepts Medicare assignment.
Medicare Advantage plans are offered by private insurance companies that contract with Medicare. You can sign up for a Medicare Advantage plan when you’re first eligible for Medicare, during your Initial Coverage Election Period, or during the Annual Election Period, which runs from October 15 to December 7 each year. If you are diagnosed with ESRD, you might not be eligible for a Medicare Advantage plan in certain situations, but you may be able to enroll in a Medicare Special Needs Plan (SNP) if one is available in your area. Remember, even if you are enrolled in a Medicare Advantage plan, you will still need to keep paying your Part B monthly premium along with any premium the plan may charge.
Again, many Medicare Advantage plans include prescription drug coverage; these are known as Medicare Advantage Prescription Drug (MAPD) plans.
Medicare Advantage plans come in many different types, which may include, but are not limited to, Health Maintenance Organization (HMO), Preferred Plan Provider (PPO)*, and Private Fee-For-Service (PFFS) plans. Each plan type may have different regulations on how you must receive care. For example, HMO plans have an established network of doctors, hospitals, and other healthcare providers that you must use in most cases. Visiting an out-of-network provider may result in higher out-of-pocket costs.
Beneficiaries enrolled in a Medicare Advantage plan will pay a monthly premium for their coverage, although that premium could be as low as $0 a month. Out-of-pocket copayments, coinsurances, and deductibles will continue to apply as well.
Original Medicare vs. Medicare Advantage Plan comparison
Making a choice between Original Medicare vs. Medicare Advantage plans is dependent on your own health needs and budget. There is no one coverage option that is right for everyone.
When deciding on which plan works best for you, keep the following in mind:
- Cost and coverage:These vary by plan. Check the available Medicare Advantage plans in your area to see if any of them include benefits that are important to you and that aren’t included in Original Medicare Part A and Part B coverage.
- Network:Are there doctors and hospitals that you would prefer to keep? You may want to check with each Medicare Advantage plan you’re considering to see if your desired physician participates in the plan’s provider network. Under Original Medicare, you can visit any doctor or hospital that accepts Medicare assignment.
- Prescription drugs:Most Medicare Advantage plans combine health benefits and prescription drug coverage into a single plan. If you choose to receive your Medicare benefits through Original Medicare, then you may sign up for a stand-alone Medicare Part D Prescription Drug Plan to receive prescription drug coverage, which is limited under Original Medicare.
*Out-of-network/non-contracted providers are under no obligation to treat Preferred Provider Organization (PPO) plan members, except in emergency situations. For a decision about whether we will cover an out-of-network service, we encourage you or your provider to ask us for a pre-service organization determination before you receive the service. Please call our customer service number or see your Evidence of Coverage for more information, including the cost-sharing that applies to out-of-network services.