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. Once a beneficiary is first enrolled in the Medicare program, they receive their benefits through Original Medicare, which is divided into Part A (hospital benefits) and Part B (medical insurance). They may also wish to consider joining a Medicare Advantage plan. These plans are required to cover everything that Original Medicare does, with the exception of hospice care, but could also 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 years who have either reached 65 years of age, or are under age 65 and have End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS, also known as Lou Gehrig’s Disease), or have collected certain disability benefits for two years or more.
Medicare Part A covers hospital insurance, including inpatient care, medically-necessary skilled nursing facility stays, hospices, and home health care settings. Medicare Part B, on the other hand, covers services received from doctors and other health care providers, outpatient care, home health care, durable medical equipment, and certain preventive services.
When enrolled in Original Medicare, you are free to be treated by any doctor or health care provider that accepts Medicare assignment. If you choose a provider that is not enrolled in the Medicare program, you run the risk of paying up to 15% more for services rendered.
If you have worked 10 years or 40 quarters in Medicare-covered employment, 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 copayments and/or coinsurance. Everyone will have to pay a monthly Part B premium. 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 assignment.
Medicare Advantage (MA, also known as Part C) plans are sold by private insurance companies. In order to be eligible to join one, you must already have Original Medicare. MA plan enrollment occurs either through your Initial Enrollment Period (when you first sign up for Part A and Part B) or during the Annual Election Period, which runs from October 15 to December 7 each year. If you are diagnosed with ESRD, you can only join a MA plan in certain situations and may be able to join Medicare Special Needs Plan (SNP) if one is available in your area. Remember, even if you are enrolled in an MA plan, you will still need to keep paying your Part B monthly premium.
MA plans are legally required to offer at least the same amount of coverage provided by Original Medicare, but many of them will offer additional benefits like vision, dental, and hearing. Some MA plans might even include prescription drug coverage, and 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 health care providers from which you must utilize. Visiting an out-of-network provider may result in higher out-of-pocket costs.
Beneficiaries enrolled in a MA 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 MA plans in your area to see if any of them meet your needs better than Original Medicare Part A and Part B coverage.
- Network: Are there doctors and hospitals that you would prefer to keep? You will have to check with each MA plan to see if your desired physician participates in their provider network. If you are choosing Original Medicare, you can visit any doctor or hospital that accepts Medicare assignment.
- Prescription drugs: Some 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 purchase a stand-alone Prescription Drug Plan to receive prescription drug coverage.