Older Americans typically receive Medicare in one of two ways: Original Medicare (Parts A and B) and Medicare Advantage (Part C) .
The eligibility requirements are the same for Original Medicare and Medicare Advantage.
Original Medicare is provided by the federal government; Medicare Advantage is sold by private insurance companies.
Medicare Advantage must cover at least the same things as Original Medicare, but often includes more benefits.
Medicare Part A and Medicare Part B have set costs; pricing for Medicare Advantage depends on each plan.
If you’re nearing Medicare eligibility or evaluating whether to stick with your current plan, it’s crucial to examine Original Medicare vs Medicare Advantage — the two main ways you can receive Medicare across the nation. There are some key similarities (and differences) to know. Fortunately, Medicare gives its beneficiaries several chances each year to select a coverage option that will work for them.
No matter where you are in the Medicare enrollment process, here is what to know about Original Medicare vs Medicare Advantage.
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The term “Medicare” is used many different ways, and it’s important to understand exactly what it’s referring to when you’re weighing your options. For example, having Medicare can mean:
- Being enrolled in Original Medicare (Parts A and B).
- Being enrolled in both Original Medicare and Medicare Supplement Insurance (Medigap).
Some beneficiaries may even (understandably) refer to their Medicare Advantage (Part C) plan as Medicare. Here are the different forms of Medicare you’ll want to understand before making a decision.
Original Medicare is the form most often associated with Medicare. That’s partly because it’s the oldest and still most popular — though Medicare Advantage is gaining ground. Original Medicare is made up of:
- Medicare Part A: Sometimes called “hospital coverage,” Part A helps cover inpatient care at hospitals and other medical facilities. That can include hospice and some skilled nursing facility stays.
- Medicare Part B: Part B provides the “medical coverage” portion of Original Medicare. Doctor’s visits, therapies, lab work and durable medical equipment are all partially covered by Part B. It even covers 100% of preventive services.
The list of services not covered by Medicare is just as important to know; if you need dental, vision or hearing coverage, you’ll need to sign up for separate plans as Original Medicare doesn’t provide these benefits. You’ll also need to enroll in Medicare Prescription Drug Plan (Part D) if you need medications. All of these separate plans also have their own costs.
Medicare Supplement Insurance (Medigap)
For some, “Medigap” may be synonymous with “Medicare,” but they’re two separate things. Medigap refers to additional policies you can purchase alongside Original Medicare to help with your costs. To sign up for Medigap, you must first be enrolled in Medicare Parts A and B. Those are just some of the details you’ll want to know about comparing Medigap and Original Medicare.
Medicare Advantage (Part C)
Medicare Advantage, or Part C, is sold by private insurance companies. Medicare Advantage replaces Original Medicare (Part A and B) but offers the same Part A and B coverage as Original Medicare. Along with receiving Part A and B benefits, Medicare Part C often bundles additional services like dental, hearing, vision and prescription drug coverage (more on that a little later).
Knowing key details like these can help as you weigh the pros and cons of Medicare Advantage plans vs Original Medicare. Of course, there are plenty of other things to take into account.
Yes, and the difference often adds up to more benefits for Medicare Advantage beneficiaries. But there may be trade-offs to consider. Not knowing how the coverages work can affect the doctors you see and the benefits you receive. Here are some details to know when comparing Original Medicare vs Medicare Advantage plan coverage options.
Original Medicare coverage
There are some key characteristics that help define Original Medicare coverage. First, you can use it at any doctor’s office or hospital that accepts Medicare — you’re not limited to certain doctors or areas. Another is that you’ll probably need to add other policies to get everything you need. Original Medicare doesn’t cover hearing, dental or vision, and you’ll need to enroll in Medicare Part D for your medications.
Medicare Advantage coverage
Medicare Advantage (Part C) must provide at least the same benefits as Original Medicare’s Parts A and B. That includes medical, hospital and preventive services. Many of the private insurers that provide these plans sweeten the pot with additional benefits like dental, vision and hearing coverage. Some of these benefits may not be as much as you’d get from a separate plan, but can significantly improve your out-of-pocket costs over what you’d pay without coverage.
Unlike Original Medicare, Medicare Advantage plans typically don’t let you see any doctor in the nation that accepts Medicare. Instead, many Part C plans use provider networks. These are groups of doctors and providers that have agreed to treat an insurance company’s customers. How that happens depends on the type of Medicare Advantage plan you have. Here are four common types of Medicare Advantage plans:
Health Maintenance Organization (HMO): HMO plans manage your care through a primary care physician, who is also responsible for referring other in-network doctors when you need to see a specialist.
Preferred Provider Organization (PPO): With a PPO plan, you’ll have a primary care physician but may be able to see in-network specialists without a referral.
Private Fee-for-Service (PFFS): Many PFFS plans don’t require you to see a primary care physician, but you’ll likely have to stick to a provider network. Going out-of-network may be possible, but it’ll probably be more costly.
Special Needs Plans (SNP): SNPs are designed to help beneficiaries with certain diseases or conditions. Some, like C-SNPs, are designed for people with chronic conditions and cover doctors that treat your specific condition. D-SNPs are catered to those who are dual-eligible with Medicare and Medicaid.
Are you eligible for cost-saving Medicare subsidies?
First, understand that Original Medicare’s costs are standardized — aside from some adjustments based on income and work history, Parts A and B come with set costs that can be somewhat easy to forecast. Original Medicare does this because it’s a federal program that’s accepted in all states. Medicare Advantage, however, is sold by private insurance companies and based on local markets. A Part C plan in Pittsburgh is probably priced differently than one in Palm Beach.
To illustrate, here are some standard Medicare costs, Original Medicare vs Medicare Advantage:
Premium: the monthly amount you pay for your coverage.
- Original Medicare: Parts A and B each have their own premiums. Part B starts at $170.10 per month in 2022 for those making $91,000 or less ($182,000 for couples) and increases based on income. Part A is based on work history ; if you worked and paid Medicare taxes for 40 quarters, you won’t pay a Part A premium.
- Medicare Advantage: You’ll pay at least the Part B premium in most cases, and maybe a little more for your Part C plan. However, some Part B plans offer no-cost premiums. There’s a wide range here, but the average Part C premium in 2022 is $19 per month.
Deductible: what you pay before your coverage kicks in.
- Original Medicare: Again, Parts A and B have their own costs. The Part A deductible per benefit period was $1,556 in 2022; the Part B annual deductible was $233.
- Medicare Advantage: Part C plans can lump all of your deductibles together, charge separate deductibles for your medical and prescription drug coverages, or charge no deductibles at all.
Coinsurance and Copayments: the payment you make to your doctor when you receive a service.
- Original Medicare: Parts A and B each have their own payment structures. Part A charges daily copays once you’ve reached your limit on fully covered days in a medical facility. Part B typically charges a 20% coinsurance for covered services after Medicare picks up the first 80%.
- Medicare Advantage: Part C generally charges copays, or flat-rate charges, whenever you receive a service. These are usually $10 to $30 for regular doctor’s visits, and $20 to $60 for specialists. There may be some services and treatments that require coinsurance instead of a copay.
No — if you qualify for Original Medicare, you can enroll in Medicare Advantage. In fact, you can’t enroll in Medicare Advantage without first enrolling in Original Medicare’s Parts A and B.
To qualify for Medicare, you must be a legal U.S. citizen, or have been a legal resident for five or more years. Eligibility is also usually reserved for Americans aged 65 and older, but you may qualify before 65 if you:
- Have received disability-based Social Security benefits for more than 24 months.
- Are living with End Stage Renal Disease (ESRD).
- Are living with Amyotrophic Lateral Sclerosis (ALS), also called Lou Gehrig’s disease.
As with Original Medicare, you also can’t be denied coverage due to pre-existing conditions.
What extra benefits and savings do you qualify for?
When shopping for healthcare, it’s important to always prioritize your needs when comparing a Medicare Advantage plan vs Original Medicare. That said, you may be curious to hear your doctor’s opinion of the different plans. To help you understand how doctors and other providers fit into the Medicare equation, here’s a very simplified model for how they receive payment from a Medicare Advantage plan vs Original Medicare:
Original Medicare (Parts A and B): The doctors that treat you are paid by Medicare for every service they perform. This is true whether you’re admitted to the hospital (Part A) or have an outpatient appointment with your doctor (Part B). This is known as a Fee-for-Service model.
Medicare Advantage (Part C): Generally, the federal government pays health insurance companies a set amount per beneficiary each month. Those companies then pay the doctors within their networks another set amount to treat their customers.
Which type of Medicare a doctor prefers can come down to details like their location, how many patients they have and personal preferences. Feel free to discuss the topic with your doctor if you’d like to hear their opinion.
Roughly 22 million Americans are enrolled in Medicare Advantage. Part C is a more recent offering and still falls behind Original Medicare, which accounts for about two-thirds of all Medicare beneficiaries. Enrollment in Medicare Advantage has doubled since 2010, however, and government officials expect it to equal Original Medicare’s enrollment numbers by 2029.
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