Original Medicare vs. Medicare Advantage: What Are the Differences?

Medicare beneficiaries have two main choices. They can enroll in Original Medicare, or they can select a Medicare Advantage plan. There are many differences between the two options.

The Basics

Original Medicare consists of Medicare Part A and Medicare Part B. Beneficiaries can also enroll in Medicare Part D and Medicare Supplement Insurance.

  • Medicare Part A is hospital insurance. It covers inpatient hospital care, skilled nursing facility care, hospice care and home health care.
  • Medicare Part B is medical insurance. It covers preventative care, services from doctors and other providers, outpatient care, home health care and durable medical equipment.
  • Medicare Part D is prescription drug coverage. These policies are sold by private insurance companies.
  • Medicare Supplement Insurance is also called Medigap. These policies help with the out-of-pocket costs associated with Medicare.

Medicare Advantage policies are sold by private insurance companies. These policies combine Medicare Part A and Medicare Part B coverage into a single policy. Many Medicare Advantage plans also provide prescription drug coverage. People who enroll in Medicare Advantage cannot enroll in a Medicare Supplement Insurance plan.

The Costs

When looking at costs, you need to think about two things: your premium and your other out-of-pocket expenses, which can include deductibles and copays or coinsurance.

Premiums:

  • When you enroll in Original Medicare, you may qualify for free Medicare Part A, but you will have to pay a monthly premium for Medicare Part B, as well an any Medicare Part D and Medicare Supplement Insurance plan you select.  The Medicare Part B premium you pay depends on your income bracket.
  • Some Medicare Advantage plans are often described as having a $0 premium. This means that you do not pay an additional premium on top of the amount you pay for Medicare Part B. Other Medicare Advantage plans require a monthly premium, which you pay on top of the amount you are required to pay for Medicare Part B.

Out-of-Pocket Expenses:

  • With Original Medicare, you will have to pay the deductible. After that, you will typically pay 20 percent of the Medicare-approved amount for services covered under Medicare Part B. There is no annual out-of-pocket limit for Original Medicare, although a Medicare Supplement Policy can provide one.
  • Some Medicare Advantage plans have lower out-of-pocket costs than Original Medicare, although these costs vary from plan to plan. Additionally, there is a limit to the out-of-pocket costs that you can be charged in a year.

The Providers

If you enroll in Original Medicare, you can go to any doctor or hospital that accepts Medicare, anywhere in the United States. Some providers do not accept Medicare, but many do. Most of the time, you can see a specialist without getting a referral.

If you enroll in Medicare Advantage, your choice of providers and hospitals may be more limited. Most plans use a network of hospitals and providers. If you see a doctor or go to a hospital that is not included in your plans network, you may have to pay more out of pocket. You may need a referral to see a specialist.

The Benefits

Medicare Advantage plans provide coverage for everything that is covered under Original Medicare, and many also provide prescription drug coverage.

On top of this, Medicare Advantage plans often include benefits that are not covered under Original Medicare. These benefits can include hearing, vision and dental coverage, among many other things. Some may even provide non-medical benefits, such as meal delivery and in-home support services. These extra benefits are a big part of what makes Medicare Advantage attractive to many enrollees.

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Sources
  • https://www.medicare.gov/sites/default/files/2019-09/10050-medicare-and-you.pdf

  • https://www.cms.gov/newsroom/press-releases/cms-finalizes-medicare-advantage-and-part-d-payment-and-policy-updates-maximize-competition-and

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