Original Medicare and Medicare Advantage are both health insurance plans provided by the federal government. Original Medicare is a federally funded program that provides basic coverage for people who have reached 65 years of age or older, whereas Medicare Advantage is an option for people to purchase their own health plan from private companies with more benefits and less cost.
In this article, we will discuss the advantages of enrolling in a Medicare Advantage Plan.
What is Original Medicare?
The Federal Medicare Program was founded in 1965. Original Medicare is the traditional form of health insurance for people 65 and older. It provides coverage that includes inpatient and outpatient medical services.
Original Medicare consists of Part A and Part B.
Part A Coverage
Part A covers medical expenses incurred in a hospital setting or other skilled nursing facility, hospice care, and home health care.
Part B Coverage
Part B covers outpatient and physician services, durable medical equipment, and preventive services, like those to prevent common illnesses or detect illnesses at an early stage. It will also cover ambulance services if required for emergency care.
Medically necessary services needed to diagnose or treat a condition are covered under Part B.
Original Medicare Premiums
Part A is "free" if an individual has met certain requirements:
- If they have worked for 40 quarters at a job where Social Security taxes were deducted. (Since deductions were made from prior income, it's not technically true that Medicare Part A is free.)
- If they have Railroad Retirement benefits
- If their spouse is eligible
- If you were a federal employee after December 31, 1982
- If you were a local or state employee after March 31, 1986
If none of the above criteria has been met, your Part A coverage will likely come with a monthly premium.
If you do not meet the criteria above, you will likely pay a monthly premium for Part A. Your monthly Part A premium will depend on how many years you or your spouse worked in any job at which you paid Social Security taxes in the U.S.
Original Medicare Isn't Enough
It's obvious that Original Medicare coverage is extremely helpful. Parts A and B will cover about 80% of medical expenses. That saves Medicare beneficiaries a large amount of out-of-pocket costs.
However, there is no out-of-pocket maximum cost in Medicare as there are in employer or group health insurance plans.
That means that if you incur a $100,000 hospital stay, Medicare will pay for 80%, leaving you with $20,000 in out-of-pocket costs. There is no cap to what you could be responsible for paying.
That is why it is so important to have more coverage than just Parts A and B. Medicare Advantage Plans are a good solution.
Medicare Advantage Plans
Medicare Advantage is also referred to as Medicare Part C. These plans combine the Original Medicare benefits of Parts A and B as well as extra benefits like dental, vision, hearing, and prescription drug coverage.
Instead of purchases several policies to cover all of these, Medicare Advantage Plans offer all coverage in one policy, making them less confusing to keep track of, which is why so many Medicare beneficiaries choose Medicare Advantage Plans.
Advantage plans are sold by private insurance companies. While they do follow rules and regulations that Medicare sets, the monthly premium for Medicare Advantage plans will vary based on the type of plan and the benefits provided. There are some Advantage plans that require no monthly premium.
Unlike Original Medicare, these plans do have a maximum on what a member's out-of-pocket expenses can be during each year.
Medicare Advantage plans require members to use providers who participate in the plan's network service area. Members will need to choose their Advantage plan based on their location and healthcare needs.
Dental, Vision, and Hearing Benefits
Dental, Vision, and Hearing benefits are not part of traditional Medicare. However, they are included in Medicare Advantage plans.
DVH benefits include services like:
- Preventive and routine dental care
- Restorative dental treatment including fillings, root canals, crowns, bridges, and dentures
- Hearing exams and hearing aids
- Routine vision exams, glasses, and contact lenses
The coverage details of these services will vary based on the type of Advantage plan you choose.
Prescription Drug Coverage
Most Medicare Advantage Plans include prescription drug benefits. If they do, they are called MAPDs. This will take the place of having to enroll in a separate Medicare Part D prescription drug plan.
As with DVH plans, the coverage will vary based on the type of Advantage plan you are enrolled in. There are some Advantage plans that do not include prescription drug coverage, so this is an important factor to consider, especially if you are taking several prescription drugs.
Choosing a Medicare Advantage Plan
There are five types of Medicare Advantage plans. Below is a brief introduction to each, but you can read more about each plan HERE
Health Maintenance Organizations (HMOs)
HMO plans require you to choose a primary care physician and receive care from a provider that is in the plan's network. There can be exceptions to this in case of urgent or emergency care.
Preferred Provider Organizations (PPOs)
Like an HMO plan, PPOs have a network of doctors. However, members can choose to see an out-of-network provider, but the cost for these providers will be higher than if the provider was in the plan network.
Private Fee-for-Service (PFFS) Plans
These plans set reimbursement fees for both the provider and the member. They dictate how much you will pay for services.
Special Needs Plans (SNPs)
These plans are only offered to individuals with specific diseases. These plans have tailored benefits and drug formularies based on the disease.
Medical Savings Account (MSA) Plans
MSAs require the member to have a high-deductible plan. These plans come with a medical savings account that is used to pay the deductible.
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There is an obvious benefit of obtaining a Medicare Advantage Plan that will provide all your Medicare benefits instead of relying solely on Medicare Parts A and B. The specific type of plan you need may be less obvious. This is where a licensed insurance agent can be extremely helpful.
We can guide you through all of your options and help you choose the plan that best fits your needs.
