Making decisions that impact your physical and financial well-being can be confusing. Should you pick Medicare Advantage, or Original Medicare? What’s the difference? Here’s a comparison of your two options.
What is Medicare?
To dive into the differences between Medicare plans, we have to understand Medicare as a whole: it is federally-funded healthcare insurance. Medicare plans are much more cost-effective compared to private insurance plans.
Most people who sign up for Medicare are 65 or older, but it also assists younger people with certain disabilities and anyone with End-Stage Renal Disease. No matter why you qualify for Medicare, you have the choice between Medicare Advantage and Original Medicare.
Medicare Advantage vs. Original Medicare
Coverage
When we say coverage, we mean “What will the Medicare plan pay for?”
Prescription Drugs
Medicare Advantage often covers prescription drugs. However, only certain plans cover medications—if you need prescription drugs covered, make sure to pick a plan with Part D coverage. Each plan will cover different drugs.
With Original Medicare, you’ll either have to purchase separate coverage for drugs or pay for them out-of-pocket.
Medicare Advantage offers extra coverage
Medicare Advantage covers more medical services—like dental care, vision, and hearing—that Original Medicare doesn’t. Both Advantage and Original usually cover medically necessary services or supplies.
Medicare Advantage requires approval
With Medicare Advantage, you often need approval of services or supplies before the plan covers it. In contrast, with Original Medicare, you usually don’t have to get any sort of approval ahead of time.
Costs
When considering coverage, cost is a very important part of the equation. First, we need to understand a few insurance terms:
- Premium: The amount you’ll pay for your health insurance per month.
- Deductible: A specified amount of money that you agree to pay before your insurance pays.
- Coinsurance: The amount you pay for covered health care after you meet your deductible.
AARP writes, “The federal government sets the premiums, deductibles, and coinsurance amounts for Part A (hospitalizations) and Part B (physician and outpatient services).”
Original Medicare
Most people qualify for premium-free Part A—meaning your hospitalizations are covered with no monthly fee. As for Part B, you pay a premium for that.
As for out-of-pocket costs, you usually pay 20% of the Medicare-approved amount after your deductible. Before you meet your deductible, you cover all the costs yourself. There’s no cap on out-of-pocket costs.
Many people who enroll in Original Medicare enroll in Medigap policy too, which helps cover the costs of:
- Copayments
- Coinsurance
- Deductibles
Aside from Medigap, you can pay for these costs using coverage from a former employer or union, or Medicaid.
Medicare Advantage
Similarly to Original Medicare, most people qualify for premium-free Part A. As for Part B, you pay a monthly premium. Plus, it’s possible you’ll have to pay a separate premium to the plan. Premium costs vary greatly depending on what plan you pick.
Out-of-pocket costs also vary by plan, but there is a yearly limit on out-of-pocket costs for Part A and B. Once you reach your plan’s limit, you won’t have to pay anymore for the rest of the year.
As for Medigap, you can’t buy it and you don’t need it when with a Medicare Advantage plan.
Breakdown of costs
At the end of the day, costs depend on your individual plan. Many seniors do feel more comfortable with a Medicare Advantage plan, because there’s a yearly limit on costs, plus more coverage in general.
After costs, there’s still one more factor to consider.
Freedom of choice: Doctors and hospitals
The last question to ask yourself is, “Can I choose my doctor and provider?”
Original Medicare offers more freedom. You can go to any doctor or hospital that takes Medicare, and you usually won’t need a referral to see a specialist.
Medicare Advantage has more limitations. Typically, you can only use doctors who are in the plan’s network and service area. If you want to see a specialist, you often will need a referral.
Quick Summary
We’ve thrown a lot of information at you, so here is a quick summary of it all:
- Coverage: Medicare Advantage offers more coverage.
- Cost: Original Medicare may be less expensive if you have minimal healthcare needs, but Medicare Advantage offers a yearly cap on out-of-pocket expenses.
- Choice: Original Medicare offers more freedom of choice in doctors and hospitals.
Ōmcare engages with Medicare plans
Ōmcare partners with organizations that are seeking to:
- Increase access
- Improve health outcomes
- Reduce costs
Ōmcare is actively engaging with Medicare plans—both traditional and Advantage—to help bring technology into the home as part of the costs you already pay. Learn more about how we partner.