Comparing Medicare and Medicare Advantage
You could breathe a sigh of relief as you approach 65, or once you apply for Medicare, at the prospect of low-cost (or even free) government health insurance. Unfortunately, deciding between Medicare and Medicare Advantage can be a difficult task; each has its own set of benefits and drawbacks. According to the Kaiser Family Foundation, in 2020, 39 percent of Medicare beneficiaries were enrolled in a Medicare Advantage plan. So, what distinguishes one Medicare plan from another? What criteria do you use to make your decision?
Understanding Medicare Coverage Basics: Medicare and Medicare Advantage
It's important to understand the fundamentals of Medicare and Medicare Advantage before comparing the two.
Medicare
Original or basic Medicare is government run and has two parts: Part A and Part B. Part A pays for medical costs and does not usually have a fee associated with it. Part B can have a fee attached depending on the circumstances, and it covers medical appointments, lab screenings, preventative testing, and other services. The prescription medications you take at home are not covered by Parts A and B. To get prescription drug coverage, you'll need to add Medicare Part D.
Medicare Advantage
Private insurance providers manage Medicare Advantage plans, which are controlled by the government. They must have coverage that is comparable to Medicare Parts A and B. Many Medicare Advantage plans have prescription drug coverage in addition to Part A and B coverage. Since Medicare Advantage plans are run by private insurance firms, they may have health insurance provider networks that restrict where and how you can get medical care.
How to Choose the Right Medicare Plan
Individualized health care is needed. People 65 and older, as well as some younger people with disabilities, have access to basic or initial Medicare. (Medicare has an online tool that can help you determine whether you're eligible.) While you can get Medicare automatically when you reach the age of 65 (or three months before), you may not want to because you have other choices. Medicare Advantage will provide coverage and options not available via traditional Medicare.
These benefits may or may not be worth the extra expense of a Medicare Advantage plan, depending on your medical needs.
Questions to Ask
These are the basic plan features you have to compare to help you determine what kind of Medicare Plan is better for you.
- Monthly bonuses
- Co-pay, co-insurance and deductibles
- Out of the boundaries
- Network Provider
In addition to the basics above, you can also ask a few more questions about the amount of coverage you need and the effect you might have on extra pocket costs:
- Are you using prescription medicines regularly?
- Are you more or less seeing the doctor often?
- If you're out of state, need health insurance?
Your local state health insurance assistance will help you understand your choices.
Medicare and Medicare Advantage Comparison Table
One of the biggest advantages of original Medicare over Medicare Advantage is the freedom to access doctors and medical providers without network limitations. Each plan has its pros and cons depending on your needs.
| Medicare | Medicare Advantage |
Medicare Part A & B | Yes (Part B is optional) | Yes, includes A & B |
Preventative Care | Yes: learn more about Medicare preventative care | Yes |
When and How to Enroll | You can sign up for Medicare three months before you are 65: learn more about applying for Medicare. | During the special enrollment period |
Dental Benefits | No | Yes, with many plans |
Vision Care (Eye exams or glasses benefits | No | Yes, with many plans |
Extra Benefits | No | May include routine hearing checks, fitness benefits, and other perks |
Prescription Drug Coverage | No, but available as an add on through Medicare Coverage D or may have limited coverage for specific situations | Yes, with many plans |
Prescription Drug Coverage | No, but available as an add on through Medicare Coverage D or may have limited coverage for specific situations | Yes, with many plans |
Choice of Medical Providers | If the provider you choose accepts Medicare, then you may use your Medicare coverage. Many doctors and medical providers accept Medicare. | You may be limited to a network or have higher out-of-pocket costs out-of-network. |
Access to Specialists | Yes, without a referral. | You may need a referral before you can see a specialist with some plans. |
Medicare Advantage Premium Costs
Approximately 60 percent of Medicare Advantage recipients did not receive premium reimbursement of prescription drugs (except Part B) in 2020. Medicare Advantage's total premium charged for recruitment medicines was $63 a month.
Out of Pocket Spending
No out-of-pocket limit is given to Original Medicare. The overall Medicare Advantage for 2021 is $7,550 in-network or $11,300 in-network and non-network combined. Some plans provide lower boundaries from the wallet.
| Medicare | Medicare Advantage |
Maximum out-of-pocket limit | No | Yes |
Deductible | Yes: learn more about Medicare deductibles | Some plans may have deductibles; this will vary by insurer. |
Co-insurance or Co-pays | Yes | Yes |
HMO or PPO When Choosing Medicare Advantage Plans?
If contrasting the Medicare Advantage Plans options, take into account that HMO plans had lower pocket costs (average of $4,486) than PPO plans (average of $5,622-$6,493). It's more than 1000 dollars of average pocket cost difference!