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Original Medicare vs. Medicare Advantage

When you enroll in Medicare, you will be able to choose between Original Medicare (Parts A, B, and D) and a Medicare Advantage Plan (MA). Medicare Advantage plans are often collectively referred to as Part C. MA plans are private health plans that contract with Medicare to provide Medicare benefits. These plans must cover the same benefits as Parts A and B. In other words, they combine hospital and outpatient care in one plan, and may also cover additional services that Original Medicare does not, such as hearing and eye exams. They may also cover prescription drugs.

What are the differences in cost?

If you enroll in Original Medicare, you will pay your Part B premium and deductible, and Part D premium if you choose to enroll in Part D. You will also pay the coinsurance required by Medicare, which is generally 20% of the cost for a service. Many people purchase supplemental Medigap insurance to cover some of their out of pocket costs.

If you enroll in an MA plan, you will continue to pay your Medicare B premium, and will pay any MA premium, copays, and deductibles in addition. There is wide variation in the costs of these plans, and in the benefits they offer. MA plans may have lower out of pocket costs than Original Medicare, because they have a legal maximum limit on annual out-of-pocket costs. Still, limits vary by plan, and can be fairly high. In 2014, the average out of pocket limit for an HMO is $4,707, and $4,927 for a local PPO. The maximum out-of-pocket limit is $6,700 in 2014. However, if you are enrolled in an MA plan, you cannot also have Medigap insurance.

Which allows me greater choice of providers?

One of the key benefits of original Medicare is that beneficiaries can go to any provider or hospital they choose, as long as that provider accepts Medicare. In contrast, MA plans limit the choice of providers to those that are in their network. Similarly, Original Medicare will cover providers anywhere in the country, while most MA plans limit you to the providers in one local geographic area. All MA plans are required to cover emergency care anywhere in the country.

Can I get extra benefits through Medicare Advantage?

Many MA plans do offer extra benefits that Original Medicare does not cover, such as vision services and hearing aids (Please note that Medigap insurance does not cover these benefits either, for the most part).

How do I get prescription drug coverage?

Many MA plans offer prescription drug coverage, though not all do (Plans that offer drug coverage are sometimes referred to as MA-PDs). To get drug coverage through original Medicare, you must purchase a Part D plan and pay an additional premium.

Which is more stable from year to year?

Each year, MA plans choose whether or not they want to stay in Medicare or not. They also can change their costs and benefits each calendar year. In addition, the Affordable Care Act will change the way MA plans are paid in the next few years, which may have an impact on the costs that beneficiaries pay. Original Medicare will always be there, but its deductibles increase slightly each year.

Measuring Quality

Medicare uses a 5 star rating system to assess the quality of Medicare Advantage and Part D plans, with 5 stars being excellent, 4 being above average, and 3 being average. These ratings are based on a variety of factors, including how well the plans help members manage chronic diseases, member satisfaction, and how often members get screening exams and vaccines, among others. The ratings are posted on the Medicare plan finder website. According to the Medicare Payment Advisory Commission, 36% of all plans score a 4 or above on the rating system.

There are many different types of Medicare Advantage plans, but the most common are HMOs and PPOs. 93% of people enrolled in Medicare Advantage choose one of these two types of plans. The other three options are Medicare Private Fee for Service plans, Medicare Medical Savings plans, and Special Needs Plans, but these are newer, and not as widely available.

Original Medicare Medicare Advantage
HMO PPO
What
you pay
Part B premiums, deductibles, and coinsurances—unless you have a Medigap policy that covers them. Medicare premiums + plan premium. Your plan sets its own deductibles and copays. Medicare premiums + plan premium. Your plan sets its own deductibles and copays.
Can
I go to any doctor?
Yes, if they accept Medicare No, you must go to in-network providers Yes, Though PPOs have provider networks, you may go out of network for a higher copay.
How
do I get prescription drug coverage?
Part D You must join a plan that includes drug coverage. You must join a plan that includes drug coverage.
Will
I need a referral to see a specialist?
No. Usually. No, but you may pay more out of pocket if you go to a provider who is out of
network.
Is
there a limit to my out of pocket spending?
No. Yes. All Medicare Advantage plans must have limits on out of pocket spending. Yes. All Medicare Advantage plans must have limits on out of pocket spending.
Will
it pay for extras, like vision and hearing aids?
No. Medicare does not cover dental, hearing, or vision. Maybe. Some plans offer these additional benefits. Maybe. Some plans offer these additional benefits.

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