Original Medicare and Part D VS Medicare Advantage
When you enroll in Medicare, you will be able to choose between:
- Parts A & B (Original Medicare), Part D and potentially Medigap
- Part C (Medicare Advantage Plan)
When comparing coverage, it is important to look at the two core options first: Original Medicare and Medicare Advantage. Note that Medicare Advantage plans come in many types (the most common are HMO and PPO) and must cover the same benefits as Parts A & B.
It’s also important to consider the potential to add a Medigap policy to your Original Medicare to help cover some of the costs of Parts A & B. Remember, you cannot have both a Medigap policy and a Medicare Advantage plan.
Costs and coverage will differ between plans. You should compare your options holistically, taking into account your desired coverage, premiums and routine out-of-pocket costs. Here are how the 4 major plan packages stack up in some key areas.
When making the decision about which plan package to choose, there are other questions that you can investigate. We explore a few key areas to compare below.
Which option is more stable from year to year?
Each year, Part C (Medicare Advantage) 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.
How can I measure quality for all of the various plans?
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.
What are the cost differences?
If you enroll in Parts A & B (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 a Part C (Medicare Advantage) 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 2015, the average out-of-pocket limit for an HMO is $4,869 and $5,250 for a local PPO. The maximum out-of-pocket limit is $6,700 in 2015. However, if you are enrolled in an MA plan, you cannot also have Medigap insurance.
If you want help comparing plans and pricing, see if you qualify to speak with an Aon Retiree Health Exchange™ Benefits Advisor.