Being new to Medicare can bring an onslaught of knowledge. In today’s world, there are a ton of Medicare options available to beneficiaries. You have Parts A and B, various Medigap options, and there are different Advantage plans.
With so many different options, how do you choose the best? Should you pick Original Medicare vs. Medicare Advantage?
Many Americans pick their health coverage based on cost factors. Monthly premiums, coinsurance, annual deductibles, and copays are all costs you can see with Medicare. You may even face expenses for prescription medications, and if you choose to see an out-of-network doctor. Choosing the right plan for you can help to save you money and time.
Below we’ll compare the differences between Original Medicare vs. Medicare Advantage so you can make the best choice.
Original Medicare vs. Medicare Advantage
The creation of Medicare began in 1965. Original Medicare is a health insurance program run by the Federal government. Medicare consists of Parts A and B.
Part A is hospital coverage, and coverage includes hospital visits and skilled nursing facilities. Part B is your medical coverage that covers doctors, appointments, labs, medical equipment, etc. Parts A and B have deductibles, copayments, and coinsurance for services you receive.
Due to the Medicare Modernization Act, Medicare Advantage plans were introduced back in 2003. Before this, beneficiaries didn’t have a choice between Original Medicare vs. Medicare Advantage.
Medicare Advantage plans are Part C. The insurance program provides Part A and B coverage. Some Advantage plans offer prescription medication coverage.
These plans may also include hearing, vision, and dental benefits. To qualify, you must first have Part A and B.
Advantage plans are still a part of Medicare. However, it’s private insurance companies that sell the policies. When you choose to enroll in an Advantage plan, your benefits are no longer being managed by the federal government.
The private insurance company gets paid by Medicare to oversee your Part A & B benefits. These private companies not only control your network of doctors, but they also tell you what you must pay in copays.
As of now, about one-third of all Medicare recipients enrolled in a Medicare Advantage plan, which is equivalent to about 19 million people.
How Much will Original Medicare vs. Medicare Advantage Cost?
Original Medicare Costs
Part A is usually premium-free just as long as you paid into Medicare enough quarters. The annual deductible is $1,408 in 2020. Part B has a monthly premium of $144.60 and a yearly deductible of $198 in 2020.
There is no out of pocket spending limit with Original Medicare. You’re left responsible for the 20% coinsurance for any medical expenses you incur that fall under Part B. This can quickly add up.
Due to this, most beneficiaries elect to enroll in a Medigap plan to protect them from incurring the 20% coinsurance expense. Medigap plans also protect them from other out of pocket costs such as deductibles.
Medicare Advantage Costs
Each Medicare Advantage plan has different benefits. This makes it nearly impossible to predict how much you’ll end up spending out of pocket.
The cost of a Medicare Advantage policy in 2020 is around $35 per month. You’ll still be responsible for paying your Part B monthly premiums, in addition to this cost.
You must have Parts A and B to qualify for Part C. Advantage plans often have a “zero premium.”
Advantage beneficiaries pay copays for all their health services. Copayments can range from around $10 to $20 for routine doctors’ appointments. Emergency room visits are usually around $75 in copays.
The higher copays are how these private insurance companies can afford to offer plans with no premium. In exchange for a zero or low premium, you’ll pay a copay for every visit and service you receive. This can also quickly add up.
The most significant difference between Medicare Advantage and Original Medicare is the Maximum out of Pocket limit. Original Medicare does not have a MOOP, Medicare Advantage plans do. Once you hit the MOOP limit for the calendar year, you won’t pay any more out of pocket costs.
The 2020 MOOP limit is $6,700. However, less than 40% of Medicare Advantage plans have their MOOP set to the full limit. Meaning, most plans offer a lower MOOP. Those with a lower MOOP will most likely come with a monthly premium
The Pros and Cons of Medicare Vs. Medicare Advantage Policies
When deciding between Original Medicare and a Medicare Advantage policy, it’s good to weigh the pros and cons.
Pros of Original Medicare
Original Medicare offers coverage to see any physician anywhere in the country. The coverage travels with you as long as you stay within the United States. You don’t need a referral to see a specialist or prior authorization for treatments or services. You don’t have to worry about copays for every visit and service. Also, you won’t ever have to answer any health questions to enroll in Original Medicare.
Cons of Original Medicare
Medicare Parts A and B do not cover routine hearing, dental, or vision benefits. It doesn’t cover prescription drug costs unless you have Part D. Medicare does not carry a maximum out-of-pocket in the same sense that an Advantage plan offers.
Pros of Medicare Advantage Plans
Many Advantage plans offer extra benefits like dental, vision, and hearing. Advantage plans offer prescription drug coverage, which is a huge pro to many people. You may even get a gym membership. With an Advantage plan, you will have an out-of-pocket maximum of $6,700 per year.
Cons of Medicare Advantage Plans
Advantage plans don’t cover care outside of the service area, especially not in a foreign travel emergency. They require you to get a referral to see any specialists. Advantage plans can also switch medical and prescription coverage every year. Your doctor can drop out of your plan’s network at any point in the year. If this happens, you won’t be able to switch plans until an enrollment window comes around.
They require prior authorizations for a lot of treatments and services. Lastly, you have to answer one health question, which is, “Do you have End-Stage Renal Disease?” If so, you’re not eligible for a Medicare Advantage plan.
Is Original Medicare or Medicare Advantage Better for Me?
Both Medicare and Advantage plans offer many benefits to recipients. The most important thing to consider is your situation is not the same as anyone else’s. To determine the best choice for you, you’ll need to weigh out the costs and your specific healthcare needs.
Medicare Advantage proves to be a popular choice for individuals who want benefits wrapped into one premium. It’s also attractive for some due to the MOOP of $6,700. However, that’s still a hefty expense to pay. Those who have a rainy-day fund and are okay paying copays for every service may like this option better. But, if you become sick, you may find your rainy-day fund depleted quickly due to the MOOP.
With Medicare, in combination with a Medigap plan, your out of pocket spending is controlled. You won’t have to worry if your doctor is in the plan’s network. You also have the freedom to travel with your coverage. We have another great guide on Medigap vs. Medicare Advantage that breaks down the differences just like this one.
To help you gain a clear picture of the best route to go, feel free to contact one of our expert agents. We can compare the benefit and cost differences between Medicare Advantage vs. Original Medicare.
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