Medicare Advantage: Is it Better than Medicare?

Upon reaching the age of 65, you gain eligibility for Medicare, but the decision isn’t as straightforward as it may appear. Your choices require thoughtful consideration, as selecting the wrong plan can have financial consequences. Medicare presents options in the form of Part A, Part B, Part C, and Part D, and we’re here to break down the distinctions for you.


Traditional Medicare: Part A and Part B

Traditional Medicare comprises two key components: Part A and Part B. Part A provides coverage for hospital services, while Part B extends coverage to routine medical services, including doctor’s office visits, medical tests, preventive care, and home health visits. Both segments involve copayments and deductibles, with most beneficiaries facing the same cost-sharing amounts.

Under the traditional Medicare program, there is no cap on your out-of-pocket expenses. This can become quite costly depending on the range of services you require. In contrast, when you had coverage through your employer or a marketplace plan, there might have been a maximum out-of-pocket limit. In essence, once you reached this maximum, the insurance covered 100% of any remaining expenses. However, this feature does not apply to Part A or Part B of traditional Medicare.

Traditional Medicare plans come with fixed premiums, which are determined by the government annually. These premiums do not increase due to health conditions or age, except when your income exceeds a specific threshold.

It’s important to note that Part A and B coverage do not include prescription medications, with the exception of drugs that must be administered by a doctor or hospital. Beneficiaries under traditional Medicare often choose to enroll in Part D coverage, which exclusively covers prescription drugs and entails an additional cost or premium.


Medicare Advantage

Medicare Advantage is insurance sold by private companies, rather than the government. By law, they must provide the same coverage as Part A and B provide. But, they usually offer more than the standard Medicare policy. This is where the differences begin.

You may find Part C programs that offer vision or dental care, neither of which are offered with Part A or B. You will have different premiums. You’ll also have different guidelines regarding what the policy covers and does not cover. While each provider charges a different premium, at a minimum, you’ll pay the standard Medicare premium. Most providers, however, charge an additional fee on top of it.

Let’s dive into the differences:

  1. Out-of-Pocket Maximum: With this type of plan, there’s a defined out-of-pocket maximum. Once you reach this threshold (as specified by your healthcare provider), the insurance company covers 100% of eligible charges, subject to your yearly or lifetime maximum.
  2. Specialist Referrals: Under this plan, it’s typically necessary to obtain referrals for consultations with specialists. Typically, you’ll select a primary care physician as your initial point of contact. Your primary care doctor can then issue referrals to other specialists or services you may require.
  3. Medicare Part D and Advantage Plans: It’s essential to note that if you opt for the Advantage plan, you won’t be eligible to enroll in Medicare Part D. If prescription coverage is a priority for you, it’s crucial to choose a plan that includes this coverage.


Highlighting Key Differences

Now that we’ve covered the basics, let’s delve into the primary distinctions between the various Medicare plans:

  1. Cost – Monthly expenses under Medicare plans are typically lower, while the Advantage program entails an additional premium. However, it’s essential to consider that Plan A and B might end up costing more in the long term, especially if you require extensive hospital or specialized care.
  2. Coverage – The Advantage plan often offers more comprehensive coverage, particularly for dental and vision services. If these aspects are vital to you, note that the standard Part A and Part B plans do not include them.
  3. Providers – With Part A or B, you have the flexibility to choose any healthcare provider, and referrals are not necessary to consult with a specialist. The Advantage program, on the other hand, imposes tighter restrictions, which might result in longer wait times to see a specialist.
  4. Prescriptions – If you depend on prescription medications, it’s crucial to compare the costs between Part D and the Advantage Plan. Not all Advantage plans provide prescription coverage, so it’s advisable to select one that does for accurate cost comparisons.
  5. Out-of-Pocket Maximum – For those who frequently utilize their insurance, having an out-of-pocket maximum can be beneficial, a feature only available with the Advantage program. By law, Advantage plans cannot set the annual out-of-pocket maximum higher than $6,700.


Medigap Insurance: Bridging the Medicare Gap

Another Medicare option available for purchase is the Medigap policy. True to its name, it bridges the ‘gap’ between what Medicare covers and your financial responsibility. This insurance is designed to alleviate your out-of-pocket expenses by helping cover deductibles, co-pays, and other financial aspects. In essence, it lessens the financial impact of accessing medical services.

Comparing Medigap and Medicare Advantage is a wise approach. Depending on the specific policy, the Advantage program may often result in lower overall costs.

As you reach the age of 65, selecting the insurance plan that aligns with your unique needs becomes crucial. Given the increased likelihood of requiring medical services as you age, this decision carries substantial weight. It’s advisable not to assume that Part A or Part B will suffice. Instead, assess which plan offers the most cost-effective long-term solution. Even if the monthly premiums are higher, lower co-pays and deductibles may result in reduced overall expenses.