Medicare Advantage: Is It Better Than Medicare?
At age 65, you become eligible for Medicare. It’s not as simple as it sounds, though. You still have options that you should consider carefully. Choosing the wrong plan could cost you a lot more money in the end. Medicare has Part A, Part B, Part C, and Part D. We help you understand the differences below.
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Traditional Medicare has Part A and Part B coverage. Part A covers hospital services and Part B covers regular medical services including doctors’ office visits, medical tests, preventative care, and home health visits. Both coverages have co-payments and deductibles. Most covered individuals have the same co-payment and deductible amount.
With the traditional program, there is no limit on how much you can pay out-of-pocket. This can get rather expensive depending on the services you receive. Chances are, when you had coverage through your employer or the marketplace, there was a maximum out-of-pocket allowance. In other words, once you paid the maximum, the insurance covered 100% of any remaining expenses. This is not the case with Part or Part B.
The traditional plans have a set premium. The government sets the premium each year. You do not have to pay elevated premiums if you have health conditions or are an advanced age. The only increase in premium occurs when you have income over a specific threshold.
Part A and B coverage does not cover prescription medication. The only exceptions are those that a doctor or hospital must administer. Those covered by the traditional plan usually opt for Part D coverage, which strictly covers prescription drugs and is an extra expense/premium.
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.
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Here is where the differences begin:
- You will have an out-of-pocket maximum. Once you reach that amount (per your provider), the insurance company pays 100% of covered charges up to your yearly or lifetime maximum.
- You may need referrals to see specialists. Generally, you must pick a primary care doctor who you always see first. This doctor can then provide you with referrals to other doctors or services.
- You cannot sign up for Medicare Part D if you have the Advantage plan. You’ll want to make sure you choose a plan that has prescription coverage if this is a concern for you.
The Major Differences
Now that you know the basics, we’ll go into detail regarding the major differences between the Medicare plans.
- Cost – Medicare often costs less monthly. The Advantage program charges an additional premium. However, Plan A and/or B may cost more in the long run if you end up needing extensive care in a hospital or other setting.
- Coverage – The Advantage plan may provide coverage for more services, especially dental and vision. If these are important to you, know that standard Part A and Part B plans don’t cover it.
- Providers – You can choose any provider when you have Part A or B. You also don’ need referrals to see a specialist. The Advantage program has tighter restrictions, which could mean a longer delay to see a specialist.
- Prescriptions – If you take prescriptions, you should compare the cost of Part D and the Advantage Plan. Not every Advantage plan offers prescription coverage, though, so make sure to choose one that does for comparison purposes.
- Out-of-Pocket Maximum – If you use your insurance often, having an out-of-pocket maximum could be helpful, which you’ll only find with the Advantage program. By law, Advantage programs can allow an out-of-pocket maximum no higher than $6,700 per year.
One other type of Medicare program you can purchase is Medigap policy. As the name suggests, it covers the ‘gap’ between what Medicare pays and what you owe. It’s insurance to help lessen your out-of-pocket expenses. It can help cover your deductible, co-pays, and other out-of-pocket costs. In other words, it lessens the financial impact of receiving financial services.
Medigap and Medicare Advantage are two good plans to compare side-by-side. Oftentimes, depending on the policy, the Advantage program comes out less expensive in the end.
When you turn 65 years old, it is important to figure out which insurance plans suits your needs the most. Since you are more likely to need medical services as you age, this is an important decision. Don’t assume Part A or Part B will be enough. Instead, figure out which plan will cost you the least in the long run. Even if the premiums are higher each month, if your co-pays and deductibles are lower, you may pay less in the end.
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