Original Medicare vs Medicare Advantage
Original Medicare vs Medicare Advantage
The good news is seniors today have more options than ever to choose their Medicare coverage. The bad news is seniors today have more options than ever to choose their Medicare coverage. Choosing between Original Medicare vs Medicare Advantage is your main decision when starting Medicare.
Choice is good but it can lead to confusion if there’s an overwhelming amount of options. That’s where I can help. So let’s first review Original Medicare and Medicare Advantage because there are some key differences.
Original Medicare
Original Medicare is made up of 2 parts, Part A + B.
Part A is your hospital coverage and most people do not pay a premium for this. There are some costs for using your coverage which are:
- $1,484 deductible for each benefit period like being admitted to the hospital
- $371 coinsurance per day of each benefit period for days 61-90
- $742 coinsurance per day for each of your 60 lifetime reserve days
- $185.50 coinsurance per day for days 21-100 for a Skilled Nursing Facility Stay
Part B is your Medical coverage like doctor visits, physical therapy, and outpatient surgery.
Most people pay $148.50 per month in 2021 for this coverage.
There is a once per calendar year deductible of $203. You pay this before Medicare pays anything. Then you also pay 20% of the Medicare-approved amount after that deductible
A big thing to keep in mind is there is NO LIMIT to that 20%. So if you need something like chemotherapy, your 20% of the bill can be a very large amount.
That’s why most people who have Original Medicare have some extra coverage like a Medicare supplement.
Medicare Advantage
Part C
Medicare Advantage is known as Medicare Part C. It is an option that you can choose, but it is NOT REQUIRED for your Medicare coverage.
It is an alternative option to staying on Original Medicare and adding Part D + a Medicare supplement/Medigap.
Not a Supplement
Many people think they have a Medicare supplement when they actually have a Medicare Advantage plan. Advantage plans are not a supplement because they do not help fill in the gaps of Original Medicare.
Instead they replace how you get your Medicare benefits. You receive your Medicare benefits from an insurance company instead of Original Medicare.
But Advantage plans don’t help pay what Medicare doesn’t pay like Medicare supplements do.
$0 All in One Medicare Plan?
With Medicare Advantage plans, you still pay your monthly Part B premium. For most people in 2021, that amount is $148.50 per month. So you aren’t really paying $0, because you are still paying that amount each month.
But insurance companies that offer Medicare Advantage plans may not charge you an extra premium. And this is why they sometimes refer to it as a $0 all in one Medicare plan.
How can they charge $0?
Because they are being paid by Medicare to provide you with your Medicare benefits. Since they are already being paid by Medicare, many will not charge you a premium. Or if they do, it’s usually a small amount.
In 2020, the average Medicare Advantage premium was about $23 per month.
Key differences between Original Medicare and Medicare Advantage
There are some pretty big differences between Original Medicare and Medicare Advantage which you should know before making your decision. Here’s a few of the biggest differences.
Network
Original Medicare gives you the ability to see any doctor or hospital nationwide that accepts Medicare. You don’t need a referral to see a specialist. So it’s a great option for people who want flexibility to go where they want for treatment.
Medicare Advantage plans use networks, similar to traditional health insurance. Each company has their own network of providers you can use. Some companies will even offer a few plans for you to choose from that have different networks.
So if you want a Medicare Advantage plan, it’s important to verify that the doctor or hospital you want to see is in network. Otherwise it may not be covered. Even if the Advantage plan says you can go wherever you want.
Maximum out of pocket
Original Medicare does NOT have a maximum out of pocket. Medicare covers 80% of treatments covered under part B like outpatient surgery, physical therapy, and chemotherapy. So unless you have other coverage like a Medicare supplement, you are responsible for paying the other 20%.
And there’s no limit to that 20% amount. 20% of something like chemotherapy adds up really quickly.
Medicare Advantage plans do have a maximum out of pocket. If you reach that amount in a calendar year, then the insurance company will pay 100% for the rest of the year.
For 2021, the maximum out of pocket can be as high as $7,550 for in network charges. Many companies have plans that are lower than this which is good news for you.
It’s important to note that the maximum out of pocket only applies to in network charges. If you have an emergency, then you do have coverage out of network. But if it’s not an emergency, depending on your plan you may or may not be covered out of network.
Extra Benefits
Original Medicare does not have any extra benefits included. That’s why they are considered extra benefits for Medicare Advantage.
Prescription Drug Coverage
Original Medicare does not cover prescription medications. This is why many people enroll in a Medicare part D/prescription drug plan.
Most Advantage plans include prescription drug coverage so you don’t need a separate policy just for your prescriptions.
Dental and Vision
Original Medicare does NOT cover routine dental and vision. You can buy insurance for an extra premium.
Many Medicare Advantage plans have at least some dental and/or vision coverage built right into their plan with no extra premium. The amount of coverage does vary so it’s important to see exactly how much coverage is included before you get a bunch of dental work done.
Extra Coverage
Most people on Original Medicare buy extra coverage to help with the out of pocket costs of actually using their Medicare benefits. The most common extra coverage for people on Original Medicare is:
- Medicare Supplement/Medigap
- Medicare Part D/Prescription Drug Plan
- Dental, Vision, and Hearing
These are all optional coverage, but they greatly reduce your costs when you actually need to use your coverage.
Medicare Advantage plans are branded as your all in one Medicare plan. But they still leave you with a large amount of risk like that maximum out of pocket which can be over $7,000 per year. So what should you consider?
- Cancer Protection Plan
- Hospital Indemnity Plan
The two biggest spots for your portion of medical bills on Medicare Advantage plans is typically chemotherapy and a hospitalization.
A cancer protection plan can help you pay the 20% of chemotherapy bill that you are likely responsible for on a Medicare Advantage plan. That way you aren’t trying to figure out how to pay a $7,000 medical bill while fighting for your life.
A hospital indemnity plan helps cover the cost of a hospital stay. Similar to the cancer protection plan helping pay a chemotherapy bill, a hospital indemnity plan removes the burden of paying that bill in the event you have to be admitted to the hospital.
Combined together, these 2 types of extra coverage still make up much less than a traditional Medicare supplement. And they help cover you in case something major does impact you which is the whole point of insurance.
What’s right for you?
Everyone’s situation is unique, so there isn’t one answer for everyone. Adding a Medicare supplement to Original Medicare or Medicare Advantage are both good options. Both types of coverage give you things you don’t get with Original Medicare.
Some things to consider are:
- What’s the total cost? Not just monthly premium but things like copays, deductibles, and the maximum out of pocket
- Do I travel often? Advantage plans with restrictive networks could cause an issue for you
- Do I prefer paying a little bit higher premium with little to no cost when I need to see a doctor or would I rather pay less now but risk paying a lot more if I need something major covered?
At the end of the day, there are a lot of moving parts. So it’s good to work with an independent insurance broker that represents many different companies as well as different types of Medicare options.
That way you can compare benefits and costs of different options to see what best fits your priorities.
Contact me at 1-855-712-7316 or Mike@askMedicareMike.com for help today.