When you first enroll in Medicare, you’re faced with a big decision – Original Medicare or a Medicare Advantage plan? This can be a particularly daunting choice, especially during the Annual Election Period, which runs from Oct. 15 to Dec. 7, when you’re bombarded with advertising for Medicare Advantage plans at every turn. Let’s turn down the noise and take a look at how each program works.
In the most basic sense, Original Medicare (Part A and Part B) and Medicare Advantage (Part C) are just two different ways to receive your Medicare benefits.
On Original Medicare, Part A is a hospital insurance that covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health care. Part B is medical insurance that covers doctors’ services, outpatient care, medical supplies, and preventive services. If you have Original Medicare, you can go to any healthcare provider that accepts Medicare – you are not limited to in-network providers. If you have Original Medicare, you can purchase a Medicare supplement policy to help pay for some of the out-of-pocket costs not covered by Parts A and B.
Medicare Advantage, or Part C, refers to private health insurance plans offered by Medicare-approved insurance companies. It combines Part A and Part B coverage into a single plan. This often includes additional benefits like prescription drug coverage, dental, vision, and fitness programs. However, Medicare Advantage plans may have network restrictions, and you typically need to use plan-specific providers. Costs and coverage can vary depending on the specific plan.
On the face of it, the main difference is that Original Medicare is a program provided directly by the federal government, while Medicare Advantage is offered by private insurance companies and includes additional benefits but often has network limitations. But scratch the surface a little more and you will find that’s just the start.
On Original Medicare, you have the flexibility to go wherever you choose without a network and with no copays, no maximum out of pockets, no prior authorizations and no pre-approvals. Part C, on the other hand, is a managed care product, meaning that the insurance carrier that provides your Medicare Advantage plan will dictate much more of your care. You will be required to jump through more hoops for prior authorizations for medical procedures and you’ll be limited to in-network providers. Also, Medicare Advantage plans can change from year to year, so if your providers are in-network this year, there is no guarantee they will be next year.
During the Annual Election Period, Medicare Advantage beneficiaries have the opportunity to change their plan or leave Part C entirely and return to Original Medicare. Keep in mind that if you return to Original Medicare, you will need to buy a Medicare supplement policy to help with some of the out-of-pocket costs that Medicare does not cover. While this seems like an additional unwanted expense, a Medicare supplement policy will help reduce or eliminate many of the out-of-pocket expenses associated with Original Medicare. Supplement plans provide predictability in healthcare costs, as you’ll know in advance what your monthly premium is and can budget for healthcare expenses more effectively. You can change your Medicare supplement insurance plan any time of year, not just during the Annual Election Period.