Is it Medicare or Medicare benefit I should choose?

As a person reaches age 65 or encounters a qualifying medical event, they may sign up for Medicare. Medicare isn’t a one-size-fits-all insurance plan, however. Original Medicare has multiple parts, as well as a hybrid alternative called Medicare Advantage, or Medicare Part C.

When an individual reaches the age at which they will sign up for Medicare, they will need to look at which program would better match them and their needs.

Making the right decision on which program and packages to follow can help a person out of potential medical care taking stress and expenses.

Learn more about the plans and costs of Medicare here.

This article will compare the costs and coverage levels associated with both Medicare and Medicare Advantage

Medicare vs. Medicare Advantage

The best Medicare plan will depend on a person’s needs.
The best Medicare plan will depend on a person’s needs.

Traditional Medicare and Medicare Advantage have different costs significantly. This is because the services have different philosophies that support people with differing medical needs.

Programs for Medicare cost more, as they have to include additional programs. As a result, if a person gets sick and needs more regular treatment, they may have less out- of-pocket costs. A person pays a higher premium so that later costs are not charged.

At the other side, Medicare Advantage has lower premium but higher out- of-pocket costs. Many programs also require a person to pay for prescription drug coverage only for the Medicare Part B premium and $0.

This package may be more appropriate for people who do not often use healthcare services. It can be a drawback to have to pay more out- of-pocket costs if a person requires regular medical attention or medication that is not fully covered by his program, such as imaging, transportation or home care.

The expense of the Medicare Advantage plans, however, varies by geographic location.

A person might switch from Medicare to a Medicare Advantage Package once a year, or vice versa. If they think a plan doesn’t work well for them, they may be able to select another Medicare option.

Costs

It is better to include out-of-pocket expenses alongside the monthly premium when contrasting the Medicare and Medicare Benefit costs.

The chart below breaks down some of the basic costs for such plans.

Plan typeMonthly premium
Medicare Part AThese plans are free if a person qualifies. Otherwise, it is up to $458 per month.
Medicare Part BThese plans cost from $144.60 per month. They may cost more if a person has an income higher than $87,000 per year.
Medicare Part DThe cost varies by plan, but the average monthly premium ranges from $13 to $83, according to the Kaiser Family Foundation (KFF).
Medicare AdvantageAs with Part B, the cost varies by plan. However, in 2019, the average monthly premium was $26.87, according to the Centers for Medicare & Medicaid Services (CMS). Despite this, some Medicare Advantage plans cost much more every month.

Some people opt for a Medicare Advantage package because, according to Medicare.gov, they think they have less out- of-pocket costs.

Medicare Advantage vs. Medicare supplement

Medicare replacement services help a person reduce some of the health-care costs not covered by traditional Medicare. Some people refer to those plans as Medigap as well.

The CMS separates Medicare replacement programs by letter as it does with standard Medicare. As of 2020, people new to Medicare may choose from plans A, B, D, G, K, L, M, and N. However, not all insurers market the same plans across all areas of the country.

Plans also vary from the traditional Medigap plans in Illinois, Minnesota and Massachusetts.

Supplemental Medicare policies will help to cover certain costs, including:

  • copayments for parts A and B
  • up to 3 pints of donated blood
  • coinsurance for skilled nursing facilities
  • yearly out-of-pocket expenses

Individuals with concerns about steep out- of-pocket costs may choose a Medigap Plan. A individual can not, in general, have both a Medicare Advantage plan and a Medigap plan at the same time.

What is Medicare?  

Medicare is a federal health insurance program for individuals aged 65 and older, as well as individuals with certain health conditions and disabilities, such as end-stage kidney disease.

When Medicare was developed by federal government workers they broke it into many different parts. These sections cover various aspects of medical care and include:

  • Part A: Medicare Part A provides hospital coverage, including a hospital stay, hospice care, and necessary care in a skilled nursing facility.
  • Part B: Medicare Part B covers doctors’ visits, outpatient services, medical supplies, and preventive medical care.
  • Part D: Medicare Part D accounts for prescription drug coverage. A person can select a Medicare Part D plan according to the prescriptions they currently take and the copayment with which they are comfortable.

If a person or their spouse were to pay Medicare taxes for 30 quarters of employment, they would receive Medicare Part A at a discounted rate at age 65. If they paid 40 quarters of the same fee, they would get Part A for free. Several exceptions apply to this, and some those, such as younger people with specific disabilities, may qualify sooner.

A person may also opt to pay a monthly Medicare Part A premium if they don’t qualify for the free plan.

Part B Medicare is available at a standard cost that varies only for people with high incomes. The costs of Medicare Part D can vary depending on which plan an patient chooses and how much they receive.

What is Medicare Advantage?

Medicare Advantage is another name for Medicare Part C which includes parts A, B, and D in addition to some additional services, such as dental, hearing, and vision coverage.

Although the parts below identify the most common forms of Medicare Advantage Plan, there are several more available. In fact, the CMS reports that in the United States in 2020 there will be 1,200 more Medicare Advantage plans available than in 2018.

This means that, according to the KFF, approximately 3,148 Medicare Advantage plans are available.

It is important to note, however, that the availability of Medicare Advantage plans can differ per geographic area. For instance, Alaska does not have any Medicare Advantage Plans.

According to the KFF, those areas with higher concentrations tend to have more plans available. For example, there are more than 60 Medicare Advantage Plans available in Miami, Florida and New York City.

Medicare Advantage plans typically fall into various categories including:

Health maintenance organization

A individual usually chooses from a list of preferred providers they will visit to cover healthcare expenses for the plan.

Most health maintenance organization (HMO) programs allow a primary care physician to manage treatment for an individual. That means they generally have to refer a person to a doctor before the insurers cover the cost of the healthcare.

In 2020, according to the KFF, an estimated 64 percent of people with Medicare Advantage plans will have an HMO plan.

Preferred provider organization

A preferred association of providers (PPO) package covers some or all of the expenses from a specified network of health care providers.

Normally a person does not need a doctor’s recommendation to see a specialist under such plans, and generally they have a broader network of providers to choose from than for an HMO plan. PPO plans are, however, typically more costly than HMO plans.

Private fee-for-service

This program allows a person to seek care at a hospital and to pay a fixed amount already decided upon by the insurance company.

A person does not have to seek referrals, or choose a primary care doctor, unlike HMOs and PPOs. Bear in mind, though, that not all doctors who support Medicare would consider a private fee-for-service plan, too.

Special needs plans

A special needs program is a Medicaid package that supports people with a chronic condition of health and other particular needs. Examples of such conditions may include diabetes, renal disease in the end stage, HIV and chronic heart failure.

Since people with these conditions often have specific health needs, factors such as drugs and other necessary services may be taken into account in these plans.

Summary

According to the CMS, about 24.4 million recipients were participating in Medicare Advantage programs, out of the 60 million people enrolled in Medicare in the United States.

In choosing a plan that best suits their needs, people should always weigh up the costs and coverage levels. Neither Medicare nor Medicare Advantage is better, but in specific financial or medical conditions, one may be more suitable for people than the other.

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