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What’s the Difference Between Original Medicare and Medicare Advantage Plans?

September 07, 2017

If you’re new to Medicare, you may be wondering about the best way to get the benefits you’ve earned. Will Original Medicare coverage be enough to meet your needs? Or will you need extra coverage to protect your health and your retirement savings? What makes the most sense for you?

Choices and Options: Original Medicare vs. Medicare Advantage Plans

As you may know, Original Medicare was never meant to cover all your medical costs. That’s why private companies offer alternatives with added coverage. Let’s take a closer look at how one of these alternatives, Medicare Advantage, stacks up against Original Medicare.

Original Medicare Covers Basic Benefits

So, what is Medicare? Original Medicare, which is administered by the federal government, is made up of Parts A and B. It covers certain medical services and supplies in hospitals, doctors’ offices, and other health care settings.

Medicare Part A (Hospital Insurance) helps cover:

  • Skilled nursing care
  • Inpatient hospital stays
  • Hospice care
  • Some in-home care

Medicare Part B (Medical Insurance) helps cover:

  • Doctor visits
  • Preventive care
  • Outpatient services
  • Medical supplies
  • Tests and X-rays

With Original Medicare, you can go to any doctor, hospital, or other facility that accepts Medicare patients. You don’t need to choose a primary care physician or get a referral for a specialist, as long as they accept Medicare as payment. Original Medicare does NOT cover most prescriptions you buy at a pharmacy, although Part B does cover a limited number of drugs like injections you get in a doctor’s office.

And despite what you might think, Original Medicare is not free. Although many people don’t pay a premium for Part A because they had payroll deductions for it while they worked, most people still have a monthly payment for Part B.

You should also expect to pay deductibles and a percentage of the overall cost (which is called coinsurance) for covered services. Medicare Part B only pays 80% of approved charges, so even if your hospital stay or doctor visit is covered, you’ll probably pay 20% of it yourself. For medical charges, services and supplies that aren’t covered by Parts A or B, you will pay the full amount out of your own pocket. Go to Medicare.gov to see exactly what’s covered — and what isn’t.

Medicare Advantage Combines Parts A and B with Additional Benefits

When evaluating Original Medicare vs. Medicare Advantage, you’ll see the biggest difference is that Medicare Advantage plans, also called Part C or MA plans, bundle Parts A and B together with extra benefits you wouldn’t get from Original Medicare.

Medicare Advantage plans are available from private companies that are approved by the Centers for Medicare and Medicaid Services (CMS) and must follow the rules it sets. These MA plans cover all the services that Parts A and B do, including emergency and urgent care, with the exception of hospice care. Most offer extra coverage options — such as vision, hearing, dental, and other health and wellness programs — that Original Medicare does not. Many MA plans also include Medicare prescription drug coverage (Part D), combining it with Parts A & B in a single plan at a low or no additional cost. These are known as MA-PD plans.

MA plans work like traditional HMOs and PPOs, like group insurance plans you might have gotten while you were employed. And as with most HMOs and PPOs, you can expect to share some of the costs. Here are some things to keep in mind about Medicare Advantage:

  • You may have a monthly payment (in addition to your Part B monthly payment), deductible, copayments or coinsurance for covered services
  • With many plans, you need to use plan doctors, hospitals, and other providers to get lower copayments
  • MA plans can’t charge more than Original Medicare for certain services, including chemotherapy, dialysis, and skilled nursing facility care
  • Unlike Original Medicare, MA plans have an annual limit on out-of-pocket costs for medical services — after which you pay nothing for covered services

Deciding between Medicare Advantage vs. Original Medicare depends a lot upon whether you want the minimum coverage available, or you prefer getting prescription drug coverage and access to other extras bundled into one convenient, low-cost Medicare Advantage plan. Make sure to weigh your needs against what each type of plan offers when deciding which type of plan to enroll in.

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This information is not a complete description of benefits. Contact the plan for more information. Limitations, copayments, and restrictions may apply. Benefits, premiums and/or co-payments/co-insurance may change on January 1 of each year. You must continue to pay your Medicare Part B premium.

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