Choices and Options: Original Medicare vs. Medicare Advantage Plans
When it's time to start receiving Medicare benefits, it's also time to make some choices. If you are considering a Medicare Advantage plan, you may have questions on how it differs from Original Medicare. Your decision may be based on the answer to these questions: "Which plan best fits my needs? The fee-for-service Original Medicare that the government administers? Or a private Medicare health insurance plan called a Medicare Advantage Plan?"
Here are some highlights of how each of these choices work:
Original Medicare is administered by the federal government or more specifically, CMS (Centers for Medicare and Medicaid Services). Original Medicare pays health care providers directly for services rendered. Payments are based on set amounts for each approved service that a person enrolled in Original Medicare receives.
Original Medicare is available to individuals age 65 and older or younger people with disabilities. Medicare is comprised of Part A (hospitalization), Part B (medical or doctors, nurses and equipment) and Part D (prescription drugs). With Original Medicare, enrollees can seek care from any health care provider that accepts Medicare payment terms and conditions. It is important to note that Medicare does not cover dental, vision or hearing whereas some Medicare Advantage Plans do.
Additionally, you should take the time to understand out of pocket costs associated with Medicare due to the fact that it does not pay for health services in full.
Medicare Advantage Plans
Medicare Advantage Plans are private Medicare health insurance plans. Insurance companies have contracts with the federal government to provide Medicare benefits to those who sign up for Medicare Part A and Part B. (The federal government pays private plans a certain amount for each enrollee.)
All Medicare Advantage Plans must provide at least the same level of benefits and services as the federally administered Original Medicare (Medicare Parts A and B), with the exception of hospice care. Some plans may offer benefits beyond what is required.
Generally, a private company that offers Medicare Advantage Plans is also required to offer at least one option that includes Medicare Part D prescription drug coverage. (When a Medicare Advantage Plan also includes Medicare Part D, the plan is called a Medicare Advantage Prescription Drug Plan or a MA-PD Plan.)
Medicare Advantage plans and MA-PD plans work a lot like the group insurance plans that employers offer. They might be very similar to a Health Maintenance Organization(HMO) or Preferred Provider Organization (PPO) health plan that was used before retirement. The cost-sharing that enrollees are asked to pay for these plans is also similar to HMO and PPO health plans.
Medicare Advantage plans may ask plan members to pay monthly premiums, deductibles, copayments and coinsurance. There may or may not be an additional monthly premium for prescription drug coverage. Each plan is different and people are encouraged to shop for the plan that best fits their needs.
The Medicare & You Handbook explains Medicare choices and options in great detail. This Handbook can be downloaded from the Publications section of the official Medicare website, Medicare.gov.