Understanding Basic Medicare Coverage
It’s useful to understand the basics before comparing options between Medicare and Medicare Advantage. The original or basic Medicare program is available to individuals aged 65 and older or, in some cases, younger individuals with certain disabilities. Medicare provides an online tool to help you determine if you qualify.
You may be automatically enrolled in Parts A and B if you are receiving Social Security benefits four months before you turn 65. Otherwise, you can enroll during your initial enrollment period, which starts three months before the month you turn 65 and ends three months afterward. You may qualify for a special enrollment period if you miss this window, or you may have to enroll during the general enrollment period for Medicare, which runs from January 1 to March 31 each year.
Original Medicare and Part D
Original or basic Medicare is a government program consisting of two parts: Part A and Part B. Part A covers hospital expenses and often has no cost associated with coverage. Part B carries a monthly premium and covers necessary medical services, such as doctor visits, laboratory tests, and preventive services. The monthly premium is $164.90 in 2023, compared to $170.10 in 2022.
Note: Original Medicare does not require the use of a provider network, such as PPO or HMO. You can go to any provider that accepts Medicare, and you typically do not need a referral to see a specialist.
Parts A and B do not cover any prescription drugs you take at home. You will need to add a prescription drug plan to get prescription drug coverage, or purchase a Medicare Advantage plan with prescription drug coverage.
It’s important to note the notorious “Medicare donut hole,” or coverage gap, in Part D prescription drug coverage. The coverage gap officially closed in 2020, but once you and your Part D plan spend $4,660 in 2023, compared to $4,430 in 2022, your drug costs may increase. Generally, you will pay no more than 25% for prescription drugs.
Once spending reaches $7,400 in 2023, you enter the “catastrophic coverage” phase, and your costs drop to 5% or a small copayment.
Note: Drug coverage through a Medicare Advantage plan may be better than prescription drug coverage in Part D during the coverage gap or “Medicare donut hole.”
Medicare Advantage
Private insurance companies administer Medicare Advantage plans, also known as Part C of Medicare, and they are regulated by the government. It is simply a way to receive your benefits from Parts A and B and must therefore include coverage similar to Parts A and B.
Note: You must be enrolled in both Part A and Part B to purchase a Medicare Advantage plan.
Most Medicare Advantage plans also cover prescription drugs, eliminating the need to obtain a separate Part D prescription drug plan. Many plans also offer additional benefits not available with Original Medicare, such as vision, hearing, and dental coverage. However, since private insurance companies manage Medicare Advantage plans, they often use a network of healthcare providers, such as HMO or PPO. This may limit where and how you receive medical care.
How to Choose the Right Medicare Advantage Plan
You can choose to join a Medicare Advantage plan if you are not satisfied with what Original Medicare offers. Medicare Advantage plans can add coverage, and some even pay a portion of your Part B premiums. However, you may be limited to network providers, depending on the plan. Consider your preferences and needs when deciding on the right plan.
Questions
Frequently Asked Questions (FAQs)
How much does the government pay for Medicare Advantage plans?
In 2019, the average cost of a Medicare Advantage enrollee cost the government an additional $321 compared to original Medicare enrollees. In total, Medicare Advantage enrollees added about $7 billion to Medicare spending that year.
What is the difference between Medigap and Medicare Advantage?
Medigap plans help cover costs of original Medicare, such as cost-sharing percentages and your out-of-pocket maximum. Medicare Advantage plans may help cover original Medicare costs but also provide additional coverage beyond what original Medicare covers, such as dental and vision.
Conclusion
Always look at the bigger picture when comparing the costs of your health insurance plan. A Medicare Advantage plan may seem more expensive than a basic Medicare plan, but you may find that the plan with higher premiums but a lower out-of-pocket maximum could save you money by the end of the year.
Frequently Asked Questions (FAQs)
How much does the government pay for Medicare Advantage plans?
In 2019, the average cost of a Medicare Advantage enrollee cost the government an additional $321 compared to original Medicare enrollees. In total, Medicare Advantage enrollees added about $7 billion to the spending on Medicare
Source: https://www.thebalancemoney.com/comparing-medicare-and-medicare-advantage-4767650
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