Medicare Advantage vs Medicare – Difference and Comparison.
Table of contents:
- comparison table
- Contents: Medicare vs. Medicare Advantage
- Medicare vs. Medicare Advantage Coverage
- Access to doctors
- Medicare Cost vs. Medicare Advantage
- Out of pocket expenses
- Changes to Medicare under the Affordable Care Act
- Advantages and disadvantages
- Popularity of Medicare Advantage Plans
Medicare Advantage plans (sometimes called Medicare Part C) are offered by private insurance companies as an alternative to traditional Medicare. Their benefits cover the same services as traditional Medicare Parts A and B, but some plans also provide prescription drug coverage (Part D). Medicare Advantage plans may have slightly different (usually lower) costs and out-of-pocket costs; some plans charge an additional premium. Access is often more limited because these are HMO or PPO plans, meaning you won’t be able to see all the providers under a Medicare Advantage plan that you can under Medicare. New members are automatically enrolled in traditional Medicare but can switch to a Medicare Advantage plan at the time of enrollment or annually.
With 30% of Medicare beneficiaries enrolled in Medicare Advantage plans as of 2014, these private insurance alternatives are very popular and are among the highest rated health insurance plans in the United States. However, many of these plans change little; for example, the Affordable Care Act ended some government subsidies for Medicare Advantage plans.
comparison table
| review | Medicare in the United States is an insurance program that primarily covers seniors age 65 and older and disabled people of any age who are eligible for Social Security. Also covers people of any age with end-stage renal disease. | Medicare Advantage, sometimes known as Part C, is a private insurance alternative that replaces “Original Medicare” Parts A and B. Some Medicare Advantage plans even cover prescription or Medicare Part D. |
|---|---|---|
| Program type | Government perspective | Private |
| Qualification requirements | Regardless of income, anyone over 65 years of age can enroll in Medicare as long as they have paid into Medicare/Social Security. People of any age with severe disabilities and end-stage renal disease are also eligible. | To be eligible for a Medicare Advantage plan, a potential enrollee must already be eligible for Original Medicare, pay a monthly Part B premium, and not have end-stage renal disease. |
| Services covered | Regular and emergency medical care, hospice, family planning, some smoking cessation programs. Limited dentistry and vision. | Everything is covered by Original Medicare. Also often covers prescription drugs and may cover dental, vision and hearing. May have special preventative coverage, such as gym membership. |
| Cost for enrollees | Part A costs nothing for those who have paid Medicare taxes for 10 years or more (or have a spouse who has done so). Part B in 2014 costs most $104.90/mo. Part D costs vary, typically around $30 per month. Medicare Advantage costs vary. | You must pay the Original B Medicare Part B premium, plus typically a monthly Medicare Advantage premium (about $30-$65). You may have to pay a copay to see a doctor. Coinsurance costs vary. |
| control | Entirely operated by the federal government. | Heavily regulated by the government, but usually run by private companies. |
| financing | Payroll taxes (namely, Medicare and Social Security taxes), interest earned on trust fund investments, and Medicare premiums. Together with Medicaid, Medicare accounts for approximately 25% of the federal budget. | Most funding still comes from the public; plans and care are heavily subsidized. Some funding comes from subscribers in the form of premiums. |
| User Satisfaction | High | Very high |
Contents: Medicare vs. Medicare Advantage
- 1 Medicare coverage vs. Medicare Advantage
- 2 Access to doctors
- 3 Cost of Medicare vs. Medicare Advantage
- 4 out of pocket expenses
- 5 Changes to Medicare Under the Affordable Care Act
- 6 pros and cons
- 7 Popularity of Plans Benefits of Free Medical Care
- 8 links
Medicare vs. Medicare Advantage Coverage
Original Medicare covers hospital care (Part A) and medical care (Part B). Prescription drug coverage (Part D) must be covered out-of-pocket, with separate private insurance, or through Medicaid.
Medicare Advantage is required by law to cover everything covered by traditional Medicare, commonly called “Original Medicare.” In addition, some Medicare Advantage plans may also offer other benefits. These plans typically include prescription drug coverage, for example, and may include vision, dental, and hearing care. Some even include benefits such as gym membership. However, benefits vary significantly between plans.
To be eligible for a Medicare Advantage plan, a potential enrollee must already be eligible for Original Medicare, pay a monthly Part B premium, and not have end-stage renal disease. Other medical history – that is, pre-existing conditions – may not be a barrier to enrolling in Medicare Advantage plans.
Watch the video below to learn more about how Medicare Advantage differs from Original Medicare Supplements and Medicare Supplements such as Medigap.
Access to doctors
Although most doctors and hospitals accept Medicare, a small percentage (approximately 4%) reject Medicare recipients. And nearly 30% reported having difficulty finding a doctor who would accept Medicare.
Medicare Advantage users are typically limited to specific provider networks as part of their HMO and PPO plans. Therefore, some Medicare Advantage plans only provide limited coverage if the user travels out of state. However, for local in-network care, Medicare Advantage users have a similar access experience and do not have difficulty communicating with physicians.
Medicare beneficiaries pay standard rates for services no matter where they live. While Medicare Part A (hospital insurance) is usually covered by the government for free, Part B (outpatient health insurance) costs $104.90 per month or more if a person’s annual income exceeds $82,000. Benefits are subject to a $140 per year deductible. In addition to the premium and deductible, there is a 20% coinsurance, meaning members must pay 20% of medical expenses for all services covered by Parts A and B, such as long hospital stays. Home health care and hospice services are covered free of charge. Part D, which covers prescriptions and is purchased from a private insurer, varies in cost from plan to plan, but the average cost in 2014 is just under $33 per month, according to the federal government.
Along with the costs associated with traditional Medicare, Medicare Advantage members typically pay a monthly premium for prescription drug coverage. As of 2014, premiums range from US$30 to US$65. It may be less than the cost of traditional Medicare, plus a Part D plan, plus Medigap coverage, but the cost varies from plan to plan. Medicare Advantage plans set copays for doctors, but may have higher copays for expensive services such as hospitalization or chemotherapy.
Source: Kaiser Family Foundation
Out of pocket expenses
Neither Original Medicare nor Medicare Advantage plans provide 100% coverage. Regardless, recipients and subscribers will personally pay for some of their healthcare costs.
For Original Medicare Part A and Part B, enrollees must pay 20% of costs after they reach the deductible. For inpatient stays, members must pay a $1,216 deductible for the first 60 days and then a $300 coinsurance per day until the 90th day. After the 90th day, participants can have another 60 days at $608 per day for the duration of their life, after which they must pay all expenses. The Part B deductible is $147 per year.
Out-of-pocket cost of original medical care. Source: Medicare.gov
Those with Part D (prescription coverage) must also pay a deductible, which varies depending on the Part D plan. Once the deductible has been met, enrollees can have either a copay plan, where they pay a flat fee for each drug, or coinsurance program where they pay a percentage of the cost. However, participants may face a “donut hole”: after total drug costs exceed $2,850 per year, participants must pay 47.5% of the cost of brand-name drugs and 79% of the cost of generic drugs. Once drug costs exceed $4,550, Medicare kicks in again, covering 95% of drug costs.
Under Medicare Advantage, tests and procedures must also be considered necessary by the private insurance company, not just the doctor, or the costs must be paid out of pocket. Just as monthly premiums vary by Medicare Advantage plan, deductibles and medical costs also vary, so enrollees should be sure to check each individual plan to find out exactly what drugs and procedures it covers and how much it will cost. However, it should be noted that Medicare Advantage cannot charge more than Original Medicare for services such as chemotherapy, dialysis, and nursing facility care.
Changes to Medicare under the Affordable Care Act
Under the Affordable Care Act (“Obamacare”), Medicare now covers preventive services that were not previously provided—services for which many used Medicare Advantage plans to cover. While Medicare Advantage plans still offer some benefits that Original Medicare doesn’t, the two types of coverage are now much more similar.
In the past, government subsidies have kept Medicare Advantage costs and premiums deceptively low. Some of these subsidies were cut under the Affordable Care Act, in part because Medicare now covers many additional preventive services that were previously covered only by Medicare Advantage plans. In response, private Medicare Advantage insurers may keep plans largely the same, raise premiums or cut certain benefits, such as vision or dental.
Advantages and disadvantages
When deciding whether Original Medicare or Medicare Advantage is better, a lot depends on your personal needs. Both Medicare and Medicare Advantage provide relatively easy access to doctors, specialists and hospitals, but Medicare Advantage plans may be more likely to cover additional expenses such as gym memberships. A Medicare Advantage plan is also more likely to keep enrollees out of the “donut hole,” where prescription drug costs are high, out of pocket.
Medicare Advantage plans are supposed to provide the same coverage as traditional Medicare and may end up being cheaper than paying for individual Medicare Parts B and D and Medigap. However, the benefits you receive from a Medicare Advantage plan vary, so individuals with specific health conditions should review them carefully. Medicare Advantage plans also provide limited coverage only if the user travels to an area that only has out-of-network providers; This is an issue that Original Medicare users do not face.
Finally, the insurance company, not just the doctor, must cover all tests and procedures performed by the Medicare Advantage plan, not just the doctor. This could slow down payment and leave people with higher out-of-pocket costs if the insurer decides the treatment is not needed.
Popularity of Medicare Advantage Plans
Medicare Advantage plans are very popular, especially in Hawaii, Minnesota and Oregon. In at least one survey, users rated Medicare Advantage more favorably than any other type of health insurance or medical assistance program in the United States.
Source: Kaiser Family Foundation
Last edited on August 21, 2014.
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