Original Medicare vs. Medicare Advantage

When you first join Medicare, and at specific periods of the year, you have the option of receiving your coverage in one of two ways.

The first one is Original Medicare which consists of Medicare Part A – Hospital Insurance – and Part B – Medical Insurance. For prescription drug coverage, you need to add Part D – the Medicare drug plan.

The second one is Medicare Advantage, also referred to as Part C. This is an alternative to Original Medicare that’s offered by private insurance companies but has to be federally approved. Medicare Advantage plans bundle Part A, Part B, and in most cases Part D as well. They also typically offer additional benefits not included in Original Medicare, such as dental, vision, and hearing care.

Your Medicare health plan selection has an impact on how much you pay for coverage, what services you have access to, which doctors you can see, and the quality of care you receive.

Understanding your Medicare coverage options and comparing different plans can help you make the best decision for your medical needs and budget.

Original Medicare

As we already mentioned, Original Medicare consists of two parts: Part A – Hospital Insurance – and Part B – Medical Insurance. You’ll pay a deductible at the start of each year, as well as coinsurance, which is typically 20% of the cost of a Medicare-approved service. You need to add Part D if you want coverage for prescription drugs as well.

Even though Original Medicare pays most of the costs of covered health care services and supplies, it does not cover the entire cost of care. However, you can get a Medigap plan – Medicare Supplement Insurance – to cover some of the remaining costs like deductibles, copayments, and coinsurance.

A deductible is the amount you have to pay out of pocket before your health insurance kicks in.

Coinsurance refers to your share of the cost of services after paying deductibles. It’s usually calculated in percentages.

Copayment is also your share of the cost of medical services or supplies, but it’s usually a set amount. For example, you might be required to pay $10 or $20 for a prescription drug or a doctor’s visit.

Some Medigap plans offer additional services not included in Original Medicare, like emergency medical care abroad.

Routine dental and vision care, dentures, glasses, hearing aids, nursing home, long-term care, acupuncture, and cosmetic surgery are examples of services not included in Original Medicare. For these types of services, you’ll almost always be required to pay for the full cost out of pocket.

At this point, you may be wondering: does Medicare cost the same for everyone? The short answer is no.

You are not required to pay a premium for Medicare Part A if you or your spouse worked and paid Medicare taxes for a minimum of ten years or forty quarters. However, if you paid these taxes for less than thirty quarters, you will be required to pay a monthly premium of $471. And if you paid for thirty to thirty-nine quarters, you will be required to pay a monthly premium of $259. These rates are valid for 2021 and are the same all around the US.

The Medicare Part B premium also varies and is determined by your income level. The 2021 standard monthly premium is $148.50, but you will be required to pay more if your income is above a certain level. These premiums are also the same all around the US.

What Are Medicare Advantage Plans?

A Medicare Advantage Plan is another option for getting Part A and Part B coverage under Medicare. Medicare Advantage Plans, also known as “Part C” plans, are provided by private companies that have been approved by Medicare and are subject to the rules and regulations established by Medicare.

Medicare Advantage Plans come in a variety of shapes and sizes, but most of them also cover prescription drugs (Part D). Each of these Medicare Advantage Plan has its own set of criteria for receiving Medicare-covered Part A and B treatments, as well as the extra benefits.

You’ll still have Medicare if you join a Medicare Advantage Plan, but you’ll receive most of your Part A and Part B benefits from your Medicare Advantage Plan rather than Original Medicare. When you enroll in a Medicare Advantage Plan, Medicare pays the company that offers your Medicare Advantage Plan a set sum each month for your coverage. To access Medicare-covered services, you must use the card provided by your Medicare Advantage Plan.

Companies that provide Medicare Advantage plans must adhere to Medicare’s standards, but each plan can charge different out-of-pocket expenses and have various rules about how you access services.

For example, some providers may require you to obtain a referral if you want to get non-emergency or non-urgent care from doctors, facilities, or suppliers within the plan’s network.

Providers are allowed to change these rules every year, but they are legally required to notify you of any changes prior to the beginning of the next enrollment year.

Premiums, deductibles, and service charges are established each year, and it’s the private insurance company that determines how much you pay for these services, not Medicare. The premiums can change only once per year, on the 1st of January.

When estimating your out-of-pocket costs under a Medicare Advantage Plan, you should take into account your premium, deductible, copayments, and coinsurance, as well as the following factors:

• The kinds of medical services you require and how frequently you receive them;

• Whether you visit a doctor or a supplier who accepts Medicare assignment. Medicare has a set list of authorized rates for services and supplies that providers can charge. Accepting Medicare assignment implies that the providers agree to these rates and will not charge you more. Others may still accept Original Medicare enrollees, but they will charge them 15% more than the rates on the list, on top of their share of the cost;

• Whether the plan includes additional benefits (beyond those provided by Original Medicare) and whether you’ll have to pay extra for them;

• Whether you have Medicaid or receive assistance from your state to pay for your Medicare expenditures through a Medicare Savings Program.