There’s no denying that Medicare can be a bit confusing to navigate, and the addition of Medicare Advantage presented an entirely new set of options and, in some cases, challenges for those that qualify for Medicare coverage and are seeking the most suitable options. The original Medicare program was developed in 1966 as a means of providing federal health insurance for those over the age of 65 (as well as certain younger people that meet qualifying circumstances). The idea was to provide affordable healthcare for a traditionally underserved group. Then, in 1995, Medicare Advantage was launched as an expansion of the original Medicare program with the idea of providing further options for those eligible for Medicare. What you might be wondering, if you qualify for Medicare, is which option is right for you and how they differ.
What you’re probably going to notice first is a lot of letters: A, B, C, and D. These are the parts of Medicare that you can choose from. Traditional Medicare, which you will automatically be enrolled in when you first join the Medicare program, includes parts A and B for healthcare services, with the option to add part D for a stand-alone drug plan. Medicare Advantage is comprised of part C, which is an addition to or an alternative for parts A and B, depending on how you look at it. You should understand what all these letters mean before you make an informed decision about which plan is best for you.
Original Medicare, including parts A and B, includes coverage for medical and hospital costs up to a certain amount. Rates for coverage and services are standardized so that patients pay virtually the same amount no matter where they live and doctors and hospitals nationwide accept their coverage. Medicare Advantage expands on this plan with part C. Private insurance companies provide Part C coverage (although it is regulated by the federal government). It utilizes HMO and PPO plans as a substitute for standard Medicare parts A and B as a means of lowering out-of-pocket expenses through local or regional services. For patients this could mean greater access to services at lower costs, and it more closely mirrors traditional health insurance policies (as opposed to the services provided by Medicare parts A and B).
What does this mean for patients? Those that elect to enhance coverage with a Medicare Advantage plan may gain access to coverage for dental, vision, hearing, and drug plans as part of their policy, although it depends on the plan selected. There is also a cap for out-of-pocket spending, and if you reach it, you will receive 100% coverage for many services. Medicare Advantage plans may also extend beyond U.S. borders. Whereas Medicare is accepted nationwide, it generally doesn’t include coverage for medical care received outside the U.S.
The major benefit of choosing a Medicare Advantage plan is that you will switch to a system of copays instead of co-insurance (in addition to plan premiums). Whereas original Medicare requires patients to pay a set percentage of all costs (say, 20% of all medical visits, services, and so on), Medicare Advantage requires only a fixed copay for visits and services, so your out-of-pocket cost never changes. The major drawback of Medicare Advantage is that you must use a fixed network of doctors and facilities approved by the network, whereas original Medicare allows access to any healthcare provider or facility that accepts Medicare. You’ll simply have to weigh the pros and cons in order to decide which plan is right for your particular needs.