When you become eligible for Medicare, you'll have a decision to make about how you choose to get your coverage. You can opt for Original Medicare and add a Medigap plan and a stand-alone drug plan, or you can enroll in a Medicare Advantage plan.
These two types of coverage are very different and what is best for your neighbor may not be best for you. Let's reviews how each option works.
Original Medicare is made up of Parts A and B. These two parts have been around since 1965, and they cover hospital and outpatient services respectively.
When you enroll in Original Medicare, you get your benefits directly from the federal government. Part A covers your inpatient hospital services as well as skilled nursing care and hospice benefits. Part B covers your preventive care, doctor visits, lab work, medical equipment and supplies, outpatient surgeries and many other services.
Beneficiaries who stay with Original Medicare can see any provider in the nation that accepts Medicare. This is over 800,000 providers, and you can access them freely without any need for a referral.
Since Medicare has cost-sharing in the form of deductibles and coinsurance, most people who opt for Original Medicare will sign up for a Medicare supplement plan to help cover the gaps. When you seek healthcare services, your providers will bill Medicare, and then Medicare will send the remainder of that bill to your Medicare supplement company to pay its share. Depending on which Medicare supplement you choose, the insurance carrier will pay some or all of the remaining dollars due.
This is a great way to keep your back-end expenses predictable. Be aware, though, that Original Medicare does not cover outpatient medications. If you need help with your prescription drug costs, you can enroll in a stand-alone Part D drug plan to help with those costs. These plans are fairly inexpensive and come with great catastrophic coverage.
Medicare supplements generally have higher premiums than Medicare Advantage plans, which we'll cover next. This is because they leave fairly little for you to pay on the back end. If you need lower premiums and prefer to pay for services as you go along, then a Part C Medicare Advantage plan might be an option you would like to consider. https://boomerbenefits.com/new-to-medicare/parts-of-medicare/medicare-part-c/
Medicare Advantage Plans
Advantage plans are a form of private insurance coverage that you can opt for instead of Medicare. These plans fall under Part C of Medicare, and you will sign up for this kind of coverage through a Medicare insurance broker instead of at the Social Security office.
Medicare Advantage plans pay your healthcare bills instead of Medicare. Most Medicare Advantage plans have a network of providers, such as an HMO or PPO network. With an HMO-style plan, you'll usually need to select a primary care physician and consult with that physician first if you need a referral to consult a specialist. You must seek your care from within the network except in cases of emergencies.
PPO plans are generally more flexible. You can see doctors outside the network, but you'll pay a higher cost to do so and the doctor must agree to bill the Medicare Advantage plan instead of Original Medicare.
You must be enrolled in both Medicare Parts A and B and live in the plan's service area before you are eligible to sign up. There is only one health question about End-Stage Renal Disease. Anyone who does not have ESRD can sign up for a Medicare Advantage plan during a valid Medicare enrollment period.
Medicare Advantage plans typically have lower premiums up front because you will instead pay co-pays for your services as you go along. There are some Medicare Advantage plans that may even have premiums as low as $0. Medicare pays the plan a set amount of money every month to administer your Part A and B services, so the plan will offer low premiums to attract you to that coverage.
Many Advantage plans also have a Part D drug plan built in, and some include extras live preventive dental care or eye exams.
How to Decide Which Coverage is Right for You
It can be tricky to determine which type of coverage is right for you, so here are some pointers.
If you like the peace of mind that comes with knowing you will spend very little on your healthcare services at the time of care, then Original Medicare and a Medicare supplement might be a good fit for you. These plans also work well for people who travel and want the freedom to treat with Medicare doctors anywhere in the nation.
If, on the other hand, you would feel better to spend less out of pocket on the monthly premium and instead pay only for health care services that you actually use, then a Medicare Advantage plan might be a good fit for you. Be sure to check with your healthcare providers to see if they are in the network for any plan that you are considering. You should also review the plan's drug formulary to ensure that it includes any medications that you need on a regular basis.
You can learn more about choosing between Original Medicare and Medigap versus a Medicare Advantage plan here.