As people approach retirement age, it is important to ensure that their healthcare needs are met. However, choosing the right healthcare coverage can be confusing and overwhelming, especially with the seemingly endless paperwork and coverage options of government-backed Medicare. This article aims to provide a comprehensive overview of Medicare and Medicare Advantage to help individuals make informed decisions.
Traditional Medicare
Medicare is a health coverage plan that provides affordable care to Americans aged 65 and older2. The program itself is split into four parts, A through D. Parts A and B cover hospital and medical services respectively, C and D fall under Medicare Advantage and Prescription coverage 2. Traditional Medicare includes parts A and B, essentially ensuring full coverage to any policy holder in hospitals, home health, outpatient services, and even preventative screenings. Since Medicare is backed by the federal government, the coverage network is quite extensive, according to the Kaiser Family Foundation only 1% of doctors don’t participate1. Many senior Americans opt for traditional Medicare (Parts A and B) alongside a supplementary Medigap plan or part D coverage for prescriptions. Individuals ensured by this plan receive ultimate flexibility, especially if intending to travel frequently. These individuals have the benefit of accessing over 1 million provider networks backed directly by the federal government. As far as payment is concerned, traditional Medicare doesn’t cover prescriptions, so users will need the aforementioned Part D coverage, or a supplementary Medigap plan. Furthermore, there is no limit to out-of-pocket pay, meaning users with frequent visits can still succumb to expensive medical bills2. Overall, the nationwide coverage of Medicare remains affordable at roughly $160 per month in 20232.
In summary, someone searching for worry-free care, while enjoying a life of abundant travel and leisure would receive the most benefit from traditional Medicare. If the individual is prescribed medication, supplementing this plan with Medigap or Part D coverage will allow ultimate freedom and flexibility. Without worrying about care networks, having this plan ensures inpatient and outpatient care virtually anywhere within the United States.
Medicare Advantage
In 1997, CMS unveiled Part C also known as Medicare+Choice, which was eventually rebranded to Medicare Advantage1. Medicare Advantage is essentially a private insurance plan, similar to employee health insurance, that’s backed by the Medicare program. This coverage is offered through two distinctions, HMO and PPO. HMO or Health Maintenance Organization uses closed provider networks for all aspects of health aside from emergency care, furthermore the plan may require referrals for coverage of specialist care. PPO or Preferred Provider Organization allows users to receive care out of network but staying in network generally costs less1. Through PPO Medicare Advantage, referrals generally aren’t required, and part D coverage is generally included. Medicare Advantage is best for someone looking to receive coverage similar to the plan they had during their working years. Since MA falls under private network care, it offers everything traditional Medicare has with additional benefits such as routine vision, dental, and hearing1.
Over the past few years, benefits offered through MA have been updated to include quality-of-life options like home accessibility improvements, gym memberships, and OTC drug coverage. When it comes to billing, Medicare Advantage plans can cost less for subscribers if care is contained within the supported network. MA includes prescription drugs, tailoring the plan to a subscriber’s direct needs. As a result, it offers a wider range of care options and coverage throughout a localized geographic region. To summarize, Medicare Advantage is an optimal plan for subscribers planning to spend retirement in one general region. As long as care is received in the network, users benefit from wide coverage and accessible care throughout all facets of life.
Making a Decision
When deciding between Medicare and Medicare Advantage, it is important to understand the differences. Medicare Advantage has a wider range of services, but they only exist within the network of the plan. Traditional Medicare offers basic services at a flat rate across a vast majority of the United States, providing peace of mind for users that wish to spend retirement traveling while knowing basic care will be available. Medicare Advantage can offer more services at a discounted rate within the home network for users planning to enjoy a more centralized retirement. There isn't one right answer, but understanding the differences is an essential step in making an informed decision.
When approaching the aging population decisions can be challenging, but with the right healthcare coverage, it doesn’t have to be. Choosing between Medicare and Medicare Advantage can be overwhelming but by understanding the fundamental differences between the two, individuals can make informed decisions that best suit their needs.
This blog was originally published as "A Comprehensive Overview of Medicare and Medicare Advantage" by Harper Dion on March 14, 2023, for Maxwell Healthcare Associates. The Maxwell TEC editorial team has since updated this article to ensure accuracy and relevance.
Resources
- Bunis, Dena. “The Big Choice: Original Medicare vs. Medicare Advantage.” AARP. AARP, November 29, 2022. https://www.aarp.org/health/medicare-insurance/info-2020/original-medicare-vs-advantage.html.
- “Compare Original Medicare & Medicare Advantage.” Medicare. U.S. Centers for Medicare and Medicaid Services. Accessed January 25, 2023. https://www.medicare.gov/basics/get-started-with-medicare/get-more-coverage/your-coverage-options/compare-original-medicare-medicare-advantage.
- Emerson, Jakob. “50 Things to Know about Medicare Advantage.” Becker's Payer Issues. Becker's Healthcare, January 9, 2023. https://www.beckerspayer.com/payer/50-things-to-know-about-medicare-advantage.html.
