If you are new to Medicare, your first decision would be to select one of the two primary sources of coverage: Original Medicare or Medicare Advantage. Understanding your options can help you make the decision that is right for you.
Original Medicare is the program managed by the federal government that includes Parts A and B. Part A is hospital insurance and includes care and services you receive when you are admitted as an inpatient to a hospital, skilled nursing facility, hospice, or health health care. Part B encapsulates medically necessary doctor visits, outpatient services and medical equipment. Drug coverage is a separate plan known as Part D, which is an option at an additional cost.
Original Medicare allows you to visit any doctor who accepts assignment across the U.S. However, there is no limit to your annual out-of-pocket costs if you have Original Medicare. Some Medicare recipients with Original Medicare choose to supplement their coverage with a Medicare Supplement plan that can help cover some of the costs that Original Medicare does not, including copayments or coinsurance.
Types of Medicare Advantage Plans
Medicare Advantage (MA) plans, referred to as Part C, is offered by private insurance companies that contract with Medicare to provide your Part A and Part B benefits. These plans are required to offer the same Parts A and B coverage as Original Medicare, but many MA plans provide additional benefits, such as vision, dental, or prescription drug coverage.
The MA plan will usually fall into one of these categories: Health maintenance organization (HMO), preferred provider organization (PPO), private fee-for-service (PFFS), Special Needs Plan (SNP), HMO point-of-service (HMOPOS) and medical savings account (MSA). Compare the plans based on your personal preferences and priorities, weighing such factors as network physicians and facilities, prescription coverage, referral requirement for specialists, deductibles, co-insurance, out-of-pocket maximums and, premiums.
The Cost Differences Between Original Medicare and Medicare Advantage
Compared to Original Medicare paired with a Medicare Supplement plan and a Prescription Drug Plan, Part C may be considered a less expensive option, but it’s important to compare the plans available in your area. In some areas, MA plans are offered for little to no additional cost that Original Medicare. This one-stop-shop of Medicare Advantage is often advantageous from an expense and tracking perspective, as well. As a word of caution, if you choose an MA plan with prescription drug coverage, confirm your prescriptions are listed in the plan’s formulary and that your preferred pharmacies are in their network.
The easiest way to research plans available in your area is online. Online plan comparisons will allow you to narrow down your options and find the plan that’s right for you.