For older adults, healthcare costs account for about 9% – 14% of household spending. Medicare, the government’s health care program for people age 65 and older, is a way to manage those costs. It can get confusing, though. What is Medicare Advantage? Is it different from Original Medicare? What does each individual part cover?
It can be a lot to digest. Let’s break it down to the basics so you can establish a solid foundation for deciding which plan is right for you.
What Is Medicare
Medicare is a government-run health insurance program that covers people age 65 and older, some younger people with disabilities, and people with End-Stage Renal Disease.
The two main coverage options are Original Medicare and Medicare Advantage. In this section, we’ll discuss Original Medicare, which includes Part A and Part B.
What Part A Covers
Medicare Part A is basically your hospital insurance. It covers hospital visits, skilled nursing facility care, nursing home care, hospice care, and home health care.
There is a deductible for Part A, as well as a coinsurance you’ll have to pay. That coinsurance doesn’t kick in until after a 60-day stay at an inpatient facility.
What Part B Covers
Part B is more like your traditional medical insurance. It covers your doctor visits, mental health visits, ambulance services, services and supplies used to diagnose or treat a medical condition, and preventative services.
You’ll pay a monthly premium for Medicare Part B. That price varies based on things like your marital status and income.
What Part A And Part B Don’t Cover
While Original Medicare might cover the majority of your healthcare needs, it’s important to factor in what it won’t cover before you enroll. Those things include:
- Long-term care
- Most dental services
- Dentures
- Eye exams for getting prescription eyeglasses
- Cosmetic Surgery
- Hearing aids
If you would like prescription drug coverage, there’s an additional plan called Part D that you’ll need to join.
If there’s a specific test, item, or service you’re wondering about, the Medicare website has a search feature to help you find out if it is covered.
What Is Medicare Advantage
Also called Part C, Medicare Advantage Plans are an alternative to Original Medicare. Private insurance companies approved by Medicare provide these plans. Think of them as an all-in-one option.
Essentially, these are bundled plans that will include benefits like Part A, Part B, oftentimes Part D, and additional benefits like vision, hearing, and dental coverage.
Part C plans can have some other perks that you might not usually think about, like assistance for fitness programs, over-the-counter drugs, and even transportation to and from doctor visits.
The cost of Medicare Advantage Plans will vary depending on which insurance provider you go with. There will also be certain stipulations based on what providers are in the plan’s network and the service area.
Advantages Of Medicare Advantage
Medicare Advantage has revolutionized the way seniors access healthcare services in the United States. With its wide array of benefits, this program offers a holistic approach to healthcare
coverage.
Provides All-In-One Coverage
One of the primary advantages of Medicare Advantage plans is the integration of various healthcare services into a single, comprehensive package. By consolidating services from all parts of Medicare as well as additional benefits, beneficiaries can enjoy streamlined coverage and potentially lower out-of-pocket costs. Because all of these benefits fall under one plan, you don’t have to purchase multiple plans to achieve complete coverage.
Offers Cost-Effective Premiums
Medicare Advantage plans often come with competitive premium rates compared to supplementary Medigap policies. While beneficiaries are still required to pay their standard Part B premium, many Medicare Advantage plans have lower or even $0 monthly premiums, making them an attractive option for those looking to manage their healthcare expenses effectively.
Limits Out-Of-Pocket Costs
Unlike traditional Medicare, which does not have a cap on out-of-pocket expenses, Medicare Advantage plans set annual limits on these costs. Once the beneficiary reaches the out-of-pocket maximum, the plan covers all additional costs for covered services. This financial protection provides peace of mind for individuals concerned about unexpected medical expenses and ensures predictability in budgeting for healthcare.
Typically Includes Prescription Drug Coverage
As previously mentioned, many Medicare Advantage plans include prescription drug coverage Part D, helping beneficiaries save significantly on medication costs. The plans are designed to negotiate with pharmaceutical companies for lower drug prices, and they often have formularies that encourage the use of generic drugs, further reducing expenses for both the plan and the beneficiary.
Promotes Preventative Services And Wellness Programs
Medicare Advantage plans emphasize preventative care and wellness programs, aiming to keep beneficiaries healthier and reduce the need for expensive treatments. These plans frequently cover services like vaccinations, screenings, and preventative tests at little to no cost, encouraging early detection and management of health issues. This is one of the most important cost benefits of a Medicare Advantage plan. Prevention is key to Better Health and lower healthcare costs.
Network Efficiency
Medicare Advantage plans typically operate within a network of healthcare providers, allowing them to negotiate discounted rates for services. Beneficiaries who use in-network providers often enjoy lower out-of-pocket costs. While there may be restrictions on seeing out-of-network providers, the trade-off is often justified by the cost savings within the network.
Focus On Care Coordination
Medicare Advantage plans often offer care coordination services, ensuring that beneficiaries receive comprehensive and well-managed healthcare. Coordinated care can lead to fewer hospitalizations and emergency room visits, resulting in overall cost savings for both the individual and the healthcare system. This is especially important for individuals who suffer from multiple chronic conditions.
Emergency Care Nationwide
You don’t want to end up without coverage while you’re traveling. All Medicare Advantage plans must provide coverage for urgent and emergency medical care throughout the United States.
Is Medicare Advantage Right for You?
Many of us rarely had to dive deep into healthcare coverage when we were younger. Our employer or union usually offered it as a benefit. We had a couple of options, and we picked what we thought was best or maybe even cheapest.
Now that we are older, insurance has become more hands-on. The government provides us with Medicare, but it’s up to us to determine the coverage that best fits our lifestyle. Medicare Advantage plans are constantly expanding the benefits they offer that Original Medicare does not.
Here are some things to consider.
Pros
Medicare Advantage plans can offer more personalized benefits based on your situation. With Original Medicare, the extent of your coverage is already laid out. Going the Advantage route will give you some more flexibility to cater your health plan to fit your needs.
In that same vein, you’ll also get more convenient options for your coverage. You can wrap everything up into one plan. If you take the Original Medicare route, you would have to add Part D coverage if you want a prescription drug plan, for example.
There is potential to save money with Advantage plans with lower premiums and set limits on the maximum amount you will have to pay out of pocket during the year.
Cons
You are likely to be more limited in healthcare providers you can choose from with an Advantage plan. Since this is run through private insurance companies, you are probably going to face the old in-network versus out-of-network provider dilemma. That’s dependent on the plan you choose, but it’s still important to keep in mind.
Speaking of the plans, there are several types of Medicare Advantage plans to choose from. The number of available options can make it more complex to choose a plan. It can get overwhelming trying to narrow them down.
Finally, Medicare Advantage Plans may only offer coverage in specific areas. That means if you end up moving you may also have to change your plan. By contrast, Original Medicare has the same coverage no matter where you are in the country.
Enrollment Periods for Medicare Advantage
Navigating the complexities of healthcare coverage can be challenging, especially when it comes to understanding the enrollment periods for Medicare Advantage.
To make the most of your coverage options, it’s crucial to be aware of the key enrollment periods: the Initial Enrollment Period (IEP), the Annual Enrollment Period (AEP), the Medicare Advantage Open Enrollment Period (OEP), and Special Enrollment Periods (SEPs). Each of these windows offers unique opportunities to join, switch, or adjust your plan, ensuring that your healthcare needs are met throughout the year.
- Initial Enrollment Period (IEP): This period begins three months before the month you turn 65, includes your birthday month, and ends three months after your birthday month. For example, if your birthday is in July, your IEP runs from April through October.
- Annual Enrollment Period (AEP): This period occurs from October 15 to December 7 each year. During this time, you can join, switch, or drop a Medicare Advantage plan. Coverage for changes made during the AEP begins on January 1 of the following year.
- Medicare Advantage Open Enrollment Period (OEP): This period is from January 1 to March 31 each year. If you are already enrolled in a Medicare Advantage plan, you can switch to a different Medicare Advantage plan or return to Original Medicare (with or without a Part D plan).
- Special Enrollment Periods (SEPs): These periods occur due to specific circumstances, such as moving to a new address that isn’t in your plan’s service area, losing other health coverage, or your plan’s contract with Medicare ending. The timing and rules for SEPs vary based on the qualifying event.
For more information tailored to your specific healthcare needs, it’s often beneficial to contact Medicare directly or consult with a Medicare advisor.
Contact your insurance agent today and see if you should join a Medicare Advantage plan! You just might save some money and get some extra benefits.