For older adults, health care 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 a Medicare Advantage plan? Is it different from Original Medicare? What do the plans cover?
It can be a lot to digest. Let’s break it down to the basics so you’ve got a good foundation to decide if this is a good route for you to take.
What is Medicare
Medicare is the 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 options for coverage are Original Medicare and Medicare Advantage. In this section, we’re talking about 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 preventive 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.
What is a Medicare Advantage Plan
Also called Part C, Medicare Advantage Plans are an alternative to Original Medicare. These plans are provided by private insurance companies that are approved by Medicare. 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 other things like vision, hearing, and dental coverage.
The packages 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.
Pros and Cons of Medicare Advantage Plans
While Medicare Advantage Plans are a great option for some people, others may not need the amount of coverage provided.
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 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, too. Some of this type of plan will come along 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 a lot of them 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.