People with Medicare can receive their healthcare coverage through either Original Medicare or a Medicare Advantage plan.

According to the Kaiser Family Foundation (KFF), about 36% of the 67.7 million Medicare beneficiaries opt for Medicare Advantage plans.

In this article, we look at Original Medicare and Medicare Advantage plans. We provide a comparison of the two options and explain the premiums that a person could pay.

We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:

• Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
• Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
• Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.

Original Medicare

Original Medicare is a government health insurance program that covers hospital and medical costs. It comprises Part A and Part B.

Part A

Part A covers hospital costs. It includes inpatient care in a hospital, care in a skilled nursing facility while recovering from a health condition, and hospice care.

To receive hospice care coverage, the individual’s doctor and a hospice care doctor must certify that the person is terminally ill with a life expectancy of up to 6 months.

Part A also covers the costs of meals, prescription drugs, general nursing, and a semi-private room while a person is in the hospital.

Part B

Part B covers medical costs as an outpatient. It includes preventive care services, doctor visits, laboratory tests, durable medical equipment, and some home health services.

An individual has to pay out-of-pocket costs for Medicare Part A and Part B, including a deductible amount, a coinsurance, and copayments.

Limitations

Original Medicare does not cover dental, vision, or hearing care, or fitness and wellness programs.

Also, Medicare Part A only covers prescription drugs while someone is staying in the hospital as an inpatient. However, Medicare provides prescription drug coverage through the optional Medicare Part D.

Enrollment

The Medicare Initial Enrollment Period begins 3 months before someone turns 65 and continues for 7 months. There is also a General Enrollment Period between January 1 and March 31 each year and an Annual Enrollment Period from October 15 to December 7.

In special circumstances, an individual might also qualify for a Special Enrollment Period to enroll in Medicare.

If an individual receives Railroad Retirement Board or Social Security retirement benefits in the month they turn 65, Medicare automatically enrolls them in Medicare parts A and B.

If someone is under 65 and receives specific disability benefits from Social Security or the Railroad Retirement Board, Medicare automatically enrolls them in Original Medicare — both Part A and Part B — after 24 months of disability benefit payments.

Other rules affect those with end stage renal disease or amyotrophic lateral sclerosis (also known as Lou Gehrig’s disease).

When someone enrolls in Original Medicare, they receive a red, white, and blue Medicare card in the mail. The card shows that someone has Part A or Part B coverage or both. Healthcare providers will ask to see the card when an individual with Medicare uses their services.

Medicare Advantage

Private insurance companies that Medicare has approved offer Medicare Advantage plans or Medicare Part C.

They offer an alternative to Original Medicare that combines the benefits of Part A, Part B, and, usually, Part D. Many plans also offer coverage for wellness programs and vision, dental, and hearing care.

Medicare Advantage plans must offer at least the same benefits as those that Original Medicare offers. However, the plan provider may have different rules, restrictions, and costs.

With Medicare Advantage, an individual still pays for their Original Medicare premiums. Most people do not pay a premium for Part A but continue to pay their Part B premiums.

Medicare Advantage plan providers offer a range of plans. The most popular plans are:

• Health Maintenance Organization (HMO) plans, which use in-network doctors.
• Preferred Provider Organization (PPO) plans, which have lower rates for in-network services.
• Private Fee-for-Service (PFFS) plans, which allow greater flexibility in choosing a provider.
• Special Needs Plans (SNP), which cover costs for chronic health conditions.

In some cases, an individual’s location may prevent them from enrolling in the Medicare Advantage plan of their choice.

Enrollment

An individual can enroll in a Medicare Advantage plan during their Initial Enrollment Period. They can also enroll or make changes in the General Enrollment Period and Annual Enrollment Period or during a Special Enrollment Period.

There is also a new Medicare Advantage Open Enrollment Period that runs from January 1 through to March 31 annually.

Medicare Advantage Plan holders receive a membership card from the insurance company.

Premiums

Medicare premiums vary in cost depending on an individual’s circumstances.

Premium-free part A

If a person or their spouse paid Medicare taxes for a specified time while in employment, they typically do not pay a premium for Medicare Part A. Medicare refers to this as premium-free Part A.

Part A premiums

If someone has to buy Part A coverage, they will pay up to $458 every month if they paid Medicare taxes for fewer than 30 quarters. Those who paid Medicare taxes for 30–39 quarters pay a monthly premium of $252.

Part B Premiums

Medicare bases this premium on someone’s income for the past 2 years. The standard part B premium is $144.60 each month.

Part D Premiums

The monthly premium for Medicare Prescription Drugs coverage varies among plans. The average national premium was $39.13 in 2019, although this increases in line with income.

Medicare Advantage Plan premiums

These vary depending on the plan. Some insurance companies offer zero-premium plans with higher out-of-pocket expenses.

According to the KFF, the average Medicare Advantage monthly premium is $63.

People can compare Medicare Advantage plans using the Find a Medicare Plan tool on the government website.

Reference:

https://www.medicalnewstoday.com/articles/medicare-original-vs-medicare-advantage