There are four important factors to consider when choosing between traditional Medicare, which is a public plan administered by the federal government, and Medicare Advantage plans, which are commercial insurance plans that contract with Medicare to deliver Medicare benefits: 1. Coverage, 2. Access, 3. Incentives and 4. Cost.
- Coverage: Both traditional Medicare and Medicare Advantage plans cover the same benefit package of medically necessary care. Traditional Medicare covers this care from most doctors and hospitals in the United States. Medicare Advantage plans generally cover care only from doctors and hospitals in their network and, often, only in your area, except in emergencies or urgent care situations. Medicare Advantage plans can and do generally offer some additional benefits. They also can and do often take a narrower view of what care is medically necessary than traditional Medicare. For more information on the fundamental differences between fee-for-service care through traditional Medicare and Medicare Advantage plans, click here.
- Access: With traditional Medicare, you are covered for all medically necessary care without a referral or prior authorization. For more information on the easy access you have with traditional Medicare, click here. With a Medicare Advantage plan, you often must have a referral from a primary care physician or prior authorization from your Medicare Advantage plan in order to be covered.
- Incentives: With traditional Medicare, your doctors and hospitals have every incentive to provide you with all the care they think you need because traditional Medicare will pay for it. Medicare Advantage plans receive a fixed amount from Medicare to cover your care. They may create incentives for their network doctors and hospitals to withhold needed care. The less money a Medicare Advantage plan pays out for your care, the more money the Medicare Advantage plan has for its shareholders. To learn more, read this blog post by Diane Archer and Theodore Marmor on the fundamental difference between Medicare and private insurance.
- Cost: With traditional Medicare, you need extra insurance to fill coverage gaps. Some people get this additional insurance from former employers, some buy an individual “Medigap” or Medicare supplemental insurance policy and some qualify for Medicaid, which fills gaps, because their income is low. With this extra insurance, you will have few if any out-of-pocket costs when you get medical or hospital care. You also need prescription drug coverage, if not through Medicaid or a former employer, through a Medicare Part D drug plan. Without this extra insurance, if you need a lot of costly care, your out-of-pocket costs could be astronomical. With a Medicare Advantage plan, you cannot buy extra insurance to fill coverage gaps, and you can be liable for up to $6,700 in out-of-pockets costs–copays, coinsurance and deductibles–for your in-network care alone. There is generally no limit to your out-of-pocket costs if you use doctors who are out of network
Here’s more from Just Care on choosing a health plan:
- Did you know Medicare covers weight-loss counseling?
- Six tips for keeping your drug costs down if you have Medicare
- Five programs that lower your costs if you have Medicare
- Two questions to ask during the Medicare Open Enrollment Period
- Medicare ratings of Medicare Advantage plans a farce
- Don’t trust your health plan’s provider directory
- Three big differences between a private Medicare fee-for-service plan and traditional Medicare