The Differences Between Medicare Advantage and Traditional Medicare Plans
Medicare is a federal program to provide certain groups with insurance. Run by the Centers for Medicare and Medicaid, it is funded by its customers premiums, Medicare taxes, and federal budgeting. It was created for individuals over 65, those under 65 receiving Social Security Disability Income (SSDI), or individuals with end stage renal disease. As a federal program, Original Medicare may not cover everything you need, so Medicare Advantage provides a way to get low-cost health care to supplements traditional Medicare plans. Here’s a look at the difference between Original Medicare and Medicare Advantage.
What is Original Medicare?
Medicare consists of 4 different parts: A, B, C, and D. Original Medicare refers to parts A and B. If you have Medicare, you have Original Medicare. Part A is also called “hospital coverage.” If you haven’t worked for at least 10 years, or 40 quarters, and paid taxes during that time (under the table cash jobs don’t count, unless you very carefully filed your taxes on that money), Part A is free. If you haven’t worked or haven’t worked enough, you will likely have to pay a premium. As of 2017, the monthly premium for Part A if you haven’t worked at least 30 quarters is about $413; having worked 30-39 quarters may still cost as much as $227 a month.
Part A is intended to provide coverage for long term care—hospital visits, hospice care, home care, and nursing facilities are all covered under part A. However, Part A comes with a $1300 deductible (per period), and after 60 days of inpatient care, you will have a coinsurance charge of $329-$660.
Part B is your general doctors visits. People on social security pay about $100 for their monthly premiums, but higher income households may pay as much as $140 a month. It also comes with a $183 deductible, after which you pay about 20% of doctor fees that fall within the Medicare network. Services include preventative care, doctors visits (including doctors during inpatient visits), medical equipment (such as a wheelchair), tests, xrays, outpatient hospital care, mental health care, and some forms of ambulance and home health costs.
Part C of Medicare is comprised of Medicare Advantage. Medicare Advantage is beyond Medicare: rather than being restricted to Parts A and B, you can add additional coverage through other insurance companies. Humana, AARP, Kaiser Permanente, and Anthem are examples of Medicare Advantage plans. These companies all have plans that start with monthly premiums as low as $0 but can be $100 or more a month. As with everything, you get what you pay for.
Part C plans can come with the same types of coverage as your Part A and B coverage, but they may have different deductibles, copays, or provide additional benefits (such as hearing, vision, or dental coverage). Copays may be as high as $50, but better plans can provide better coverage and help you meet the gap between your $1,000 deductible or ensure you still get a yearly dental cleaning.
You may have to pay an additional premium (usually only a few dollars) each month to get those better benefits. For example, AARP offers a $40 premium Medicare Advantage Plan, but to receive dental benefits through Delta Dental, you must pay an additional $13 a month on top of that. Essentially, it's a way for private insurance companies to get into the Medicare game, and a way for those covered by Medicare to find better coverage without having to pay an additional $500 premium each month.
Part D is often included in Medicare Advantage Plans (although not always), and it is the part of Medicare that helps pay for prescription costs. Again costs will vary depending on where it is provided —and this will always be through a private insurance company. The government never provides Part D. If you don’t want Part C but would like Part D, there are Part D plans (PDPs) that come with no extra ribbons.