Traditional Medicare or Medicare Advantage: Which option is right for you?
Becoming eligible for medicare opens up a new set of healthcare questions, specifically, do you want to use the Traditional, sometimes called Original Medicare or is a Medicare Advantage plan right for you? This is one of the first questions you will run into when signing up on Medicare.gov and it can be confusing. Most new beneficiaries sign up for the traditional or original plan, however, according to Kaiser Family Foundation beneficiaries who switched to Medicare advantage plans saved $1,253. The differences between Traditional Medicare and Medicare Advantage plans stem from how each plan is designed, administered, and the types of benefits they offer. It is important to consider what plan is right for you as there may be important financial and quality of life implications. Here's an overview of the key differences:
1. Plan Structure and Administration
Traditional Medicare: Also known as Original Medicare, it includes Part A (hospital insurance) and Part B (medical insurance). It's a federal program directly administered by the government.
Medicare Advantage Plans (Part C): These are offered by private insurance companies approved by Medicare. They bundle Part A and Part B and often include Part D (prescription drug coverage) and additional benefits.
2. Coverage
Traditional Medicare: Provides broad coverage for health care services but does not typically include prescription drug coverage (Part D), which must be purchased separately. It also does not cover most dental, vision, and hearing services.
Medicare Advantage Plans: Must cover all the services that Original Medicare covers but can offer additional benefits, such as prescription drug coverage, dental, vision, and hearing care. The specifics of what's covered can vary significantly from one plan to another.
3. Costs
Traditional Medicare: Has deductibles and coinsurance/copayments. Many beneficiaries purchase Medigap (Medicare Supplement Insurance) to cover the out-of-pocket costs that Medicare does not pay.
Medicare Advantage Plans: Costs vary by plan. They may have lower out-of-pocket costs in some cases and may include an out-of-pocket maximum, which Original Medicare does not have. However, you usually need to use network providers to get the lowest costs.
4. Provider Choice
Traditional Medicare: Allows beneficiaries to see any doctor or hospital that accepts Medicare, anywhere in the U.S., without needing referrals for specialists.
Medicare Advantage Plans: Typically use a network of providers, and you may need to see doctors within the plan's network to be covered. Some plans require referrals to see specialists.
5. Prescription Drug Coverage
Traditional Medicare: Does not include Part D prescription drug coverage, requiring beneficiaries to enroll in a separate Part D plan if they want it.
Medicare Advantage Plans: Often include prescription drug coverage within the plan, simplifying the process to get comprehensive coverage.
6. Travel
Traditional Medicare: Generally does not cover health care outside the U.S. except in very limited circumstances.
Medicare Advantage Plans: May offer coverage for emergency care abroad but also generally limited.
7. Enrollment
Traditional Medicare: Enrollment is automatic for some at age 65, especially for those who are already receiving Social Security benefits. Others may need to sign up.
Medicare Advantage Plans: Eligible individuals must actively choose and enroll in a plan offered in their area.
When choosing between Traditional Medicare and a Medicare Advantage Plan, it's important to consider your health care needs, budget, and preferences regarding provider choice and additional benefits. Each option has its advantages and limitations, and the best choice varies depending on individual circumstances.
