Original Medicare vs. Medicare Advantage

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If you will be turning 65 soon, it’s time to learn about Medicare. You will be getting mail about Medicare plans from every insurance company you’ve ever heard of and some you haven’t. Although it’s very stressful, it is very important for you to learn enough about Medicare to make the right decision about which plan is right for you.

There are a few very important things you need to know before you choose. Your freedom to choose your own healthcare providers and your ability to pay your medical bills are what’s at stake. According to the Kaiser Family Foundation, in 2010 about half of Americans over 65 are covered by a retiree benefit plan or Medicaid. If you are one of these people, your choice has already been made. Everyone else will need to choose between Original Medicare and one of several Medicare Advantage plans that may be available in your area.

Both Original Medicare and Medicare Advantage plans provide hospital and medical benefits, give you the option to enroll in a Medicare Part D prescription plan, provide preventative benefits and require you to pay the Medicare Part B premium of $105 per month. People with Medicare Advantage Plans usually pay an additional premium. People who choose Original Medicare may purchase a Medigap policy to pay their copays and deductibles for an additional premium.

The difference in Original Medicare and Medicare Advantage is the amount you pay when you use your benefits and the freedom you have in choosing your doctor and hospital. With Original Medicare, you have the option to purchase Medigap coverage. Some Medigap plans pay all Medicare approved expenses not covered by Medicare. Medigap pays the providers automatically, and since Original Medicare is a fee for service plan, you can see any doctor or hospital that accepts Medicare. Medicare Advantage requires you pay copays and in some cases a coinsurance percentage until you have met your annual out of pocket limit. Annual out of pocket limits can be up to $10,000. Medicare Advantage Plans are usually PPO’s or HMO’s that require you to use a plan doctor and hospital or pay more for services. But in some cases, your total premiums can be lower with Medicare Advantage.

Where you live can make a lot of difference in how competitive Medicare Advantage Plans are. That’s because hospital systems and doctors in large urban areas like Memphis TN have to compete and are more likely to cut their prices to be members of Medicare Advantage PPO’s and HMO’s. These savings are passed on to members in the form of lower copays and out of pocket limits.

Your residence, age, health and which Medigap Plan you choose will make a difference in the cost of your Medigap coverage. There are 10 different standardized Medigap Plans. State regulators standardized the benefits in the 1990’s to make plans easier to compare. Medigap only pays deductibles, copays and coinsurance for Original Medicare and will not work with Medicare Advantage. Claims are automatically received from Medicare and paid to the provider giving you peace of mind. Premiums are very reasonable for most. You and your agent can do a cost comparison between the plans to see which one fits your budget.

When choosing the right Medicare Plan for you, consider your ability to pay a monthly premium as opposed to paying several thousand dollars in unexpected medical expenses and the availability of doctors and hospitals in the Medicare Advantage Plans network. Also take into consideration whether you want to pay your own medical bills or have your insurance company do it for you.



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Justin Brock

President & CEO of Bobby Brock Insurance