With the Annual Enrollment Period rapidly approaching, it’s good to follow through with a refresher of the differences between Original Medicare and Medicare Advantage plans. Many individuals get confused about the relationship between these ways to receive Medicare benefits.
When it comes to Medicare, everyone has a choice of two directions. Either stay with coverage through Original Medicare and can add plans to help offset their cost-share or enroll in a Medicare Part C Medicare Advantage Plan.
Below, we’ll cover the differences between Medicare Advantage and Original Medicare, determining the right plan for you, enrollment periods, and benefits.
Differences between Original Medicare and Medicare Advantage
Original Medicare comprises Medicare Parts A and B. Part A covers inpatient hospital stays, skilled nursing, and hospice services. In contrast, Part B covers outpatient medical services and supplies. Original Medicare doesn’t include coverage for prescription drugs filled at the pharmacy or, in general, any services that aren’t deemed medically necessary.
Medicare Advantage plans must provide coverage for medically necessary items and services covered by Original Medicare. However, they can include additional benefits and coverage for prescription medications. Private insurance companies contracted with the Federal Government administer these plans and are regulated by the Centers for Medicare and Medicaid Services.
Although Medicare Advantage plans must provide the same benefits as Original Medicare, they can apply different costs, rules, and restrictions. They’re also required to cap the out-of-pocket costs of medical care annually.
Choosing a Path: Original Medicare or Medicare Advantage
There isn’t a right or wrong path when considering these options. The decision comes down to the individual situation. How often you see the doctor, where you live, prescription medications, extended traveling, and where you receive medical services will all impact this decision.
If you want fewer restrictions, such as referrals and authorizations, Original Medicare will be the way to go. Remember to get assistance with the high out-of-pocket costs. You’ll need to purchase a Medicare Supplement Plan. In addition, you’ll need a separate Part D prescription drug plan for your medications.
The Original Medicare path is excellent for people that travel for extended periods or can afford the top Medicare Supplement plan to cover their costs.
Suppose you don’t travel for extended periods and don’t mind using network doctors. In that case, a Medicare Advantage plan may work out great. Since it can include your prescription drug plan and caps your annual medical costs, these plans can provide a very affordable Medicare option.
Medicare Advantage plans also can include plan extras not covered by Original Medicare. Some examples of plan extras could consist of:
- Coverage for routine dental, vision, and hearing
- Over-the-counter benefits for items like aspirin, heating pads, toothpaste, and bandages.
- Healthy food allowances
- Gym Memberships
Plan costs and additional benefits will vary depending on the plan chosen and the service area. Review the plan materials for details.
Enrollment Periods: Original Medicare and Medicare Advantage
Initial Enrollment Period: Both Original Medicare and Medicare Advantage use an IEP. The initial Enrollment Period begins three months before Medicare starts and continues for three months after. This is the same for both options.
Special Enrollment Period: Both also have Special Enrollment Periods. These allow individuals to change plans outside of regular enrollment windows.
For Medicare Advantage, it could be moving, having assistance for Medicare costs, Specific health conditions, and more. MA SEPs generally last for two or three months after the event. The time frame is dependent on the life event.
For Original Medicare, the only SEP leaves creditable coverage, such as a group employer plan. This SEP allows 8 months after the coverage ends to enroll in Medicare.
Annual Enrollment Period: The AEP occurs in the fall, October 15 through December 7. During this time, Medicare beneficiaries can make changes to their Medicare coverage.
Medicare Advantage Open Enrollment Period: The MAOEP is only for individuals enrolled in a Medicare Advantage plan. It occurs annually from January 1 to March 31. Beneficiaries currently enrolled in a Medicare Advantage plan can make one change to their Medicare coverage.
Initial Coverage Election Period: ICEP is used to enroll in a Medicare Advantage plan by Medicare beneficiaries with delayed Part B. This will generally occur when the beneficiary enrolls in Medicare during the General Enrollment Period.
General Enrollment Period: The GEP is for Medicare beneficiaries that missed their IEP and need to enroll in Original Medicare. It occurs from January 1 through March 31, and Medicare coverage begins on July 1.
Medicare Benefits VS. Medicare Advantage Benefits
Although Medicare Advantage plans cover the same benefits as Original Medicare, their costs can vary. Original Medicare has two deductibles, copays, coinsurance, and excess charges.
Medicare Part A Costs
The Medicare Part A deductible is a sizeable recurring deductible that’s paid for each inpatient hospital stay. There are additional daily copays if the hospital or skilled nursing facility stay is more than 60 and 20 days.
Medicare Part B Costs
Medicare Part B has a monthly premium, a small annual deductible, 20% coinsurance once the deductible is paid, and excess charges.
There is no limit or cap on your medical expenses for Original Medicare.
Medicare Advantage costs
Most Medicare Advantage plans have low to no premiums, fixed predictable copays for most services, and a maximum out-of-pocket limit on your annual medical expenses. Plan costs will vary, as mentioned above.
With Original Medicare, you must purchase an additional Part D prescription drug plan if you want drug coverage. Most Medicare Advantage plans include drug coverage.
Original Medicare doesn’t require referrals to see specialists. Some Medicare Advantage plans require referrals; these are typically your HMO-style plans. Medicare Advantage PPO and PFFS plans don’t generally require referrals.
Original Medicare allows you to visit any healthcare provider nationwide that accepts Medicare. Many Medicare Advantage plans require services from in-network providers. Some MA plans allow out-of-network providers, but usually at a higher cost share.
Non-Medically Necessary Benefits
Original Medicare doesn’t allow coverage for items and services not deemed medically necessary. Medicare Advantage plans generally provide a generous selection or plan extras for coverage such as dental, hearing, and vision.
There are several differences between Original Medicare and Medicare Advantage. Making the best choice depends on individual situations and needs.
Lindsay Malzone is the Medicare expert for Medigap.com. She’s been contributing to many well-known publications as an industry expert since 2017. Her passion is educating Medicare beneficiaries on all their supplemental Medicare options so they can make an informed decision on their healthcare coverage.