Medicare vs Medicare Advantage Insurance

Medicare vs. Medicare Advantage: Understanding the Differences

Navigating health insurance can be confusing, especially when it comes to Medicare and Medicare Advantage plans. While they may sound similar, they work in very different ways. If you're approaching Medicare eligibility or helping a loved one choose the right plan, understanding these differences is essential.

What is Traditional Medicare?

Traditional Medicare is a federal health insurance program for people aged 65 and older, as well as some younger individuals with disabilities. It consists of two main parts:

• Medicare Part A: Covers hospital stays, skilled nursing facilities, hospice care, and some home health care.
• Medicare Part B: Covers doctor visits, outpatient care, medical supplies, and preventive services.

With Traditional Medicare, you can see any doctor or specialist who accepts Medicare, and you typically pay a deductible and coinsurance for services. Many people also choose to add a Medicare Supplement (Medigap) plan to help cover out-of-pocket costs and a Part D prescription drug plan for medication coverage.

What is Medicare Advantage? (Medicare Replacement Plans)

Medicare Advantage (also called Medicare Part C) is different from Traditional Medicare. These plans are offered by private insurance companies approved by Medicare. When you enroll in a Medicare Advantage plan, you are no longer covered under Traditional Medicare—the private plan replaces your Medicare coverage.

Medicare Advantage plans must provide at least the same benefits as Medicare Parts A and B, but they often include extras like dental, vision, and prescription drug coverage. However, these plans have networks, meaning you may need to see specific doctors or get referrals for specialists. Costs like copays and deductibles vary depending on the plan. Many plans require authorization for services that Medicare automatically covers.

Medicare Advantage Replaces Medicare: A Critical Distinction

A common misconception is that people with Medicare Advantage plans still have Traditional Medicare for outpatient physical therapy. This is not true. Medicare Advantage plans replace your Original Medicare outpatient physical therapy benefits, meaning Medicare itself is no longer your primary insurance. Instead, your coverage is now through the private insurance company that offers your Medicare Advantage plan.

This distinction is crucial, especially when choosing healthcare providers. Some doctors and clinics do not accept some Medicare Advantage plans, so you may have fewer options for care compared to Traditional Medicare.

Example: Outpatient Physical Therapy Coverage

Let's say John, a 70-year-old retiree, needs outpatient physical therapy after a knee injury. His coverage will work differently depending on whether he has Traditional Medicare or a Medicare Advantage plan:

• If John has Traditional Medicare (Part B) Medicare covers 80% of the approved cost of physical therapy after he meets his deductible. If he has a Medigap plan, it usually covers the remaining 20% after his deductible has been paid, leaving John with little or no out-of-pocket cost.
• If John has a Medicare Advantage plan his coverage will depend on the specific plan. He may have copays for each visit, need prior authorization before starting therapy, or be limited to certain in-network therapy providers. If his preferred physical therapist is out-of-network, he may have to switch providers or pay full price for treatment.

Understanding your coverage is essential before seeking care.

Choosing the Right Plan for You

When deciding between Traditional Medicare and Medicare Advantage, consider the following:

• Do you want the freedom to see any doctor, or are you okay with a network?
• Are you comfortable with copays and prior authorizations, or do you prefer predictable costs with a Medigap plan?
• Do you need extra benefits like dental and vision, which Medicare Advantage often includes?
• Do your providers accept traditional Medicare?

Understanding the differences between Medicare and Medicare Advantage can help you make an informed decision about your healthcare coverage. If you have any questions, it’s always a good idea to speak with a Medicare expert or insurance agent who can help guide you through the options.