What Difference Does It Make?
Selecting Medical Coverage can be similar to playing a game of chess...
This week’s blog is Part 3 of 4 on Medicare Open Enrollment and how to maneuver through all the information. The Kaiser Family Foundation reported that 7 in 10 Medicare beneficiaries do not compare coverage options during Open Enrollment. This means that those individuals do not know if their premiums, cost sharing and out of pocket limits will change from year to year. They also are not checking whether their current services will be covered next year or whether plans will require prior authorization.
Since the information is so vast and considered confusing, this blog will provide a general comparison between Traditional Medicare and Medicare Advantage plans in four (4) major areas: coverage, costs, additional benefits, and travel flexibility.
Structure of Coverage
Traditional Medicare:
Consists of Part A (hospital insurance) and Part B (medical insurance).
You can add Part D for prescription drug coverage and a Medigap plan (Medicare Supplement) to help with out-of-pocket costs like deductibles, coinsurance, and copayments.
Medicare Advantage:
Combines Part A, Part B, and often Part D (prescription drug coverage) into a single plan.
These plans are offered by private insurance companies approved by Medicare, and they typically include additional benefits like dental, vision, hearing, and wellness programs.
Costs and Out-of-Pocket Maximum
Traditional Medicare:
Part A is usually premium-free if you have worked and paid Medicare taxes for 10 years or more.
Part B comes with a standard premium (in 2024, the standard monthly premium is $174.70), along with deductibles and coinsurance (usually 20% of Medicare-approved services).
Medigap plans: Help cover deductibles, copayments, and coinsurance not covered by Parts A and B. Medigap policies have their own premiums.
You have more predictable costs with Medigap, but you must manage multiple plans (Original Medicare, Part D, Medigap).
Does not have an out-of-pocket maximum, so your expenses can continue to grow, though you can manage this with Medigap.
Medicare Advantage:
Medicare Advantage plans often have lower monthly premiums than paying for Original Medicare + Medigap + Part D, and sometimes they have $0 premiums.
However, you may face higher out-of-pocket costs like copays or coinsurance for services.
These plans set an annual out-of-pocket maximum, after which you pay nothing for covered services (which Original Medicare does not have).
Plans have an annual out-of-pocket limit. Once you hit the limit, the plan covers all additional Medicare-approved costs for the rest of the year. This provides a cap on your total spending. In 2024 the out-of-pocket limit is $8,850 for in-network services and $13,300 for in-network and out-of-network services combined
Additional Benefits
Traditional Medicare:
Does not cover services like routine dental, vision, or hearing care.
Does not offer wellness or fitness programs like gym memberships unless covered under specific circumstances.
Medicare Advantage:
Often provides additional benefits, such as:
Routine dental, vision, and hearing care.
Fitness programs like Silver Sneakers.
Over-the-counter drug allowances.
Though these benefits are widely available, the scope of specific services varies. Plans also vary in terms of cost sharing for various services and may limit the number of services covered per year. Many impose an annual dollar cap on the amount the plan will pay toward covered services, and some have networks providers beneficiaries must choose from.
Flexibility and Travel
Traditional Medicare:
Allows for flexibility in travel, including seeing any Medicare-accepting provider across the U.S.
You can use it when you travel within the country.
Medicare Advantage:
Most plans have restricted networks, so you may not be covered outside of the plan’s service area, which can limit coverage if you travel frequently.
Emergency and urgent care are usually covered anywhere in the U.S.
What is Better?
Traditional Medicare might be better if:
· You prefer flexibility in choosing doctors and providers. You can visit any doctor or healthcare provider that accepts Medicare, which means you have access to a nationwide network. No referrals are needed for specialists.
· You travel frequently or live in multiple locations. You can see any Medicare accepting provider across the U.S. and can use it when traveling within the country.
· You want or need predictable costs with a Medigap plan.
Medicare Advantage might be better if:
· You want additional benefits like dental, vision, and hearing coverage.
· You prefer a simpler, all-in-one plan with prescription drug coverage included.
· You are comfortable with provider networks and referrals, and you want lower premiums.
As with any topic, there are pros and cons for both. You must consider your costs, physician/provider availability, prescriptions costs and whether you will have coverage when and if you plan on traveling, your choice depends on your healthcare needs, financial situation, and lifestyle preferences. Make sure that you carefully consider everything that is important to you. Make sure that you research your current plan as much as possible before deciding to stay or switch to another plan or to go back to Traditional Medicare. Refer to the previous blogs to help guide your choice or reach out to us at info@QSR5.com if you have questions.