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What is the Difference Between Medicare and Medicare Advantage

As we approach retirement age, it's essential to understand the various healthcare options available to us. Medicare and Medicare Advantage are two major healthcare programs in the United States, designed to provide coverage for eligible individuals aged 65 and older, as well as some younger individuals with certain disabilities.

Medicare Advantage offers expanded services over Medicare Part A and B. Here’s what you need to know to determine which plan is right for you.

What Is Medicare?

Medicare is a federal health insurance program established in 1965 to provide coverage for seniors aged 65 and older, and it also covers some younger individuals with specific disabilities or end-stage renal disease (ESRD). It consists of several parts:

  • Medicare Part A: This primarily covers inpatient hospital care, skilled nursing facility care, hospice care, and limited home health services. Most people do not have to pay a premium for Part A if they or their spouse paid Medicare taxes while working.
  • Medicare Part B: Part B covers outpatient medical services like doctor's visits, preventive services, durable medical equipment, and some home health services. It requires a monthly premium, and the amount is income dependent.
  • Medicare Part C (Medicare Advantage): Part C offers an alternative way to receive Medicare benefits. It allows private insurance companies approved by Medicare to provide Part A and Part B coverage and often includes additional benefits like prescription drug coverage (Part D) and vision or dental benefits.
  • Medicare Part D: Part D is the prescription drug coverage plan offered by private insurance companies that work with Medicare. It helps beneficiaries pay for prescription medications.

Is Medicare Advantage Part of Medicare?

Medicare Advantage (Part C) is a part of Medicare. It's an alternative way to receive Medicare benefits through private insurance companies. These plans are required to provide at least the same level of coverage as Original Medicare (Part A and Part B), but they can also offer additional benefits, such as vision, dental, and hearing coverage.

What are the Main Differences Between Medicare and Medicare Advantage?

The primary differences between Original Medicare and Medicare Advantage:

Coverage and Additional Benefits: Original Medicare offers standard coverage for hospital and medical services, while Medicare Advantage plans provide the same coverage as Original Medicare but may include additional benefits like dental, vision, hearing, and prescription drug coverage.

Network Restrictions: Original Medicare allows you to visit any healthcare provider that accepts Medicare, without needing referrals. On the other hand, Medicare Advantage plans often have network restrictions, and you may need to use healthcare providers within the plan's network or pay higher costs for out-of-network services.

Cost Structure: Original Medicare has separate deductibles and coinsurance for Part A and Part B, along with potential gaps in coverage. Medicare Advantage plans typically combine these costs into one plan with copayments and out-of-pocket maximums, providing predictability in expenses.

Referrals and Prior Authorization: Original Medicare generally doesn't require referrals to see specialists, and prior authorization is limited. In contrast, some Medicare Advantage plans may require referrals and prior authorization for certain services.

Flexibility: Original Medicare allows you to see specialists and healthcare providers anywhere in the country, while some Medicare Advantage plans may limit coverage to a specific geographic area.

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What Stays the Same?

Despite the differences, certain aspects remain consistent between Original Medicare and Medicare Advantage:

  • Covered Services: Both Medicare and Medicare Advantage cover essential healthcare services, ensuring you receive necessary medical care.
  • Medicare Part B Premium: Regardless of whether you choose Original Medicare or Medicare Advantage, you must continue paying the standard Medicare Part B premium.
  • Medicare Enrollment Periods: The enrollment periods for both Medicare and Medicare Advantage are tied to specific times of the year.

How Do I Know Which Plan Is Right for Me?

Choosing between Original Medicare and Medicare Advantage depends on individual preferences, healthcare needs, and budget. Consider the following factors:

  • Healthcare Needs: Assess the frequency of medical visits, need for prescription drugs, and any specific medical conditions you have.
  • Budget and Cost Considerations: Compare the costs of premiums, deductibles, copayments, and out-of-pocket maximums for each plan.
  • Preferred Doctors and Providers: Check whether your preferred healthcare providers are in the network of the Medicare Advantage plan you're considering.
  • Prescription Drugs: If you take regular medications, ensure the plan's formulary covers them at a reasonable cost.
  • Additional Benefits: Consider whether the extra benefits offered by Medicare Advantage plans are valuable to you.

Ready to find a plan? Wise Money Tips Medicare Comparison Tool can help you see what you’re eligible for in minutes.

How Do I Sign Up for Medicare Advantage?

To enroll in Medicare Advantage, follow these steps:

  • Eligibility: Ensure you meet the eligibility criteria, which include being enrolled in both Medicare Part A and Part B.
  • Enrollment Periods: The initial enrollment period for Medicare Advantage is the same as your initial enrollment period for Medicare, which starts three months before your 65th birthday month and lasts for seven months.
  • Annual Enrollment Period (AEP): If you missed the initial enrollment period or want to make changes, the AEP occurs from October 15th to December 7th each year.
  • Special Enrollment Period (SEP): In certain situations, you may qualify for a SEP, allowing you to enroll outside of the standard enrollment periods. These situations include moving to a new area or losing other health coverage.
  • Choose a Plan: Research available Medicare Advantage plans in your area, compare their benefits and costs, and select the one that best meets your needs.
  • Enroll: Once you've chosen a plan, you can enroll online, by phone, or by contacting the insurance company directly.

With open enrollment happening once a year, you want to make sure you get the best plan possible. Wise Money Tips Medicare Comparison Tool can help.