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Is Medicare Advantage Right for My Parent?

Medicare used to be pretty straightforward. You turned 65, got your Medicare cards in the mail, and went to the doctor when you needed to. Things have changed in the 50 plus years since Medicare was signed into law. Now, beneficiaries have choices in their Medicare coverage. They can choose Medicare Advantage or Original Medicare—and if they choose Medicare Advantage, they likely have several different plans to choose from.

If you’re helping your parents navigate their Medicare choices, this article will help you understand how Medicare Advantage differs from basic Medicare, how much Medicare Advantage costs, and how it works with other Medicare plans such as Part D Prescription Drug Plans and Medicare Supplement insurance plans.

What’s the difference between Medicare Advantage and Original Medicare?

Original Medicare is made up of two parts. Part A is often called hospital coverage; it pays when your parent is an inpatient in a hospital or skilled nursing facility. Part B is called medical insurance. It pays for doctor visits, preventive care, and outpatient tests and treatments. Each part has separate premiums (although most people get premium-free Part A), separate deductibles, and separate cost-sharing structures.

Medicare Advantage, also called Medicare Part C, combines your Part A and Part B benefits in a private insurance plan. Instead of submitting claims to Medicare, a private insurance company contracted with Medicare handles your health care costs. You pay your premiums to Medicare and Medicare sends a portion of the money to the insurance company to cover you.

You can see any doctor who accepts Medicare patients with Original Medicare. With some Medicare Advantage plans, you may need to see network providers and use network pharmacies. You may also need to choose a primary care provider and get referrals for certain tests and specialist care.

What extra benefits does Medicare Advantage have?

The private insurance companies that sell Medicare Advantage compete for your business, so they often add in extra benefits to attract new members. Most plans, for example, include Part D coverage for prescription drugs, and many include benefits for routine vision, dental, and hearing care. Some even have perks such as free gym memberships, care coordinators, and a 24-hour nurse hotline. Recently, the government approved coverage for

  • expanded home health care benefits
  • meal delivery
  • home safety equipment
  • and non-medical transportation

Not all Medicare Advantage plans offer these expanded benefits.

What are the costs with Medicare Advantage?

Your parents will continue to pay their Part B premium if they choose a Medicare Advantage plan. Some plans charge a separate monthly premium, although you may find zero-premium Medicare Advantage plans in your area.

With Original Medicare, there is an annual deductible for Part B and a separate Part A deductible for each hospital benefit period. Medicare Advantage plans may or may not have a deductible. If they do, however, there is generally only one each year.

Original Medicare has a 20% cost-sharing structure for Part B. Medicare pays 80% of allowable charges and you pay the difference. Part A has no coinsurance unless you’re in the hospital for more than 60 days.

Medicare Advantage plans usually have a copayment at the time you get care. A visit to your primary doctor may cost $10, while a visit to a specialist may cost $30, for example. Plans may or may not have a hospital copayment. Because Medicare Advantage is private insurance, each company sets its own cost-sharing, so you need to check the details for each plan you’re considering.

There is no out-of-pocket limit each year with Original Medicare. If your parents have a medical catastrophe and have $150,000 in covered expenses, they’re on the hook for Part A and Part B cost-sharing. Your parents can, however, buy a Medicare Supplement Insurance Plan to cover their out-of-pocket costs under Part A and Part B. There is a separate monthly premium for this coverage, and it can’t be used for Part D prescription drug coverage costs.

Medicare Advantage plans on the other hand, all have an annual out-of-pocket maximum. Plans can choose any spending limit up to the government limit, so you may be able to find one with a much lower cap. Medicare Supplement Insurance Plans can’t be used with Medicare Advantage.

Is Medicare Advantage or Original Medicare better for my parents?

There’s no one-size-fits-all answer to Medicare coverage. You need to evaluate the specific Medicare Advantage plan options in your area, the Part D Prescription Drug Plans, and price out Medicare Supplement insurance plans in order to make the right decision. If you have low-premium Medicare Advantage plans in your area, and your parents’ doctors participate in the plan network, you may have more predictable health expenses and spend less out-of-pocket than with Original Medicare.

On the other hand, if your parents have serious or chronic health conditions or travel a lot—maybe they spend the winter months in a warmer climate—Original Medicare plus a Medicare Supplement insurance plan may make the most financial sense. Remember, many Medicare Advantage plans require your parents to get care within the plan’s network.

Here’s a side-by-side comparison to help your parents make the right decision. Keep in mind, these are example premiums; plans in your area may have higher or lower premiums.

(Costs are examples an may vary in your situation)

Cost Sample Medicare Advantage HMO (includes Part D coverage for prescription drugs) Original Medicare + Medicare Supplement Insurance Plan F + Part D Prescription Drug Plan
Monthly premiums $22 $17 Part D, $326 Plan F = $343 per month total
Deductible $160 for prescription drugs/$0 for health care $365 for Part D/$0 Part A & Part B (Plan F pays 100%)
Doctor copays $0 primary care, $35 specialist $0 (Plan F pays 100%)
Hospital coinsurance $345 x 4 days, then $0 $0 (Plan F pays 100%)
Outpatient tests $0 – $250 depending on type of test $0 (Plan F pays 100%)
Prescription drug copays $0 for generics up to $100 for non-preferred drugs $0 for generics up to 40% coinsurance for non-preferred drugs
Routine vision, hearing, and dental exams $0 Not covered
Maximum annual out-of-pocket $3,400 (not including prescription drugs) $0 (Plan F pays 100%), not including prescription drugs

 

As you can see, you pay less upfront in premiums for your Medicare Advantage coverage, but your exposure out-of-pocket can be as high as $3,400, not including prescription drug spending. With Original Medicare and a Medicare Supplement insurance plan, you pay more upfront in predictable premiums, but you have virtually no out-of-pocket health care costs, except for prescription drug spending and routine vision, dental, and hearing.

To look for a Medicare Advantage or Medicare Supplement insurance plan in your area, enter your zip code on this page.

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