Medicare Advantage vs Original Medicare

Understanding Medicare Advantage

Medicare Advantage is another way to receive your Medicare Part A and Part B benefits.

It is also called Medicare Part C.

Instead of Original Medicare paying your medical claims directly, you choose a private insurance company approved by Medicare to provide your Medicare-covered benefits.

A simple way to think about Medicare Advantage is:

Medicare provides the money and sets the rules.

A private insurance company provides and manages your health plan.

Why Was Medicare Advantage Created?

When Medicare started in 1965, it had two main parts:

Part A = Hospital insurance

Part B = Medical insurance

Over time, Congress wanted people with Medicare to have more choices, including private health plans.

In 1997, Congress created Medicare Part C under a program called Medicare+Choice. Its goal was to give people with Medicare a wider choice of health plans. So Part C means “choice” to have your Medicare benefits administered differently than with Original Medicare. 

Then, in 2003, Congress made changes to the program and renamed it:

Medicare Advantage

Those changes also helped expand the private-plan choices available to people with Medicare.

Think of Original Medicare as “À La Carte”

Have you ever gone to a restaurant where everything is ordered separately?

You order the steak.

Then the potato.

Then the salad.

Then the drink.

That is called à la carte.

Original Medicare can feel a little like that.

You start with:

Part A — Hospital

and

Part B — Medical

But you may want more coverage.

You may decide to add:

A Medicare Supplement to help with costs Parts A and B leave behind.

Then you may add:

Part D for prescription drugs.

You may also want:

Dental

and

Vision

Those may require additional coverage too.

Each piece can have its own premium.

So Original Medicare gives you a lot of freedom, but building a more complete insurance package can mean buying several different policies and paying several premiums. Medicare itself describes Original Medicare as allowing people to add separate Part D and Medigap coverage.

Medicare Advantage Puts More Into One Package

Medicare Advantage works differently.

It can feel more like the health insurance you may have had through an employer.

Instead of buying several separate policies, you choose one Medicare Advantage plan from a private insurance company.

That plan must provide your Medicare:

Part A — Hospital benefits

and

Part B — Medical benefits

Most Medicare Advantage plans also include:

Part D — Prescription drug coverage

Many plans also offer extra benefits that Original Medicare does not normally cover, such as:

Dental

Vision

Hearing

and other benefits.

So instead of buying each piece separately, Medicare Advantage can bundle several benefits together in one insurance plan.

You Still Have Medicare

Choosing Medicare Advantage does not mean you lose Medicare.

You must have Medicare Part A and Part B to join a Medicare Advantage plan.

You also continue paying your Medicare Part B premium.

Timing matters too. Signing up late for Part B can mean a lifelong penalty, so it’s worth knowing your enrollment window.

But Medicare pays the private Medicare Advantage company to provide your Medicare-covered services.

The insurance company then manages your coverage under Medicare’s rules.

There Are Three Big Things You Need to Check

A Medicare Advantage plan can offer a lot in one package.

But you should not choose a plan just because it has a low premium or offers extra benefits.

There are three very important things to understand.

1. Will My Doctors Accept This Plan?

This may be the most important question.

With Original Medicare, you can generally see any doctor or hospital in the United States that accepts Medicare.

Medicare Advantage is different.

Most plans have a network of doctors, hospitals, and other healthcare providers.

That means it is not enough for your doctor to simply say:

“Yes, I accept Medicare.”

You need to know:

“Does my doctor participate with THIS Medicare Advantage plan?”

For example, your doctor might accept a Medicare Advantage plan from one insurance company but not another.

Some plans may allow you to receive non-emergency care outside their network, but you may pay more. Other plans can have stricter network rules.

So before choosing a plan, ask:

Are my doctors in the network?

Is my hospital in the network?

Are my specialists in the network?

Do not assume.

Check.

2. Are My Medicines Covered?

The second big question is:

Does the plan cover my prescription drugs?

Most Medicare Advantage plans include Part D prescription drug coverage.

But every plan can have a different drug list.

That drug list is called a:

Formulary

Your medicine may be covered by one plan but handled differently by another plan.

The cost can also be different.

Before choosing a Medicare Advantage plan, check:

Are my medicines covered?

What will they cost?

Are there special rules for getting them?

Is my pharmacy a good choice with this plan?

A plan with a low monthly premium may not be a good deal if it does not work well with the medicines you take.

3. Know Your Maximum Out-of-Pocket

This is one of the most important protections in a Medicare Advantage plan.

It is called the:

Maximum Out-of-Pocket

You may also hear it called the:

MOOP

With a Medicare Advantage plan, you may pay copays or coinsurance when you receive medical care.

For example, you might have a copay when you:

See a specialist.

Go to the emergency room.

Have outpatient surgery.

Stay in the hospital.

Receive certain medical treatments.

Those costs can add up if you become very sick.

That is why Medicare Advantage plans have a yearly maximum out-of-pocket limit for covered Medicare medical services. Once you reach your plan’s limit, the plan pays 100% of your covered Medicare services for the rest of that calendar year.

Think of the maximum out-of-pocket as a safety net.

You hope you never reach it.

But you need to know what it is.

Here Is an Easy Example

Suppose Tom chooses a Medicare Advantage plan.

His plan has a low monthly premium.

During a healthy year, Tom may only have a few doctor copays.

Tom may spend very little.

But then Tom gets sick.

He needs tests, specialists, hospital care, and other treatment.

Now those copays and coinsurance can start adding up.

The plan’s maximum out-of-pocket puts a limit on how much Tom has to pay for covered Medicare medical services during that year.

Once Tom reaches his plan’s limit, the plan pays 100% of covered Medicare medical services for the rest of the calendar year.

That is why you should never look only at a Medicare Advantage plan’s monthly premium.

You should also ask:

“What could this plan cost me if I have a very bad health year?”

Original Medicare vs. Medicare Advantage

Here is an easy way to understand the difference:

Original Medicare	Medicare Advantage
Part A and Part B	Part A and Part B benefits are bundled into the plan
Add Part D separately if wanted	Most plans include Part D
May buy a Medicare Supplement	Cost sharing is built into the Advantage plan
May need separate dental/vision coverage	Many plans include extra dental/vision benefits
Usually any provider that accepts Medicare	Usually uses a provider network
No yearly medical out-of-pocket limit by itself	Has a yearly maximum out-of-pocket for covered Medicare medical services
Several policies may be needed to build your package	More benefits may be packaged into one plan

Think of It Like Employer Health Insurance

For many people, the easiest way to understand Medicare Advantage is to think about the health insurance they had while working.

Your employer may have given you one insurance card.

That health plan covered your:

Hospital

Doctors

Prescription drugs

and maybe things like:

Dental or vision

You also had a network of doctors.

You had copays when you used certain services.

And your plan had rules you needed to follow.

Medicare Advantage can feel much more like that kind of insurance.

Instead of putting together several separate policies, you have one private insurance company managing a package of Medicare benefits.

Don’t Pick a Plan Just Because It Has Extra Benefits

Dental, vision, hearing, and other extra benefits can be helpful.

But they should not be the only reason you choose a Medicare Advantage plan.

Your medical care and prescription drugs should come first.

A plan could offer attractive extra benefits but still be a poor choice if your doctor does not participate or an important medicine is not covered well.

Start with the things that could cost you the most money.

The Three Questions to Remember

Before choosing a Medicare Advantage plan, remember:

1. MY DOCTORS

Do my doctors and hospitals participate with this insurance plan?

2. MY MEDICINE

Are my prescription drugs covered, and what will they cost me?

3. MY MAXIMUM

What is my maximum out-of-pocket if I have a bad health year?

Those three questions are more important than simply asking:

“What is the monthly premium?”

The Easy Way to Remember Medicare Advantage

Original Medicare can be thought of as à la carte.

You start with Parts A and B and may choose to buy other policies to help complete your coverage.

That can provide a great deal of freedom, but it can also mean more policies and more monthly premiums.

Medicare Advantage takes another approach.

Think of it as a package.

A private Medicare-approved insurance company provides your Part A and Part B benefits. Most plans include prescription drug coverage, and many include additional benefits such as dental, vision, or hearing.

In return, you need to understand the rules of the insurance plan you choose.

The most important things to remember are:

Do my doctors accept my plan?

Are my medicines covered?

What is my maximum out-of-pocket?

If those three things work well for you, then you can look at the plan’s other benefits and decide whether the whole package fits your needs.