Traditional Medicare vs. Medicare Advantage Plans

Traditional Medicare vs. Medicare Advantage Plans

| June 01, 2020

For the vast majority of Americans, when you turn 65, you have to sign up for Medicare. You either enroll in Original Medicare which consists of Part A, B, and D or a Medicare Advantage Plan otherwise known as Medicare part C.

With Traditional Medicare, Part A covers your hospital insurance and Part B is your insurance for outpatient doctor visits.  Part D is insurance for drug coverage.  In addition, people usually add a Medigap policy as a supplemental insurance to fill in some gaps not covered under the other parts.

The other option is Medicare Advantage which is a managed care option and rolls up the different parts of Medicare into an all-in-one option.  It’s actually coverage by private companies which have been approved by the government to offer coverage similar to traditional Medicare.  They generally offer additional benefits, such as vision, dental, and hearing and many include prescription drug coverage all in one package. There are also caps on out of pocket expenses.

Traditional Medicare gives you much more flexibility in coverage.  You can go to any doctor or hospital that accepts Medicare.  That’s a big advantage.  If you get cancer, you can go to the Mayo clinic or Rush hospital in Chicago. Your benefits won’t change although premiums can go up over time.

With Medicare Advantage, these plans have networks, which means you have to see certain doctors or go to hospitals only in the plan’s network.  You can choose from HMO plans, or PPO plans similar to when you get coverage through an employer.  The network, benefits, and premiums are all subject to change each year and if you are in a more rural area, your choices of doctors can be even more limited; much less stability than traditional Medicare. 

Medicare Advantage however is significantly cheaper than traditional Medicare and that’s why some people opt for it, despite its lack of access. Average cost for Medicare is around $350/month vs. $135/month for Advantage plans. This option is also less costly for people that don’t get sick as much or are not taking prescription drugs as there are co-pays.

70% of Americans sign up for traditional Medicare and 30% sign up for Medicare Advantage. 



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