Dear Marci,
I have Original Medicare, and my out-of-pocket costs are adding up. My friend has a Medicare Advantage Plan. She seems to pay less than I do and even has supplementary benefits, too. Are Medicare Advantage Plans less expensive than Original Medicare?
– Danica (Sacramento, CA)
Dear Danica
Whether one Medicare coverage option is more affordable than another depends on your individual health needs. The costs in Medicare Advantage (MA) Plans are often different from those in Original Medicare. MA Plans will also come with some extra rules! Whether the overall costs are lower in MA or Original Medicare depends on your specific circumstances, needs, and preferences. Below is a breakdown of costs in MA and Original Medicare
- Premiums:
- Medicare Part B premium: Whether you are enrolled in an MA plan or have Original Medicare, you are responsible for the Part B premium. Note that some MA plans will subsidize this cost.
- Plan Premiums: MA Plans may charge an additional premium.
- If you have Original Medicare, you will pay a separate premium for a Part D plan for prescription drug coverage, and, if you choose, a premium for a Medicare Supplement, or Medigap plan. If you have other insurance that works with Medicare, like retiree coverage, VA benefits, or Medicaid, you may not need a Part D plan or Medigap.
- Deductible: A deductible is the amount that you must pay for health care services before your insurance starts to cover care. MA plans can have a deductible, and the amounts vary by plan. In Original Medicare, there is a deductible for Part A (inpatient services) and Part B (outpatient services). If you have a Medigap or other insurance, it may cover some or all of this cost.
- Copayment/ Coinsurance: A copayment or coinsurance is a portion of the cost of a covered service that you owe. MA Plans usually charge a copayment (copay) , which is a set dollar amount for a certain type of service. The amount of the copay varies by plan. In Original Medicare, most outpatient services have a 20% copay. This means you’re responsible for a percentage of the Medicare-approved amount for the service. Copays for most services can be higher or lower than what the Original Medicare coinsurance would be for that service, but for a few specific services the copay must be equal or lower than the copay would be in Original Medicare. Again, if you have a Medigap or other insurance, it may cover part or all of the coinsurance.
- Maximum out-of-pocket (MOOP) limit: All MA plans must include a maximum out-of-pocket limit. This means the amount you pay out of pocket (copays, coinsurance and deductibles) is capped for the year. There is no MOOP limit in Original Medicare.
- Out-of-Network Care: MA Plans can have different rules (and separate maximum-out-of-pocket limits) for covering care from outside their network of providers. Some plans don’t cover any out-of-network care, while others can charge higher copays. If you see out-of-network providers, you may be responsible for the full cost of that care. In Original Medicare, you can get covered care from any Medicare provider. Keep in mind that doctors and hospitals may leave the plan at any time, but you can only leave an MA Plan during an enrollment period if you want to avoid incurring a penalty.
- Other rules and restrictions: Though MA Plans must cover the same health services that Original Medicare covers, they may require that you take certain steps before they pay for your care. For example, a plan may require your provider to ask the plan’s permission before giving you certain services (prior authorization). They also might require referrals to see specialists. If you don’t follow these steps, you may be responsible for the full cost of your care. Original Medicare does not require referrals for specialists and requires prior approval only for power wheelchair coverage.
- Supplemental Benefits: Some MA plans offer additional benefits, not covered by Original Medicare. Common examples include dental, hearing, and vision coverage. These benefits can lower your costs compared to paying for the services out of pocket. It is important, however, to evaluate supplemental benefit offerings carefully. The coverage details can vary and may be more limited than expected, or harder to access. For example, the dental benefit may cover only routine cleanings, or a gym membership may be limited to gyms not in your preferred location.
Hope this helps!
-Marci