Page Reviewed / Updated - November 21, 2019
For many seniors over the age of 65, Medicare provides the health insurance necessary to ensure regular access to the medical professionals and treatments they need. Those who collect Social Security benefits are often enrolled automatically unless they choose to opt out and take the appropriate steps. Seniors who elect to utilize the coverage offered have the option of signing up for a traditional Medicare plan, run by the government, or a Medicare Advantage plan provided through private health insurance companies. Although both plans are required to follow government regulations and have many similarities, there are a few distinct differences that could impact which option is best for your situation. This guide explains the benefits for both plans, how to know if Medicare Advantage is right for you and how to navigate the Medicare Advantage enrollment process.
One of the biggest benefits of Medicare is the guaranteed availability of healthcare coverage for seniors who couldn't otherwise afford private health insurance. As health concerns become more significant, aging seniors will have access to services that help prevent future conditions and can get the medical care they need now, for free or by paying reduced coverage premiums. There are multiple options available to tailor coverage, such as help with the cost of prescriptions, ensuring seniors have the medications and medical care needed to promote optimal health and a higher quality of life. Seniors also get the freedom to seek treatment from the many doctors and specialists that accept Medicare payments.
Although the traditional Medicare plan has significantly increased the number of seniors with healthcare coverage, there are some areas that still need improvement. As beneficiaries age, or their healthcare needs become more complex, the out of pocket expense for treatment on Medicare increases. Hospital stays, for example, can still be very expensive for seniors on Medicare and may be more frequent in later years. It's also important to note that the program has several gaps in coverage that may require seniors to sign up for supplemental plans. Coverage of prescriptions is just one example of this, requiring an additional premium to enroll.
If the original Medicare program doesn't work for your situation, Medicare Advantage offers an alternative. Medicare Advantage programs are offered through private insurance companies but are required to follow all the same government regulations as traditional Medicare. This means Medicare Advantage plans are similar to insurance plans offered through an employer and offer a cap for your out-of-pocket medical spending. Many also include coverage for services not offered by traditional Medicare, such as vision and dental, and will cover the cost of prescriptions without the need to enroll in a supplemental plan.
There are some drawbacks to Medicare Advantage plans, however. Participants are often required to limit themselves to medical care within the network of service of their providing insurance company, reducing care provider options. Obtaining prior authorization to see a specialist may also be required under a Medicare Advantage plan. Finally, the Advantage plans do not always work well with other types of insurance. If you have insurance through your employer, signing up for Medicare Advantage could become more expensive and you risk losing your current coverage. It's also important to note that these plans often require an upfront payment at the time of service in the form of copays.
Despite some of the limitations of Medicare Advantage plans, there are some circumstances that make it an optimal choice over original Medicare. Seniors who anticipate high prescription costs or have needs that go beyond what is offered through the Medicare A and B plans, such as vision or dental work, may have these expenses included in a Medicare Advantage plan with lower monthly premiums. The limit on out-of-pocket medical expenses can also save seniors money if they are experiencing complicated medical conditions that require multiple appointments and treatments throughout the year. Because many Medicare Advantage plans require the identification of a primary care provider, this could also be beneficial to someone with complex health issues by creating a single physician to help coordinate the efforts of multiple specialists.
Seniors who are still employed and offered insurance through their employers may fare better with the traditional Medicare plan to keep costs low and prevent the loss of their current coverage. Seniors with limited income who do not require comprehensive medical attention may find the original plan to be more affordable by eliminating copays and allowing them to decline prescription coverage. For those with established healthcare providers that accept Medicare patients, traditional Medicare could also be the best option if their preferred medical professionals aren't within the network of the Medicare Advantage plans being offered.
Seniors who enroll in Part A and B Medicare are eligible to choose a Medicare Advantage plan during one of the offered enrollment periods. The Initial Enrollment Period (IEP) includes your 65th birth month and the three months before and after, adding up to seven months in total. If you decline Part B coverage during this time, you are ineligible for Medicare Advantage but can sign up during the Initial Coverage Election Period once Part B is elected. There is also an annual enrollment period called Fall Open Enrollment. This period lasts from October 15 through December 7 each year and allows seniors the opportunity to switch between plans or make plan changes.
When you're ready to enroll, you must choose a provider that covers the area you live in. You can shop for a Medicare Advantage provider online through the government's Medicare website or you can call a representative at 1-800-MEDICARE (1-800-633-4227) at any time. The website allows you to compare several plans available to you so you can make the best choice for your circumstances. Make sure to note whether prescriptions are included under the plan and what the maximum out-of-pocket expense is for each year.
You have a few enrollment options once you've made your decision:
When you enroll, you will need your current Medicare number along with the start dates of your Part A and B coverage. Most of the application process is already completed by obtaining traditional Medicare benefits. Because you have the option of applying through multiple private insurance companies, the full application process may differ between providers.
Part A covers any inpatient hospital care at no cost to those who have paid into the system through their employers. This coverage can be purchased for those who haven't contributed Medicare taxes. Services covered include medically necessary blood work, hospital stays, home health services, skilled nursing facilities and hospice care if certain conditions are met.
Part B is an optional supplement and requires payment of a monthly premium. This plan covers medically necessary services that are not covered under Part A, such as outpatient care, and may have deductibles and copayments that apply.
Part C covers the Medicare Advantage plans. These plans are offered through private health insurance companies and must follow the same governmental regulations as the original Medicare plan. Many plans include the coverage found in Part A, B and D under one reduced premium.
Part D is an optional supplement that requires a monthly premium. This plan covers prescription drug costs, allowing recipients to pay reduced prices for their prescribed medications.
Medicare Advantage plans are structured like employer-offered insurance plans and can be obtained by paying a monthly premium. Many cover all the services offered by Medicare Plans A, B and D and follow the same government regulations as the original Medicare plan. Some offer vision and dental coverage as well. Like traditional health insurance offered through employment, there are often caps on the amount you must spend on medical care before your insurance covers your costs in full. They often require naming a primary care provider and will only cover services obtained within their preferred network.
Your unique circumstances determine whether Medicare Advantage is the right choice for you. Coverage is often more comprehensive, and your medical costs are limited each year, but seniors who still receive insurance through their employer risk losing their coverage with Medicare Advantage. There are also upfront costs, such as co-pays, that some seniors may not be able to afford at the time of service. Recipients with medical conditions that require seeing multiple specialists may find the need for prior authorization cumbersome.
Medicare Part C is available to anyone who qualifies for and enrolls in Medicare Parts A and B.
Enrollment in a Medicare Advantage plan can be done through the government Medicare program, via their website or over the phone, through a third-party independent insurance agency, or can be handled directly through the insurance provider of your choice.
The Initial Enrollment Period (IEP) begins three months before your 65th birth month and ends three months after, for a total of seven months. If seniors choose to wait to enroll in Medicare Part B due to existing coverage through an employer, they have a Special Enrollment Period (SEP) of eight months after they lose this coverage to enroll in Medicare. They can enroll in Medicare Advantage once they have enrolled in both Part A and B coverage. The General Enrollment Period (GEP) is established for seniors who chose not to enroll during the previous enrollment periods and runs from January through March, with coverage beginning on July 1 of the same year. The Fall Open Enrollment Period is available to seniors who elected traditional Medicare Part A and B plans but wish to switch to a Medicare Advantage plan. This period is open every year from October 15 through December 7.