Healthcare

Original Medicare vs Medicare Advantage

by Alli Thomas

Nov 13, 2021

It’s that time of year again—Medicare enrollment season.

If you’re wondering whether Medicare Advantage is a better choice for you than original Medicare, here are some pros and cons to consider. 

Medicare Basics 

First, it’s important to understand how Medicare is structured.  

There are four parts: A, B, C and D. Additionally, there’s Medigap insurance.  

Parts A and B are original Medicare. Together, they cover inpatient hospital care, skilled nursing facility care, nursing home care, home health care and hospice care (Part A) and ambulance services, medical equipment, and inpatient and outpatient mental health services (Part B). 

What Part A and B don’t cover include most dental care, long-term care, eye exams for vision, hearing aids, routine podiatry, cosmetic surgery, and acupuncture.  

Part D is standalone prescription drug coverage. That’s right, medication is largely not covered by the other parts of Medicare.  

Medigap covers some things that original Medicare (Parts A and B) don’t. These include copayments, deductibles and, in some cases, emergency medical care when you’re traveling overseas.  

Medicare Advantage (also called Part C) is a plan that typically bundles Parts A, B and D together and is administered by a private insurance company rather than the Centers for Medicare and Medicaid Services (CMS). There is no Medigap coverage for Medicare Advantage plans. 

Pros of Medicare Advantage 

  • Since Medicare Advantage plans bundle the aspects of original Medicare Parts A, B and D, you won’t have to spend as much time researching and making decisions about your coverage. 
  • Most Medicare Advantage plans cover things that original Medicare doesn’t, such as dental, vision and hearing. 
  • If you are generally very healthy, a Medicare Advantage plan may be a better choice for you. 

 Drawbacks of Medicare Advantage  

  • The Medicare Advantage administrator approves your claims (rather than CMS) and tends to be more apt to deny claims. 
  • If you don’t use in-network providers, you may be surprised with unexpected out-of-pocket expenses…and your maximum out-of-pocket spending will typically be higher than with original Medicare.
  • For skilled nursing care, Medicare Advantage plans require prior authorization and continued proof of need for extended care, whereas original Medicare standards aren’t quite as strict. 
  • Some Medicare Advantage plans aren’t financially stable, which may lead to abrupt discontinuance of coverage. 

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Want to make a change? 

If you want to change from Original Medicare to Medicare Advantage or vice versa, the good news is that you’re never locked into your decision. 

Those currently enrolled in a Medicare Advantage plan that want to switch to original Medicare only need to contact the administrator of their current or call the CMS.  

Changing from one Medicare Advantage plan to another can be done during the annual Medicare Advantage Open Enrollment period, which lasts from January 1 to March 31. 

If you’re currently covered by original Medicare and want to switch to a Medicare Advantage Plan, you can do so during Medicare’s open enrollment period, which lasts from October 15 to December 7. 

Additionally, if you recently enrolled in an Medicare Advantage plan during your initial enrollment period, you can switch to a different Medicare Advantage plan (with or without drug coverage) or go back to original Medicare (with or without a drug plan) for three month after your initial sign-up. 

Need help making a Medicare decision?

Healthcare planning is a key part of successful retirement planning, and the choice between Original Medicare and Medicare Advantage should be made as part of your overall financial plan in mind. 

Because there are penalties for not enrolling in time and costs can be significant, it’s best to explore your options and make a decision ahead of time. 

Working with a financial advisor can help you avoid making a healthcare planning mistake. Get started today by requesting a no-cost, no-obligation advisor consultation and review of your finances with our Results in Advance Planning Method. 

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Alli Thomas

Alli Thomas has worked in the financial services industry for nearly 20 years, with a focus on retirement-related investing. She began her career as a FINRA-licensed participant-services call-center associate at Vanguard, and then moved to Principal Financial Group, where she worked closely with employers, assisting with retirement plan set-up and design, selecting appropriate plan investment offerings, and maximizing employee participation through targeted education campaigns and enrollment meetings. Alli has also worked as a qualified 401(k) administrator and registered investment advisor for several small investment firms. She now writes about all things investment- and finance-related, leveraging her extensive experience and passion for retirement planning to help investors make well-informed financial decisions.

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