| Medicare pays providers the Medicare-approved rates for covered services per Medicare rules and regulations. Your providers bill Medicare. | Medicare pays private health plans that have contracts with Medicare to provide all medically-necessary health care that Original Medicare (Parts A and B) cover. Your providers bill your Medicare Advantage plan. |
You pay Medicare Parts A and B premiums, deductibles and coinsurances. Part A is free if you or your spouse have paid taxes while working a minimum of 10 years (if not, you may pay a premium). For most people, the Part B cost is $148.50 in 2021. | You pay Medicare Parts A and B premiums, and your Medicare Advantage Plans premium, if it charges one, and possible deductibles and coinsurances. Part A is free if you or your spouse have paid taxes while working a minimum of 10 years (if not, you may pay a premium). For most people, the Part B cost is $148.50 in 2021. |
| You may be able to buy a Medigap policy. Other insurance, such as retiree, employer or union plans may supplement Medicare. | You can't buy a Medigap policy to help pay your out-of-pocket costs in a Medicare Advantage plan. |
| No. Covers medically-necessary inpatient and outpatient health care. Doesn't cover certain services such as routine vision, hearing or dental care. | Maybe. May cover some services Original Medicare doesn't cover such as routine vision, hearing and dental care. All plans must cover the same inpatient and outpatient services Original Medicare covers. |
| Yes. You can go to any doctor or hospital in the U.S. that accepts Medicare. | Usually not. Most people have HMOs, which typically have local networks of providers you must use for the plan to cover your care. PPOs plans should cover care you get outside the network, but you will pay more. |
| No. You don't need a referral. | Maybe. You may need to get a referral from your primary care doctor if you want to see a specialist. |
| No, but if you want Medicare prescription drug coverage, you can buy a separate Part D plan. | Usually. Most plans include Part D drug coverage. In Washington state, if you are enrolled in a Medicare Advantage plan, you cannot buy a standalone Part D plan. If you do, you'll automatically get disenrolled from your Medicare Advantage plan and enrolled in Original Medicare. |
| No. There's no cap on what you spend on health care. | Yes. Plans must have an annual out-of-pocket limit, which can be high, but protect you if you need expensive care. The plan pays the full cost of your care after you reach the limit. |
Definitions:
- Premium: The monthly fee you pay to have Medicare or your health plan.
- Deductible: What you must pay before Medicare or your health plan starts paying for your care.
- Copayment/coinsurance: Your share of the cost you pay for each service.
- Part A: Medicare hospital insurance for inpatient care.
- Part B: Medicare medical insurance for outpatient care.
- Part D: Medicare drug coverage.
- Medigap: Supplemental insurance that helps pay your out-of-pocket cost in Original Medicare.
En español | As you think about how Medicare will cover your health care needs, your first major decision should be whether you want to enroll in federally run original Medicare or select a Medicare Advantage plan, the private insurance alternative.
Think of it as choosing between ordering the prix fixe meal (Medicare Advantage) at a restaurant, where the courses are already selected for you, or going to the buffet (original Medicare), where you must decide for yourself what you want.
If you elect to go with original Medicare, your buffet will include Part A (hospital care), Part B (doctor visits, lab tests and other outpatient services) and Part D (prescription drugs). If you decide to go with Part C, a Medicare Advantage plan, it will be more like a set menu, since a private insurer has already bundled together parts A and B and almost always D into one comprehensive plan.
Some aspects of your care will be constant whichever plan you choose. Under both choices, any preexisting conditions you have will be covered and you'll also be able to get coverage for prescription drugs.
But there are significant differences in the way you'll use Medicare depending on whether you pick original or Advantage. Here's a comparison of how each works.
Going to the doctor
Under original Medicare, you can choose any providers — primary care doctors and specialists — who accept Medicare. You don't need referrals to see any medical provider and you don't have to worry about your doctor leaving a plan's network. According to the Kaiser Family Foundation, 93 percent of primary physicians participate in Medicare. That means chances are pretty good that any doctor you are currently seeing will accept Medicare and you won't have to change providers. But be aware that if you are looking for a new physician, 30 percent of primary care doctors aren't taking new Medicare patients, so you'll want to ask about that.
Under Medicare Advantage, you will essentially be joining a private insurance plan like you probably had through your employer. The most common ones are health maintenance organizations (HMOs) and preferred provider organizations (PPOs). Medicare Advantage employs managed care plans and, in most cases, you would have a primary care physician who would direct your care, meaning you would need a referral to a specialist. HMOs tend to have more restrictive choices of medical providers than PPOs.
Covered care
While Medicare will cover most of your medical needs, there are some things the program typically doesn't pay for -— like cosmetic surgery or routine dental, vision and hearing care. But there are also differences between what services you get help paying for.
Under original Medicare, you can get a wide variety of medical services including hospitalizations; doctor visits; diagnostic tests, such as X-rays and other scans; blood work; and outpatient surgery.
Under Medicare Advantage, you will get all the services you are eligible for under original Medicare. In addition, some MA plans offer care not covered by the original option. These include some dental, vision and hearing care. Some MA plans also provide coverage for gym memberships. And in the past few years the federal government has been adding services these plans can offer, including such home improvements as wheelchair ramps to help Medicare beneficiaries remain at home, providing transportation to doctors’ offices and getting meals delivered. Which services are available varies by plan.
Costs
Under original Medicare, the federal government sets the premiums, deductibles and coinsurance amounts for Part A (hospitalizations) and Part B (physician and outpatient services). For example, under Part B, beneficiaries are responsible for 20 percent of a doctor visit or lab test bill. The government also sets maximum deductible rates for the Part D prescription drug program, although premiums and copays vary by plan. Many beneficiaries who elect original Medicare also purchase a supplemental – or Medigap – policy to help defray many out-of-pocket costs, which Medicare officials estimate could run in the thousands of dollars each year. There is no annual cap on out-of-pocket costs.
Under Medicare Advantage, enrollees must still pay the government-set annual Part B premium and sometimes an additional premium for the MA plan. But instead of paying the 20 percent coinsurance amount for doctor visits and other Part B services, most MA plans have set copay amounts for a physician visit, and typically that means lower out-of-pocket costs than original Medicare. MA plans also have an annual cap on out-of-pocket expenses.
You should also check if you are eligible for Medicaid or any of the other assistance programs Medicare offers to low-income enrollees.
Logistics
Under original Medicare, to get the full array of services you will likely have to enroll in four separate elements: Part A; Part B; a Part D prescription drug program; and a supplemental or Medigap policy. Physicians and hospitals have to file claims for each service with Medicare that you'll have to review.
Medicare Advantage is a one-stop-shopping program that combines Part A and Part B into one plan. In addition, about 90 percent of MA plans also include prescription drugs, which means you wouldn't have to enroll in a separate Part D plan. There are no Medigap policies for Advantage plans. You do want to be careful to make sure all your doctors are in the plan's network, though that could change over time.
Where you live
Under original Medicare, you can access care anywhere in the United States as long as the provider accepts Medicare.
Medicare Advantage plans are based around networks of providers that are usually self-contained in a specific geographic area. So, if you travel a lot or have a vacation home where you spend a lot of time, your care may not be covered if you go to out-of-network providers, or you would have to pay more for care. In addition, while MA plans are pretty much available throughout the United States, the choice of plans is more limited in rural areas.
Neither original Medicare nor Medicare Advantage covers your health care abroad.
Dena Bunis covers Medicare, health care, health policy and Congress. She also writes the Medicare Made Easy column for the AARP Bulletin. An award-winning journalist, Bunis spent decades working for metropolitan daily newspapers, including as Washington bureau chief for the Orange County Register and as a health policy and workplace writer for Newsday.