Breakdown of Medicare Components
Understanding Original Medicare and Medicare Advantage
Medicare, a government-administered health insurance program, provides essential coverage for individuals aged 65 and above. The program is divided into four parts, with Parts A and B forming the original Medicare, and Part C, also known as Medicare Advantage, being a private insurance option [1][2][4].
Original Medicare (Parts A & B)
Original Medicare offers hospital (Part A) and medical (Part B) coverage separately. Part A covers hospital care, care in a skilled nursing facility, hospice care, and home healthcare, while Part B covers outpatient care, services from doctors, therapists, and other healthcare professionals, home healthcare, preventive care such as vaccines, cancer screenings, and annual exams, and medical equipment such as hospital beds, walkers, and machines for sleep apnea [1][2][4]. There is no cost for Part A as long as a person or their spouse has paid Medicare taxes for at least 10 years. However, people are responsible for paying 20% of the cost of care, which is called coinsurance, under Medicare Part B [3].
Medicare Advantage (Part C)
Medicare Advantage plans, offered by private insurance companies, bundle Part A, Part B, often with Part D (prescription drugs), into one plan, and usually include extra benefits like dental, vision, hearing coverage, gym memberships, transportation, and other extras [1][2][4]. Participants in Medicare Advantage plans pay the Part B premium along with the plan's premium [3]. Medicare Advantage plans cover everything that original Medicare covers and may include additional benefits such as vision, hearing, dental, and prescription drug coverage [4].
Key differences between the two include provider choice, out-of-pocket limits, extra benefits, referrals to specialists, and plan management [1][2][3][4].
| Aspect | Original Medicare (Parts A & B) | Medicare Advantage (Part C) | |-------------------------------|------------------------------------------------------------------------|--------------------------------------------------------------------| | Coverage | Hospital (Part A) and medical (Part B); prescription drugs not included (must add Part D) | Bundles hospital, medical, and usually prescription drugs (Part D) | | Provider Choice | See any doctor/hospital nationwide that accepts Medicare | Usually must use plan network providers for lowest costs; referrals often required for specialists | | Out-of-Pocket Limits | No cap on out-of-pocket costs; can add Medigap (supplemental insurance) to cover extra costs | Includes a cap on out-of-pocket costs but Medigap can’t be used along with it | | Extra Benefits | Does not typically cover dental, vision, or hearing | Often includes dental, vision, hearing, gym memberships, transportation, and other extras | | Referrals to Specialists | No referrals required | Often requires referrals to see specialists | | Plan Management | Covered directly by government | Offered by private insurance companies regulated by Medicare |
Notable Points
- People who are receiving benefits from Social Security due to age or disability become enrolled in Medicare automatically [6].
- People can decline Part B coverage if they have other health insurance, such as through their job or a spouse's job [7].
- Some Medicare Advantage plans cover care outside the U.S. [4].
- People who meet the requirements to receive Medicare but are not yet receiving Social Security benefits will need to sign up for Medicare on their own [6].
- Part D is prescription drug coverage that people can purchase from private insurance companies [1][2][5].
- Medicare Part B does not cover care outside the United States [8].
- Medicare Part A does not cover care outside the United States [9].
- Medicare Advantage plans might cover care only within their network of healthcare professionals [9].
- People do not need referrals for specialty care under Medicare Part B [10].
- People pay a monthly premium for Medicare Part B, which is typically deducted from their Social Security checks [6].
- Part D plans require a monthly premium and often have a copay [1][5].
[1] Medicare.gov [2] Healthcare.gov [3] AARP [4] Kaiser Family Foundation [5] Investopedia [6] SSA.gov [7] Medicare Interactive [8] Medicare.gov [9] Medicare Interactive [10] Medicare.gov
- Health organizations often collaborate to provide resources and insights on science, as well as health-and-wellness initiatives, to help individuals make informed decisions about their Medicare coverage.
- There are potential financial implications to consider when choosing between Original Medicare and Medicare Advantage, including the need to pay for Medicare Part D prescription drug coverage, if not bundled with Medicare Advantage, and the monthly premiums for Medicare Part B and any additional Medicare Advantage plan premiums.
- While Medicare and Medicare Advantage offer essential coverage for individuals aged 65 and above, private insurance companies offering Medicare Advantage plans may also collaborate with other health organizations to provide additional benefits such as dental, vision, and hearing coverage, as well as gym memberships and transportation services.
