Medicare open enrollment has arrived again. October 15 to December 7 is the perennial timeframe in which Medicare beneficiaries can switch plans and decide between original Medicare or Medicare Advantage plans. Being commercial insurance plans, Medicare Advantage plans do a great job of advertising their advantages. Being more government-based, original Medicare, on the other hand, does not have an advertising budget exactly. You will not see their representatives pounding the streets and selling the comparative advantages of original Medicare. Seniors must gather that information themselves. Some misconceptions have resulted, but we can clear those up. What is the main difference between Medicare Advantage and original Medicare? What are the main advantages of original Medicare? Is Medicare Advantage on track to make original Medicare obsolete? Let’s explore.
What is the Main Difference Between Medicare Advantage and Original Medicare?
Original Medicare is insurance designed by the government, but administrated by regional non-government companies referred to as Medicare Administrative Contractors. With Medicare Advantage plans, private insurance companies take over your Medicare benefits and repackage the benefits in various ways, giving consumers choices in their coverage. This is sometimes referred to as Medicare Part C. Medicare Part C is the section of Medicare regulation that allows Medicare to pay private insurance companies to repackage Medicare benefits. The companies providing the most Medicare Advantage policies include: UnitedHealthcare, Humana, Blue Cross / Blue Shield, CVS, and Kaiser Permanente.
Are Medicare Advantage Plans Taking Over?
The number of Medicare Advantage policies has grown every year since 2005. Currently, four out of ten people eligible for Medicare have Medicare Advantage plans. The Congressional Budget Office projects that Medicare Advantage plans will be the majority in nine years! However, the market penetration of Medicare Advantage plans varies widely by county and state. States with the lowest percentage of Medicare Advantage plans include Alaska (1.1%), Wyoming (3.7%), and Maryland (15.7%). The areas with the highest percentages of Medicare Advantage plans include Puerto Rico (80.4%), Minnesota (51.8%), and Florida (50.8%).
Medicare Advantage Plans Take Away Your Original Medicare. They Are Not Medicare Supplement Plans.
People commonly confuse Medicare Advantage plans with Medicare supplement policies. Private insurance companies offer Medicare supplement plans to pay for some things that Medicare will not, such as copayments and international medical care. These plans are designed to work with original Medicare and let you keep your original Medicare. Conversely, Medicare Advantage plans take away your direct Medicare benefits and give them to the insurance company instead. The insurance company then gives you a different set of coverages and conditions.
What are the Advantages of Original Medicare?
While some people save money on a monthly basis with their carefully selected Medicare Advantage plans, the trade-off may occur when people are really sick. An analysis published in the American Economic Journal finds that Medicare Advantage plans send 30% of revenue to internal expenses such as executive salaries and shareholder profits while spending 33% less on patient care. Patients with a Medicare Advantage plan:
- Prove more likely to be sent straight home from the hospital
- Are less likely to get time at rehabilitation facilities or nursing homes
- Receive fewer days in the hospital after a surgery
- Prove more likely to receive their surgeries as outpatient procedures
- Have fewer choices in home care agencies and other providers
- Are less likely to see a specialist
- Prove less likely to have in-network benefits in all states and territories
Original Medicare Offers Fewer Surprises
Investopedia’s Lita Epstein writes, “The most comprehensive coverage, which will likely result in the fewest unexpected out-of-pocket expenses, is a traditional Medicare plan paired with a Medigap policy.”
To switch to a Medicare Advantage plan, call the insurance company of your choice. To switch to original Medicare, call 1-800-MEDICARE.