Traditional Medicare vs. Medicare Advantage Plans

Choosing the right Medicare coverage can be stressful.

Sifting through the complex array of Medicare options can be confusing and challenging, but finding the right plan to suit your needs can save you significant amounts of time, money, and frustration down the road – especially if you require home health care and hospice.

If you or a loved one is over the age of 65, you may be considering switching from traditional Medicare to a Medicare Advantage Plan. But which   one will pay the highest number of medical bills, or cover the most senior care expenses? Is home health care or hospice covered under both? This guide will help clarify the differences between these plans and help you make the best decision possible.

Medicare 101: Understanding the Federal Health Insurance

Before learning the differences between Medicare Advantage and traditional Medicare, let’s review what Medicare is. While it may seem like there are many complex plans from which to choose, Medicare can be simply broken up into four basic parts:

  • Medicare Part A covers hospital services
  • Medicare Part B covers outpatient medical services
  • Medicare Part C includes Medicare Advantage Plans (more on those next)
  • Medicare Part D covers prescription drugs

When you turn 65, you’re automatically enrolled in Parts A and B (parts C and D are optional). From there, picking the right Medicare plan for you is all about identifying your needs.

Home health care services are covered under original Medicare so long as a few requirements are met. First, a physician must report that home health care services are necessary, the services must not exceed eight hours per day (24-hour home health care is not covered in this context), and the provider must be Medicare-certified. Parts A and B will cover home health services if these requirements are met.

Medicare Part C: Medicare Advantage Plans

One alternative to traditional Medicare Plans is Medicare Advantage Plans (otherwise known as Part C). When it comes to paying for care, there are some advantages and disadvantages of Medicare Advantage Plans.

Medicare Advantage Plans are all privately owned and sold by insurers rather than the federal government. They must meet all the same minimum requirements of Medicare plans, and there is always a cap on yearly out-of-pocket costs, although most will charge copays. It’s worth it to shop around between competing insurers because premiums (and benefits) can vary significantly from one plan to the next.

Advantage plans through Medicare Part C will cover the same minimum home health services as traditional Medicare, but there are differences. Depending on the plan, you may need a doctor’s referral for home health care, which could result in delays or even denials.

You may also have a copay. You will also need to choose a home health care provider within your plan’s network. However, Advantage plans could cover more services at a lower cost over time.

The terms of your Medicare Advantage plans may change every year. Among other things, cost-sharing may exceed that for a traditional Medicare plan for specific services, including home health care.

Are Medicare Advantage Plans “Better” Than the Traditional Plans?

That all depends on your needs.

For example, let’s say your home health services involve durable medical equipment. Under traditional Medicare, you will be responsible for 20 percent of these costs through your Medicare-approved home health care agency – and depending on billing approval, you may have to pay up to 15 percent more. If you add on certain services that Medicare doesn’t cover for home health care, you could incur high costs even with traditional Medicare coverage.

In a scenario like this, there may be an Advantage plan that would cover more of these costs.

For those with high healthcare costs, these plans can be much less expensive since traditional Medicare has no cap on out-of-pocket spending. Advantage Plans do have such a cap, however, and once you hit the spending cap for your Advantage Plan, you won’t have to pay any more for the rest of the year.

While there are some great benefits to Advantage Plans, they have a few downsides as well. One of the most important factors to consider is the effect Advantage Plans have on your ability to purchase supplemental coverage.

How Do Supplemental Insurance Plans Fit In?

You may have heard that Medicare does not cover the entire cost of your care – and you’d be right. For regular visits to the doctor, and for approved medical equipment use in home health care services, Parts A and B only cover 80% of the cost. To pay for the other 20%, many people choose to buy a supplemental insurance plan. While Medicare covers 100% of qualifying home health care services, there are exempt services that Medicate won’t pay for, which can often be covered or partially covered by a supplemental plan.

One of the most commonly-purchased supplemental plans is called Medigap. Just like Medicare Advantage Plans, these are sold by private insurers at a variety of different premiums, and they can only be purchased by Medicare subscribers. But there’s one important factor to consider: Medicare Advantage Plan subscribers can’t purchase a Medigap plan. In fact, it is unlawful for an individual to have both.

You may even encounter problems if you quit Medigap for a Medicare Advantage plan and then try to switch back later after dropping the latter.

So what’s cheaper, traditional Medicare with Medigap, or a Medicare Advantage Plan?

Unfortunately, there’s no single answer, and it all depends on your unique needs. Here is a brief summary to assist you in weighing the advantages and disadvantages of both:

  • Traditional Medicare Plans: You’re typically responsible for 20% of your outpatient costs, but you can purchase Medigap as supplemental coverage. Prescription coverage costs extra. There is no cap on out-of-pocket costs, but you have a large selection of doctors from which to choose. For qualifying scenarios, Medicare will cover all home health care expenses.
  • Medicare Advantage Plans: Copays may end up costing you more or less than traditional Medicare, and you cannot purchase Medigap supplemental coverage. However, prescriptions are often covered, and there is a cap on out-of-pocket costs. You must select providers who are in your plan’s network. Depending on the plan, you may be responsible for a portion of your home health care costs, but could pay less over time than with a traditional Medicare plan.

Ultimately, finding the best plan to suit your needs means looking at your unique costs, healthcare requirements, and budget, and then comparing available plans. Visit the Medicare website to search for plans in your locality and discover the best fit.

  • I take multiple medications.
  • Because I take multiple medications, at times I find it difficult to remember why and/or when I should take them.
  • I have had changes in my medications recently.
  • I have a new health problem.
  • I have been to the Emergency Room within the last 6 weeks.
  • I rarely get out except for doctor appointments.
  • It is difficult for me to leave the house.
  • When I leave, I must take special transportation or have someone help me.
  • I have recently fallen or fear I might fall.
  • I have an upcoming elective surgery scheduled.

If you answered YES to any of the above, you may qualify for this Medicare-covered benefit. Please consult your physician and contact your local office.