Medicare vs Medicare Advantage Plans: A Comprehensive Analysis

Hello again Medicare scholars! Today, we’re going to explore the significant differences between Original Medicare (specifically Medicare Parts A and B) and Medicare Advantage Plans. We’ll take a close look into the financial implications of each, hoping to provide some helpful insight on which plan could save you more money.

Understanding Original Medicare A and B

First, let’s clarify a couple of things. Medicare Part A takes care of inpatient hospital services, skilled nursing facilities, hospice and certain home health care services. On the other hand, Medicare Part B helps cover medically necessary doctor’s services, outpatient care, medical supplies, and preventive services.

Costs and Deductibles for Part A

• A $1,736 deductible that serves as your entire out-of-pocket expense for up to a 60-day hospital stay
• There is a possibility of paying your deductible multiple times a year depending on when your hospital stays occur
• A daily copay of $434 for days 61 to 90 in a hospital
• A daily copay of $868 for days 91 to 150 in a hospital

Therefore, the maximum amount you may have to pay out of pocket with Medicare Part A depends on the length of your hospital stay and the number of times you are hospitalized in a year.

Costs and Deductibles for Part B

• An annual calendar year deductible of $283
• Once the deductible is met, 80% of the bills on the B side are covered by Medicare, and you pay the remaining 20%
• There is no cap on the amount you could be billed in a calendar year for the 20% coinsurance payment on all Part B services.
• Additionally, about 1 in 10 doctors may charge an extra 15% above the Medicare-approved amount for services

In total, you are liable to encounter up to six gaps in Original Medicare A and B.

“In Original Medicare, you’re looking at potential out-of-pocket expenses including a recurring deductible, daily copays, and unlimited coinsurance which, unfortunately, never stops.”

Understanding Requirements and Costs of Advantage Plans

Medicare Advantage Plans, also known as Part C plans, are an alternative to Original Medicare, provided by private insurance companies approved by Medicare.

To be eligible for an Advantage plan, you have to:

• Be enrolled in Medicare Parts A and B
• Pay the Medicare Part B premium, currently at $202.90 monthly
• Live in the plan’s service area

Some costs associated with these plans include:

• The Part B premium, which still necessary to keep your Medicare active

• Copayments for services until you hit the plan’s annual max out-of-pocket limit. This could range from around $3,000 to approximately $10,000 per year depending on the specific plan.

Comparing Hospitalization Costs

Let’s compare hospitalization costs between Original Medicare and a typical Medicare Advantage plan. With Original Medicare, hospitalization cost is $1,736 for a 60-day stay. In comparison, an Advantage plan could have a daily copay of around $350 for the first six days.

This means you might actually pay more out-of-pocket upfront in comparison to Original Medicare, but any additional costs of services, including doctor visits while staying at the hospital, are taken care of by the Advantage plan.

Wrapping Up: Which Plan Costs More?

Through this analysis, determining which plan costs more involves weighing the economic benefits of an Advantage plan against the freedom of choice and flexibility offered by Original Medicare. It’s clear that if hospital stays and regular doctor visits are a common occurrence, an Advantage plan could potentially be more economical. This is because it comes with a max out-of-pocket limit, whereas, with Original Medicare, out-of-pocket costs could snowball infinitely.

However, the flip side is the potential limitation of provider networks and the need for pre-authorizations built-in to most Advantage plans.