With the advent of Medicare Advantage plans there is now a lot to consider when deciding on a Medicare plan. Both Traditional Medicare and Medicare Advantage plans are funded by the US Government, but they offer different benefits.

What’s The Difference Between Medicare and Medicare Advantage?

The main difference is that traditional Medicare is managed by the government and Medicare Advantage plans are managed by private insurance companies who are permitted to set their own fees and rules for their insured patients.  When you sign up for a Medicare Advantage plan you are essentially giving up Medicare and you become a patient of that private insurance company subject to their policies.

About Medicare Advantage Plans

These private insurance companies generally have a limited panel of physicians, hospitals, nursing homes, and other providers.  This may limit your access some facilities and providers. Similarly, be cautious, as some Medicare Advantage plans do not cover you if you need care out of state, whereas Traditional Medicare does. Neither covers you outside of the US.

Medicare Advantage plans also have their own rules when it comes to paying for tests like MRIs and CAT scans, prior authorization is required more than Traditional Medicare.  The prior authorization process causes delays in your care.  If denied, you will need to choose to either forego that care or pay out of pocket. The Medicare Advantage Plan insurers also have their own limits and prices for prescription medicines.

One advantage to a Medicare Advantage plan is, unlike Traditional Medicare where you need to purchase a prescription plan (average $43/year) and a Medi-Gap plan to cover the 20% of costs that are not covered by Medicare, the Medicare Advantage plans include coverage for prescriptions and the 20% gap charges. Medicare Advantage plans also cap your out-of-pocket expenses at around $8,300 a year.  There is no such cap for Traditional Medicare.

Advantage plans advertise benefits that are not covered by Medicare, like vision, dental, hearing and gym memberships.  Be very careful when considering these benefits as they vary by zip code and may not be available or may be less generous in your area. 

Your Medicare Manual is a good source of what is covered by which plans.  Something to keep in mind, someone who signs you up for an Advantage plan receives a commission for doing so.  There is no commission for Traditional Medicare.


Summarized from Paula Span NY Times 11/20/2002

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