What is the benefit to a Medicare Advantage plan vs regular Medicare? Particularly, what do insurers gain out of it when there is no premium?
Most Americans qualify for Medicare when they turn 65 years old. They must make a choice between enrolling in Original Medicare or a Medicare Advantage plan.What Is Original Medicare? And Medicare Advantage?Original Medicare is provided directlyby the federal government and includes Parts A and B:Part A, or hospital insurance, covers inpatient care, surgery, skilled nursing care facilities, some home health care services and hospice care. You probably will not pay a monthly premium for coverage.Part B covers medically necessary and preventive services, including certain medical expenses like doctors’ office visits, blood tests, X-rays, diabetic screenings and supplies, flu shots and outpatient hospital care. You pay a monthly premium for coverage.Medicare Advantage, or Part C, includes all the benefits of Parts A and B, except for hospice care. Private insurance companies contract with the government to offer an alternative to Original Medicare. With Medicare Advantage you still have to pay your Part B premium and possibly an additional premium, though about half of all plans are premium-free.Advantages and DisadvantagesFor a more detailed breakdown of the benefits to each, check out Medicare Advantage vs. Original Medicare: Pros and Cons Compared. Briefly, the advantages to a Medicare Advantage plan include the following:Limits to out-of-pocket costsExtra benefits, like some dental care or eye exams and glassesComprehensive coverage, usually including Part D prescription coverage, combined under one planLess paperworkLower premiumsDisadvantages to a Medicare Advantage plan instead of Original Medicare include the following:Limited network of providersMore difficulty obtaining specialized carePossibility that your plan will change or no longer be available year after yearPossible extra costs, such as for out-of-network servicesHow Medicare Advantage Plans Are FundedThe federal government contracts with private insurance companies and pays them a set amount per enrollee to cover healthcare expenses for the year. The companies use these funds plus any premiums paid by members. To limit expenses, the companies restrict coverage to its own network of providers, require authorization requests to receive care and encourage preventive services and wellness programs to reduce the need for expensive services. Though the plans might not charge additional premiums, there might be additional out-of-pocket expenses like co-pays.Photo by rawpixel on Unsplash.