In Part 1 of How To Choose A Medicare Plan we explored the pros and cons of Original Medicare and Medicare Supplement plans. In Part 2 we explore the other path, Medicare Advantage plans. If you are new to Medicare, you must choose one of these two paths. With these two articles, our intent is to give you enough information to decide for yourself which path is right for you.
Medicare Advantage Plans
Medicare Advantage plans are health insurance plans that replace your Medicare Part A and Medicare Part B with a private insurance policy from a private, for-profit insurer. They come in many different forms but are usually either HMO’s or PPO’s. They often include a Medicare Part D prescription drug plan as part of the Medicare Advantage package. Medicare Advantage Plans are also referred to as Medicare Part C.
If you choose a Medicare Advantage plan you must still pay your Medicare Part B premium that is automatically deducted from your Social Security check. However, instead of those funds going to Medicare, they are redirected to your Medicare Advantage insurer.
Medicare Advantage plans are required to be actuarially equivalent to Medicare Part A plus Medicare Part B. What that means is that over large groups of people the medical expenses of the population in total should be approximately equivalent to the medical expenses of those people with Original Medicare Part A & B. Simply put, “actuarially equivalent” means very little to the individual as individual experiences will vary greatly depending on the plan and their medical needs. In addition, Medicare Advantage is not equivalent to Original Medicare plus a Medigap plan. Original Medicare plus a supplement (any supplement) offers more coverage and freedom of choice but comes with a higher premium.