Traditional Medicare vs. Medicare Advantage Explained
Al Waller: It can be challenging to keep track of the differences between the various parts of Medicare. With so many different parts and coverage choices, it's understandable that one could get confused and become overwhelmed.
Welcome to ClearPath – Your Roadmap to Health & Wealth ℠ . I'm your host, Al Waller. Joining me today is Mihaela Vincze, public health expert, for nonprofit Transamerica Institute®. In today's episode, we'll be discussing the key differences between Traditional Medicare and Medicare Advantage. We'll be covering everything from provider networks to costs and extra benefits. So, sit back, relax, and let's dive into the world of Medicare.
Before we get started, I want to remind our listeners that we would love to hear from you and get to know what topics you’d like to hear about. Please drop us a line at [email protected].
So Mihaela, it’s good to have you back.
Mihaela Vincze: Yeah, Al, it’s good to be back.
Al Waller: We know that choosing between these two options can be overwhelming.
Mihaela Vincze: Yes, Medicare can be a complicated topic—but it doesn’t have to be!
Al Waller: That’s right. Now, why should people be informed about the differences between Medicare Advantage and Traditional Medicare?
Mihaela Vincze: Both plans have their own set of unique benefits. It’s important to be aware of how they differ since these differences may impact your health care choices. If you’re getting ready to enroll or re-enroll or are helping a loved one do so, it’s important to know the difference between Traditional Medicare and Medicare Advantage to ensure that you’re selecting what is best for your situation.
Al Waller: Why don’t we begin with some simple definitions?
Mihaela Vincze: Sure, that’s always a good place to start.
Al Waller: What is Traditional Medicare?
Mihaela Vincze: Traditional Medicare is a federal program that is comprised of Part A, which is essentially “hospital insurance” and Part B, which covers outpatient care, such as doctors’ visits. If you want help paying for vision, dental, or items not covered by Traditional Medicare, you could purchase that through a “supplemental” or Medigap plan at an additional cost. Medigap plans are designed to help cover the out-of-pocket costs that come with Traditional Medicare, such as coinsurance, copayments, and deductibles.
Al Waller: I also want to chime in and let listeners know that Traditional Medicare is sometimes referred to as “Original” Medicare.
Mihaela Vincze: That’s right.
Al Waller: Ok—moving on now to Medicare Advantage— can you define this?
Mihaela Vincze: Medicare Advantage is offered by private insurance companies and packages Part A and Part B benefits. Medicare Advantage is also called “Part C”. Sometimes, Medicare Advantage plans include benefits such as dental, vision, hearing services. Medicare Advantage can also offer coverage to help pay for prescription drugs that are not covered by Part D.
Al Waller: It sounds like Medicare Advantage covers more than Traditional Medicare. However, I do want to stress to our listeners that it's important to carefully consider all the differences between Traditional Medicare and Medicare Advantage before making a decision that works best for your health care needs.
Mihaela Vincze: Yes, it’s essential to be aware of some key differentiators between the plans so you can make an informed decision.
Al Waller: So Mihaela, let’s begin with my first question—how does Medicare Advantage and Traditional Medicare differ in terms of selecting a provider?
Mihaela Vincze: Well, Al, with Traditional Medicare you are able to see any health care provider that accepts Medicare, which includes most doctors and hospitals nationwide. On the other hand, Medicare Advantage generally limits you to a network of doctors and hospitals, and referrals may be needed to see specialists outside the network.
Al Waller: That's something to consider, especially if you have a serious medical condition. It sounds like Traditional Medicare provides more flexibility in terms of choosing health care providers, whereas Medicare Advantage plans typically have a network of doctors and hospitals you’re limited to.
Mihaela Vincze: Exactly.
Al Waller: If you’re limited to specific hospitals and doctors with Medicare Advantage, what happens if you’re traveling?
Mihaela Vincze: That’s a great question that I think is very important to address. Medicare Advantage offers emergency coverage when traveling outside the plan’s service area, but there might be restrictions for non-urgent care. For instance, if you travel a lot outside your state and find yourself needing non-emergency medical care, you might find yourself without coverage. However, Traditional Medicare plans provide coverage across the country—but there may be limited coverage outside of the US. Also, you can purchase a supplemental Medigap policy that covers emergency care outside the US—which isn’t available for Medicare Advantage plans.
Al Waller: You know, Mihaela, lots of people who are of Medicare age may like to spend their years traveling, so health coverage outside of the country might be important for them.
Mihaela Vincze: You’re onto something, Al! 36% of retirees report that they are spending their retirement traveling, according to a Transamerica Institute survey.
Al Waller: That’s what I love doing! Now, what about costs?
Mihaela Vincze: The cost difference between Medicare Advantage and Traditional Medicare depends on various factors, such as the plan you choose, your needs, and where you live. Traditional Medicare has separate premiums for Part A and Part B, along with potential out-of-pocket costs like deductibles and coinsurance. Medicare Advantage usually has a single monthly premium that may include Part A, Part B, and additional benefits like hearing and vision. You'll still have cost-sharing like copayments and deductibles.
Al Waller: Is there a limit on what you pay for Traditional Medicare or Medicare Advantage?
Mihaela Vincze: For Traditional Medicare, there is no yearly limit on what you pay out-of-pocket, unless you have supplemental coverage – like Medicare Supplement Insurance or Medigap. Medicare Advantage plans do have an annual limit on what you pay out of pocket for services Medicare Part A and Part B cover. Once you reach your plan’s limit, you won’t pay anything else for services Part A and Part B cover for the rest of the year.
Al Waller: It might be a good idea to do your homework and compare costs and benefits of each plan to make a decision that meets your needs and budget.
Mihaela Vincze: That’s right, Al.
Al Waller: To wrap up, we covered provider network coverage, travel coverage, costs, and extra benefits for both Traditional Medicare and Medicare Advantage. Where can listeners go to learn more?
Mihaela Vincze: I invite our listeners to check out our recent episode Medicare Enrollment 2024 Explained. I also highly recommend the official website for Medicare, Medicare.gov, as it provides comprehensive information on the different Medicare parts (A, B, C, D), enrollment, coverage options, and more. You can also check out Transamerica Institute’s Medicare guide at Transamericainstitute.org/medicare.
Al Waller: Thank you, Mihaela. If you’d like to check out any of the source materials mentioned today, visit transamericainstitute.org/podcast to review the episode’s transcript.
If you have comments, feedback, or topic ideas, please reach out to [email protected]. Don’t forget to hit that subscribe button so that you don’t miss an episode of ClearPath—Your Roadmap to Health & Wealth.
Until the next time, I’m your host Al Waller. Stay safe, be well, and thanks for listening.
ClearPath – Your Roadmap to Health & Wealth is brought to you by Transamerica Institute, a nonprofit private foundation dedicated to identifying, researching, and educating the public about health and wellness, employment, financial literacy, longevity, and retirement.
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