Medicare offers consumers two options for how they’ll receive their Medicare benefits: the Original (traditional) plan and an approved Medicare Health Plan which consists of managed care plans like Health Maintenance Organizations (HMO) or Preferred Provider Organizations (PPO). Our guide to Medicare health insurance will tell you what you need to know about the differences between these two plan options.
Original Medicare health insurance
Original Medicare health insurance is a traditional, fee-for-service plan in which Medicare pays a set fee for covered medical services. You pay a premium (deducted from your Social Security check) for Part A, which covers hospital costs (e.g., a room in a hospital, rehab, or skilled nursing facility) and Part B, which covers medical costs (e.g., doctor visits, home health and outpatient services). You should also have a Medi-gap policy to cover the 20 percent difference between what Medicare covers and the provider charges. You may go to any hospital or physician you choose, wherever and whenever you want, and Medicare pays them directly.
Medicare Health Plan
With a Medicare Health Plan, you can save money. You won’t need to pay for a Medi-gap
policy; instead, you pay a lower monthly premium to the Medicare Health Plan provider. You also pay a modest co-pay (usually around $5 to $10) for doctor visits. Medicare gives the Medicare Health Plan company a fixed amount of money for the year to take care of you. Whatever you don’t cost them, they get to keep. Thus, their focus both philosophically and financially is to keep you well, so you’ll get plenty of preventive care. The other benefits are: they usually handle all of the paperwork; and they are very good about flu shots, mammograms, and hearing and vision care. At a minimum, they must offer everything that the Original Medicare plan offers. Keep in mind: Original Medicare doesn’t cover annual check-ups with your doctor or gynecologist, so the savings with the Health Plan can really add up. Generally, people can join a Medicare Health Plan at any time; however, during open enrollment
each year, the law requires that the plans must accept new members.
Things to consider when choosing your plan
If you have complex needs and have been seeing specialists that you really like, you will want to think twice about joining a Medicare Health Plan. Make sure your specialists are in the health plan’s network – or decide whether or not you can accept using their physicians, specialists and hospitals rather than freely finding physicians on your own. Here are some questions you should consider when looking at a Medicare Health Plan provider:
- Are your current specialists and primary care doctor in their network?
- Is your favorite hospital in the network?
- Where do you go for emergencies? Is there a procedure you must follow?
- How easy will it be for you to see a specialist? Do you need a referral?
- Can you change doctors if you don’t like your assigned primary care doctor?
- If you live a few months of the year at a second home or travel, how are you covered?
- What skilled nursing homes are in the network?
- What will your out-of-pocket expenses be (e.g., for prescriptions, doctor visits, hospital stays or outpatient surgery)?
- What are the monthly premiums and exactly what do they cover?
There’s a terrific resource to help you decide whether or not you should switch from Original Medicare to a Medicare Health Plan, and it is available on Medicare’s website at medicare.gov
. Click on “Medicare Basics” and scroll from there to find benefits comparisons, monthly premiums, co-payments, quality measures, and patient satisfaction surveys among managed care plans available in your particular region. You will also find a guide on what to look for in a plan.
One final word of caution: Medicare Health Plans can drop out of the Medicare program any time they want; so look for a plan with a solid financial history. On the other hand, you can leave a Medicare Health Plan at any time, for any reason. If you choose to go back to Original Medicare, call 1.800.MEDICARE to re-enroll. If you need more information, call your local Area Agency on Aging at 1.800.677.1116 and ask to speak to the State Health Insurance Program representative. They’ll let you know which senior centers provide volunteer counseling to help you sort through how different plans match up with your particular needs.
The bottom line
- Medicare offers consumers two options for how they’ll receive their benefits: the Original (traditional) plan and an approved Medicare Health Plan similar to HMO and PPO plans.
- Original Medicare is a traditional, fee-for-service plan in which Medicare pays a set fee for covered medical services. You can choose who will care for you and when, but you will need a Medi-gap policy to cover the difference between what Medicare pays and the actual cost of your care.
- With a Medicare Health Plan, you pay a monthly premium and co-pays, and you need to visit doctors that are in the plan’s network. However, the costs are lower, and far more preventative care is covered under the plan.
- You need to consider your medical history and whether or not your doctors and specialists are in the Medicare Health Plan before you switch.
- Visit medicare.gov for comparison tools and guides that will help you to make the right decision for you.