If you’re at or approaching retirement age, you’re likely looking into Medicare plans. It becomes obvious pretty quickly that the Medicare landscape is not exactly straight forward. There are many options, and it can be confusing about what’s the right plan for you. Everyone has different medical needs and may require more or less coverage, so you have to consider your personal situation to find the right plan. In an effort to try to break it down as simply as possible, look at it as though there are 3 different options: Traditional Medicare, Medicare HMO and Medicare PPO. Understanding the differences between all of these insurance options will help you feel more confident in choosing the best plan for your healthcare needs.
What Is Traditional Medicare?
Original Medicare is the traditional form of Medicare that is provided and managed by the federal government. It includes Part A, which covers hospital stays and skilled nursing care, and Part B, which covers doctor visits, lab tests, and other outpatient treatments. Prescription drugs are not covered, but members usually purchase a separate Part D Rx Drug plan in addition to traditional Medicare plan to receive coverage for medications. Part D plans should be selected and reviewed yearly based specifically on your medical conditions and the medications you need. Don’t just sign up for the drug plan your neighbor is on because you may end up paying a whole lot more than you need to!
People with Traditional Medicare usually pay a deductible at the beginning of every year and may have a copayment or coinsurance for doctor visits. Many members elect to sign up for a Supplemental Insurance plan in order to help cover any out-of-pocket Traditional Medicare costs.
What Is a Medicare Advantage?
Medicare “Advantage” plans are an alternative to Traditional Medicare, also known as Medicare Part C. The federal government provides subsidies to private insurance companies to sell these plans and allow “competition” in the marketplace. Medicare Advantage typically combines coverage for outpatient treatment, hospital or skilled nursing stays, and prescription drugs.
There are two main types of Medicare Advantage policies: HMO plans and PPO plans. A Medicare Advantage HMO plan functions in a similar way to traditional HMO coverage. There are a network of doctors, hospitals, and clinics who have agreed to accept the insurance, so if you want your costs to be covered, your treatment must come from in-network providers.
Most Medicare Advantage HMO plans also require their policyholders to have a primary care physician, or PCP, who coordinates their treatment. If you need to see a specialist or undergo a test, you’ll first visit your PCP for a referral.
You have probably seen advertisements on TV for HMO’s that are very misleading. The ads boast $0 premiums and no costs, meanwhile members are usually still required to pay the Part B premium and other costs as well.
What Is a Medicare Advantage PPO Plan?
Medicare Advantage PPO plans are also provided by private insurance companies. The key difference between PPO and HMO plans is that PPO plans offer more flexibility. Like HMO plans, Medicare PPO plans have a network of healthcare providers that offer discounted services. However, policyholders aren’t limited to this network. You can choose a doctor or a clinic outside of your network if you are willing to pay more for the services.
When you have a PPO plan, you also don’t need a PCP. While it’s helpful to have a primary care provider who can direct you to good specialists and other resources, you can visit specialists or request services without a referral from a general practitioner.
The Difference Between Traditional Medicare and Medicare HMO Plans
Original Medicare and Medicare Advantage HMO plans may offer similar services, but they’re structured differently. While Traditional Medicare plans are provided directly through the federal government, Medicare Advantage is sold by private for-profit companies.
Another difference is that Advantage plans usually offer prescription drug coverage (it’s listed on the Insurance card). With traditional Medicare, you have to buy additional coverage, Part D, to offset your prescription medication expenses. Traditional Medicare Parts A and B may cover medications that you receive while you’re getting inpatient or outpatient care, such as IV drugs. However, your regular prescriptions will most likely not be covered unless you purchase Part D. Members can determine the best drug plan for themselves by getting a list of their prescriptions together and calling 1-800-MEDICARE or go online to www.medicare.gov and enter drugs to find the best Part D plan. Once someone enrolls in Part D, they are automatically on traditional/original Medicare.
Traditional Medicare does offer more flexibility than a Medicare Advantage HMO plan. With an Original plan, you can see any doctor or visit any clinic that accepts Medicare. Although not all doctors take Medicare, you still have a wide variety of options. If you have a Medicare Advantage HMO plan, your options are limited to those in your network. HMO’s keep costs down and profits up by paying providers less than Traditional Medicare and often limits the frequency and duration of allowable visits.
The restrictions involved with Medicare HMO’s can come as quite a shock when a senior becomes ill and finds out all the limitations of their care options. Unless they meet a special exception, members can’t change plans until open enrollment and even then, the new plan doesn’t become effective until the first of January of the next year.
Which Plan Is Right for Me?
The 2021 open enrollment window for Medicare began October 15 and runs through December 7th, and all types of Medicare plans have their advantages and drawbacks, so deciding which plan to enroll in can be difficult. You have to consider your budget and your priorities to determine which plan will best suit your needs.
Cost is certainly a concern for many seniors. Traditional Medicare does have programs for low-income individuals that can reduce and/or eliminate deductibles and cost-sharing.
If you have chronic illness, experience a serious medical emergency, or need a lengthy hospital stay, you may end up paying more with Medicare Advantage than with Traditional Medicare. Coinsurance and copayments can vary, so it’s important that you read all the fine print and understand the details of your plan before you enroll.
Some older adults are partial to specific doctors or clinics. HMO plans can be risky if you’re loyal to certain healthcare providers because your preferred doctors might not be in your network. If flexibility is a priority for you, a Traditional Medicare plan or an Advantage PPO plan may be a better choice.
What Is Medigap?
If you think Original Medicare is a better option but need some additional coverage, you could purchase a Medigap plan. Like Medicare Advantage HMO plans, Medigap coverage is sold by private companies. It can only be purchased by people who have Medicare Parts A and B, though. If you have Medicare Advantage, you cannot buy a Medigap policy.
Medigap helps you cover some of the costs associated with your health insurance policy, including your deductible, copayments, and coinsurance. It does not cover services like dental, vision, hearing aids, and prescription drugs.
In 2021, there were 10 Medigap plans to choose from. In most states, the plans are identified as a letter ranging from A to N. Plan F used to be very popular but was discontinued in 2020 for new enrollees and premiums may be going way up for existing Plan F members. For 2021, “Plan G is the new Plan F.” The only difference is that Plan G doesn’t cover the annual deductible ($203 in 2021).
Medicare and Counseling
Both Traditional and Medicare Advantage plans cover mental health counseling however, HMO’s are limited only to their network. Unfortunately, Medicare HMO’s do not contract with Blue Moon Senior Counseling. All of the therapists with Blue Moon Senior Counseling are Traditional/Original Medicare providers.
Maintaining your mental health as you age is critical, so no matter what kind of Medicare plan you choose, you should reach out for support when you need it. Blue Moon Senior Counseling offers therapy for older adults. Whatever mental or emotional concern you’re facing, we’re ready to help. Contact us today to learn more about our services.