Difference between Medicare Plan and Medicare Advantage Plan: The difference between Medicare and Medicare Advantage healthcare plans is often overlooked.
Some people who are yet unaware of the reality behind the term “Medicare Advantage” have the impression that these two are somehow the same. Some think that the second is just an upgrade of the first.
Although they may be the same in more ways than one, these two plans, however, are still separate from each other.
The first one is basically a government plan while the other is a private plan.
What is Medicare
In the year 1965, a government program was created under the administration of former President Lyndon Johnson.
This program is Medicare. It is meant mainly to cater to the elderly and the low-income American people who do not have sufficient means to secure a private health insurance.
It is a federal healthcare program funded through taxpayer money. The coverage, rules, and regulations for Medicare are similar and unchanged everywhere in the United States. Moreover, it is run only by the Centers for Medicare & Medicaid Services.
Medicare provides health insurance only for the following groups of people:
1. Seniors (aged 65 or older);
2. People under the age of 65 with certain disabilities; and
3. People of any age with ESRD (End-Stage Renal Disease, which requires either dialysis or a kidney transplant).
As long as you fall under any of these three groups, regardless of the income bracket you belong to, you are highly eligible for Medicare.
Medicare is a four-part program. Part A is for hospital insurance covering inpatient care.
Part B is for medical insurance covering outpatient care.
Part D is for drug insurance covering prescription drugs.
Part C, on the other hand, is the Medicare Advantage itself.
Technically a part of the original Medicare, Medicare Advantage can be considered separate in the sense that it is privately purchased as it is supplemental insurance providing additional perks including all benefits and services covered under Parts A, B, and D.
What is Medicare Advantage
You may have already heard of Medicare Advantage in the likes of HMO (or Health Maintenance Organization), PPO (or Preferred Provider Organization), and EPO (or Exclusive Provider Organization).
These private health care options provide their respective networks of doctors, hospitals, and other healthcare professionals with which members can visit to avail of insurance benefits.
The big difference between Medicare and Medicare Advantage healthcare plans is that the latter are plans sold by private insurance companies while still providing the same basic benefits as that of Medicare.
Hence, you are still actually under Medicare but you are no longer under the original one – you are now under a private Medicare plan that has different costs and restrictions.
With HMO, members choose one PCP (Primary Care Physician) within the plan’s network. Members get to pay a fixed monthly fee and doctors are paid the same monthly amount regardless of the number of services they provided.
The members go to their chosen PCP for consultation and further referral.
Without such referral, a member cannot proceed to any other health care professional within the network, unless it is an emergency.
If a member seeks professional help outside the network and without a referral from the PCP, he shall be responsible for the medical costs thereon incurred.
With PPO, members can seek professional care outside the network without the need for a referral. Doing so, however, would entail higher out-of-pocket costs and lesser insurance coverage.
Members enjoy full insurance coverage only if they choose to stay within the network. Additionally, members pay for the upfront costs in case of treatment and then be reimbursed after.
You will also need to pay for deductibles and co-payments when visiting other doctors in the network.
With EPO, members are limited only to health care and doctors within the network in order to avail of the plan benefits.
A pre-authorization from the plan is required in advance of expensive services. Any services sought outside the network will not be covered except in emergencies.
Members pay their doctors only when services were rendered.
Difference between Medicare Plan and Medicare Advantage Plan
One notable difference between Medicare plan and Medicare Advantage plan is that the Medicare is generally paid through taxpayer money while Medicare Advantage, although technically a part of the former, is to be paid out-of-pocket by members to the original program.
The upside again is that the latter provides additional benefits and services aside from those already covered under Parts A, B, and D of the original Medicare.