Choosing between the two main types of Medicare can be intimidating, and the government doesn’t exactly make the options easy to understand.
There hasn’t been much research on how seniors call, but a recent study provides some insight into how Medicare beneficiaries navigate this complex decision. The Commonwealth Fund’s biennial health insurance survey of more than 1,600 beneficiaries examines the kinds of trade-offs seniors make and the choices they ultimately make when choosing between Original Medicare and Medicare Advantage.
The following are the most common reasons (cited by more than 10% of respondents) that people age 65 and older gave for why they chose one type of Medicare coverage over another.
Original Medicare vs. Medicare Advantage
Original Medicare, also known as traditional Medicare, is provided by the federal government. It includes part A, which is hospital insurance, and part B, which covers outpatient care. There is a standard premium, which changes every year, that almost everyone pays with this coverage.
Medicare Advantage plans, also known as Part C, are private health insurance plans that are required to cover everything Original Medicare does, but may also offer other coverages, such as vision and dentistry. They may also have built-in prescription drug coverage — something that’s only available to those on Original Medicare through a separate Part D drug plan.
1. More provider choice
Respondents who cited this as the main reason for their coverage: 40% of those with Original Medicare
The most common reason for choosing Original Medicare — and the most common reason for choosing a particular plan in general — is that it offers wider access to doctors and service locations. Any doctor or hospital in the US that uses Medicare is available to help, and you generally don’t need referrals to specialists.
Medicare Advantage plans work more like other health insurance plans and usually require you to use providers that are in your service area. Referrals to specialists may be necessary.
2. More benefits
Respondents who cited this as the main reason for their coverage: 24% of those with Medicare Advantage plans
The main reason for choosing a Medicare Advantage plan is that additional services such as vision, hearing, and dentistry may be covered. Prescription drugs are also usually built-in, while original Medicare beneficiaries must purchase a plan for them separately.
3. Out-of-Pocket Cost Limit
Respondents who cited this as the main reason for their coverage: 20% of those with Medicare Advantage plans
Original Medicare has a fixed annual premium, but there’s no limit to your out-of-pocket costs unless you purchase separate supplemental coverage, such as Medigap.
Medicare Advantage plan premiums vary, but have an annual cap on how much you have to pay out of pocket for Part A and Part B services. This may result in some services being less expensive on Medicare Advantage plans. A Medigap plan is not necessary.
4. Recommended by trusted people
Respondents who cited this as the main reason for their coverage: 15% of those with Medicare Advantage plans and 9% of those with Original Medicare
Trust is an important factor in enrolling in both main types of Medicare, as well as Medicare Advantage beneficiaries.
“Medicare beneficiaries, regardless of their coverage source, appear to most often rely on the one-on-one assistance of brokers and agents when choosing a Medicare plan,” the study said. “But brokers and agents get commissions from insurers, which can affect the type of information they provide.”
5. Offered by former employer
Respondents who cited this as the main reason for their coverage: 11% of those with Medicare Advantage plans
Another common reason many people choose Medicare Advantage over health insurance is that plans can be offered in a trusted way – through work. Such plans may differ from those advertised on TV as they are negotiated by and tailored to the specific employer. They may also have their own enrollment deadlines.