Sorting Through Medicare

At USC-VHH’s Community Resource for Aging, we sometimes encounter individuals struggling to understand the complexities of Medicare – and it’s no wonder as there are many nuances to consider. These are some of the basics, but if you’d like to take a deeper dive, a good resource is medicareinteractive.org.

What is Medicare?

Medicare is the federal health insurance program for people aged 65+. It also provides health insurance for younger people with certain disabilities and for individuals with end-stage renal disease.

What are the Different Components or Parts of Medicare?

Part A covers inpatient hospital care. Part B covers outpatient care like doctor visits, lab tests, ambulance services, certain preventative care such as screenings and vaccines, and other outpatient services such as physical therapy, home health services, and durable medical equipment. Part D covers prescription drugs.

What is the Difference Between Original Medicare and Medicare Advantage? 

Original Medicare is paid for and administered by the Federal Government’s Center for Medicare and Medicaid Services (CMS) while Medicare Advantage Plans are a type of private insurance (like an HMO or PPO) offered by insurance companies that contract with CMS.

The major differences between original Medicare and a Medicare Advantage plan are:

What’s Included:

Original Medicare allows you to opt out of Part B (outpatient care) and does not offer Part D (prescription drugs). However, Part D can be added through what is known as a private drug plan (PDP). This is more of an a la carte approach.

Choice of Providers:

Like most HMOs, Medicare Advantage plans have a defined geographic network of healthcare providers you can see and require pre-authorization for most specialized care.

With original Medicare you can access care anywhere in the United States (as long as the provider accepts Medicare*), you can choose any provider and you do not need a referral or approval to see a specialist. If you have a second home in another state, this may be important to consider.

Note neither type of Medicare plan will cover healthcare outside the U.S.

Costs:

Both original Medicare and Medicare Advantage have cost structures much like insurance we have had all our lives.

There is a monthly premium (except for Part A which is free, if you have contributed through Medicare taxes over the course of your work life).

There are annual deductibles that must be met before costs are covered.

There are co-payments for services once deductibles are met.

In 2024, original Medicare premiums for Part B (outpatient) begin at $174.70/month based on an income of $103,000 or less and adjusts up on a sliding scale from there.

Under original Medicare, Part D (prescription drugs) would also need to be purchased separately using a PDP and the average premium for such a plan is $55/month.

Medicare Advantage plans all have different premium costs but, as stated earlier, Part A, B and D along with vision and dental are generally bundled together in this premium cost.

The major difference between the two in terms of costs is that all Medicare Advantage Plans have maximum out-of-pocket (MOOP) caps for Part A and Part B expenses. For 2024 the MOOP is $8,850. Original Medicare on the other hand does not have a MOOP. So while upfront costs may be lower with original Medicare, there is no cap on potential costs.

Key takeaways:

Explore your options, preferences and budget before you turn 65.

Remember that Medicare Part B and Part D are not automatic or mandatory but are critical resources for remaining healthy. 

*According to the Kaiser Family Foundation, only 1% of doctors don’t participate in Medicare and 83% of primary care physicians accept new Medicare patients.

Our complimentary community assistance is available to all (regardless of your health providers) at USC-VHH Community Resource Center for Aging. We welcome your phone call at (818) 949-4033 or email to Aging-Resources@med.usc.edu.

Wishing you accessible health and social care!