When it’s time to switch to Medicare, kupuna have some choices to make. The first decision is deciding between fee-for-service (FFS) Medicare, otherwise known as Original Medicare, and a Medicare Advantage plan. The choice we make about how to receive our Medicare benefits should depend on our unique medical histories, health issues, and budgets. In this article we will take a look at some of the important advantages Medicare Advantage Plans offer over FFS Medicare.
Medicare Advantage Plans Offer 3 Key Advantages over FFS Medicare
There are three important advantages that Medicare Advantage plans have over FFS Medicare:
1. Medicare Advantage plans may offer lower healthcare spending for enrollees, especially for low-income beneficiaries
According to a study by ATI Advisory conducted on behalf of Better Medicare Alliance (BMA), Medicare Advantage plans may offer lower healthcare spending for enrollees compared to FFS Medicare. Two of the reasons for this are:
Medicare Advantage plans have an annual out-of-pocket maximum (Original Medicare does not).
Medicare Advantage plans may cover some of the out-of-pocket expenses that come with Original Medicare, such as coinsurance.
In the ATI study, researchers also studied “cost burden” by calculating the percentage of Medicare beneficiaries that spend over a fifth of their income on healthcare costs. They found that approximately 13% of Medicare Advantage enrollees faced a cost burden compared to 20% of fee-for-service Medicare beneficiaries.
The difference was particularly noticeable among low-income beneficiaries. Researchers found that less than three out of ten low-income Medicare Advantage beneficiaries were cost-burdened (27%) compared to almost half of all low-income, fee-for-service Medicare beneficiaries (48%).
When researchers compared out-of-pocket expenses for Medicare beneficiaries with similar health conditions, they found that health care spending was lower among Medicare Advantage enrollees compared to those who were enrolled in Original Medicare.
2. Medicare Advantage plans have a more diverse group of beneficiaries
Many low-income and minority populations rely on Medicare Advantage plans because they are more affordable and include benefits not offered by Medicare's traditional fee-for-service program.
The ATI study found that 46 percent of Medicare beneficiaries with incomes 200 percent of the federal poverty level or less chose to enroll in a Medicare Advantage plan last year and that percentage has grown by 15% year-over-year over the last four years. In fact, more than half of Medicare Advantage plan beneficiaries are low-income (52.7%).
In addition, Medicare Advantage plans have a higher enrollment rate by people of color compared to fee-for-service Medicare. Minority populations rely heavily on Medicare Advantage plans for their supplement coverage.
3. Medicare Advantage plans may provide better access to care
Medicare Advantage plans cover all the same services as Original Medicare (Part A & Part B) but most also include coverage for services that Original Medicare does not cover, including dental, vision, and hearing. Some plans even include services like transportation to medical appointments and fitness programs.
Seniors with specific chronic illnesses may benefit from a type of Medicare Advantage plan called Special Needs Plans (SNPs). These plans are designed to cater to the benefits, providers, and drug formularies required to treat a specific health condition.
The vast majority of Medicare beneficiaries are very happy with both the quality of care that they receive as well as how easy it is to access care. With so many different options for Medicare beneficiaries to choose from, it’s a good idea to seek advice from a caring Medicare agent who can assess your needs and provide you with your best options.
Our independent insurance agents are dedicated to assisting people on Medicare and those who are ready to transition from employer coverage to personal retirement coverage. We help kupuna understand their benefits options and apply for additional coverage, as needed. Because we represent all the major Medicare Advantage and supplement plans in Hawaii, we are able to offer unbiased advice; all at no cost to our clients.
At PBC, our clients are our number one priority and we look forward to getting to know you and your needs. Call us today at (808) 738-4500 to see how we may be of assistance.