Choosing between the two main types of Medicare can be intimidating, and the government doesn’t exactly make the options easy to understand.
There has not been much research into how seniors make the call, but a recent survey 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 looks into the sort of trade-offs seniors weigh and what choices they ultimately make in deciding between Original Medicare and Medicare Advantage.
Following are the most common reasons (cited by more than 10% of survey respondents) people age 65 and older gave about why they chose one type of Medicare coverage over the other.
Original Medicare versus Medicare Advantage
Original Medicare, also called traditional Medicare, is provided through 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 each year, that almost everyone with this coverage pays.
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 coverage such as vision and dental. They may also have built-in prescription drug coverage — something that is available to those on Original Medicare only through a separate Part D drug plan.
1. More provider choice
Respondents who cited this as the main reason they chose their coverage: 40% of those with Original Medicare
The most common reason to choose Original Medicare — and the most common reason for picking a certain plan in general — is that it offers wider access to doctors and service locations. Any doctor or hospital in the U.S. that takes Medicare is available to you, and you generally don’t need referrals to specialists.
Medicare Advantage plans function more like other health insurance plans and usually require that you use providers who are in-network in your service area. Referrals to specialists may be required.
2. More benefits
Respondents who cited this as the main reason they chose their coverage: 24% of those with Medicare Advantage plans
The top reason for picking a Medicare Advantage plan is that extra services such as vision, hearing and dental may be covered. Prescription drug coverage is also usually built in, whereas Original Medicare beneficiaries have to purchase a plan for that separately.
3. Out-of-pocket cost limit
Respondents who cited this as the main reason they chose their coverage: 20% of those with Medicare Advantage plans
Original Medicare has a fixed annual premium, but there’s no limit on your out-of-pocket costs unless you purchase separate supplemental coverage like Medigap.
Medicare Advantage plan premiums vary but come with an annual limit on how much you have to pay out of pocket for Part A and Part B services. This can result in some services being cheaper on Medicare Advantage plans. A Medigap plan is unnecessary.
4. Recommended by trusted people
Respondents who cited this as the main reason they chose their coverage: 15% of those with Medicare Advantage plans and 9% of those with Original Medicare
Trust is a major factor for enrolling in both main types of Medicare but moreso among Medicare Advantage beneficiaries.
“Medicare beneficiaries, regardless of their source of coverage, seem to most frequently rely on the one-on-one help provided by brokers and agents in choosing a Medicare plan,” the study found. “But brokers and agents are paid commissions by insurers, which can influence the kind of information they provide.”
5. Offered by former employer
Respondents who cited this as the main reason they chose their coverage: 11% of those with Medicare Advantage plans
Another common reason many people choose Medicare Advantage for health insurance is that plans may be offered in a familiar way — through work. Such plans can differ from the ones advertised on TV because they’re negotiated by and tailored to the specific employer. They may come with their own enrollment deadlines too.