Budgeting for healthcare costs in retirement is tricky since there’s often no way of knowing whether your expenses each year will be minimal or massive, and Medicare isn’t a “one-size-fits-all” approach. There are specific differences between traditional Medicare and Medicare Advantage that are important for people to understand when they first become eligible for Medicare and during the Open Enrollment period.
Traditional Medicare
Traditional Medicare is offered directly through the federal government, and you receive a red, white, and blue card to present to providers. The same level of coverage is available to all enrollees across the country with no pre-existing condition limitations or waiting periods. You can see any doctor, medical provider or visit any facility around the country that accepts Medicare. However, Medicare doesn’t cover long-term care, but it will cover short-term rehabilitation for the first 100 days. There are limits on your charges when you visit participating or non-participating providers as a Medicare beneficiary.
Medicare Advantage
Medicare Advantage is part of the Medicare program offered to seniors and disabled adults who qualify through private plans that contract with the federal government to provide Medicare benefits. Also referred to as Medicare Part C, Medicare Advantage plans are offered through private insurance companies instead of the federal government. Medicare Advantage plans have fixed networks of doctors and hospitals, so your plan will have rules about whether or not you can get care outside of your network. Of course, you’ll pay more for any care you receive outside your network like any plan.
Medicare Advantage enrollment boils down to plan variety, choice, and costs, benefiting healthier people who use fewer services with lower costs. Enrollees are looking for the cost protection of an out-of-pocket limit and the variety of plan options with different premium, copay, and deductible schedules. A range of service options, such as dental, vision, pharmacy, and wellness benefits, are also available.