Understanding The Differences Between Traditional Medicare and a Medicare HMO
We are often asked by families to discuss the nuances and differences between traditional Medicare and Medicare Advantage Plans.
While this blog posting is not designed to be be the sin qua non in a discussion of this very important topic, we would like to give you a basic overview nonetheless:
Traditional Medicare, includes 4 parts: A,B,C, and D
Part A and Part B, are administered and run by the federal government. Part A covers things like hospital care, skilled nursing facility care, home health care and hospice care.
Part B covers medical insurance, certain medical equipment, doctor appointments and certain other out-patient services, etc
Part C, (Medicare Advantage) is run by private insurers. It is considered a package that combines the 4 elements of traditional Medicare and replaces traditional medicare. It is regulated by the federal government.
Part D is the part of the Medicare program that provides outpatient prescription drug coverage. Part D is provided by private insurance companies that maintain contractual agreements with the federal government.
For starters, you must specifically opt-in to receive your Medicare coverage through a Medicare Advantage plan. In other words, it requires your authorization and as a prerequisite, you must have been enrolled previously in Medicare Part A&B
There are the different types of Medicare Advantage Plans, including HMO, PPO, PFFS and SNP.
However, the 2 better known are HMO and PPO
• Health Maintenance Organization (HMO) plans
You can only go to doctors, other health care providers, or hospitals in the plan’s network, except in an urgent or emergency situation. You may also need to get a referral from your primary care doctor for tests or to see other doctors or specialists.
• Preferred Provider Organization (PPO) plans
You pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network.
It is important to keep in mind that if you choose to enroll in a Medicare Advantage plan you are still in the Medicare program and you still have Medicare rights and protections but you have chosen to have your Medicare benefit provided through a private plan.
So which plan is better?
Traditional medicare is just that; traditional. It’s benefits have withstood the test of time for a long time. However, due to a combination of factors, privatization of Medicare via an HMO (though they are still heavily regulated by the federal government) has become very popular over the past decade.
In fact, enrollment in Medicare HMOs and PPOs — grew from 5.4 million consumers in 2005 to 16.8 million in 2015, or about 31 percent of the Medicare population, according to the Kaiser Family Foundation.
Talk to your own family advisor about which plan may be right for you or your loved one.