The Types of Medicare – Surveying Differences in Federally Managed Healthcare

  1. Original Medicare – The Foundation of Medicare Coverage

The introduction of Medicare to many individuals begins from a familiar starting point – Original Medicare, composed of the two parts named Medicare Part A and Part B respectively, is the government’s initial healthcare offer to all American people when they’ve reached age 65, are over 65, or may fall into unique given circumstances. Overseen by the government, this healthcare provision allows regular citizens to receive help with all sorts of medical bills; its enrollment is occasionally automatic, using accrued revenue from one’s lifetime source (their taxes) to help simplify costs and the process needed to enroll. 

Divided into two separate portions for clarity’s sake, as well as to properly conceptualize between coverage that may be deemed “necessary” and that which may be somewhat voluntary, Original Medicare consists only of the following:

  • Medicare Part A is hospital coverage, including inpatient hospital stays, hospice, skilled nursing facility, some home healthcare – basically, the services and work done you’d expect in a hospital. Many unclear factors – like your hospital room, attending nurses, meals, and other routines – also fall into this umbrella of coverage. Those who have paid the appropriate taxes for over 10 years are automatically enrolled with no premium; if not the case for yourself, you may be subject to your enrollment responsibility, as well as, a Part A Premium.
  • Medicare Part B is medical coverage, including far more coverage variety and potential than Medicare Part A, such as your emergency room, ambulance, outpatient services, screenings and exams,  urgent care, and so on – essentially, because Medicare Part B is voluntary and requires you to pay a premium based on income for as long as you have it, the amount it may cover, as well as it’s ability, can be considered quite flexible.

Now, while Original Medicare does not realistically cover all significant medical expenses, it leaves a very common percentage behind that relates to most of the costs expected – 20% out-of-pocket for a service, and 80% covered by the plan. For most circumstances, this still means that you’ll need to have proper funds available in most situations where your Medicare may be applicable; only in some situations will your Original Medicare front the entire cost of a listed covered portion.

One of the most powerful benefits of Original Medicare lies in it’s freedom of choice – selecting to keep to your healthcare roots allows you the freedom to visit any doctor, or facility, in the nation that accepts Medicare coverage; as the baseline of coverage between civilians and the government, a huge plethora of healthcare providers across the country will gladly assist you without a hinderance, allowing you all the potential to enjoy knowing you’ll have coverage wherever you need to go. 

Original Medicare is just the entry point of Medicare – it is almost an entirely seamless process to begin, operate, and benefit from, and it flexes how much it will help or cost you based on income and services complete (due to the common coinsurance associated with its coverage;) Medicare alternatives, like Medicare Part C and Medigap, exist in order to create environments that alter and boost the perspective of Medicare’s ability to cover aspects of our healthcare needs. Remember – Original Medicare coverage will be limited; you cannot expect your Part A and B to offer you dental, vision, hearing, or prescription coverage, nor supply the funding and tools necessary to get help attending specialists who would relate with those benefits. 

  1. Alternatives to Original Medicare – Why Stray from the Standard?

Over the course of Medicare’s history, there has been a continual drive to allow private industry ever more opportunity to involve themselves with people’s coverage in the possibility of creating even higher, more-expansive coverage options for applicable citizens – separated into two options, the unified, “all-in-one” Part C advantage plans and the familiar, but improved, Medigap supplement policies, each serves to both 1) offer the same exact coverage you’ve come to expect on Original Medicare and 2) offer benefits and value that Original Medicare has drastically underweighted (or missed entirely.) 

Each of the two alternatives is categorized into applicable types of its own, mostly based on how the coverage will operate and ultimately serve out it’s purpose to the person who has enrolled – this, very commonly, involves costs that will range by what plan type is chosen for a specific location, namely your ZIP code. By using necessary comparison, you can not only see the differences that will be surveyed between each of the alternative options themselves – being advantage and supplement plans – but their individual branches, each much more finely tailored to fulfill certain preferences and possibilities.

Let’s first consider what makes up a Medicare Advantage Plan, as well as the several “types” you’ll find when enrolling:

  1. Medicare Advantage Plans (also commonly known as Medicare Part C)

If you’re fully enrolled into Medicare Part A and B, you can be offered to enroll into a special plan called an “advantage plan” – these plans do not remove your Original Medicare, nor do they seek to fully replace it, as one key requirement of planning for a Medicare advantage plan is that you must stay enrolled into Medicare Part A and B, which includes having to continue paying your Part B premium.

Provided and facilitated by private healthcare companies, these plans operate, first and foremost, to offer the exact same coverage you’d need from Medicare A and B – while not removing you from it’s enrollment, your advantage plan will very likely be your primary source of insurance, meaning the government has mandated that the providers must supply benefits at least equal to, or greater than, Original Medicare’s.

Very often, as incentives for enrollment and overall retention of interest in an advantage plan (and it’s supplying company,) your coverage will extend much farther than what Original Medicare would possibly offer – this usually includes recognizable and automatic dental, vision, hearing, transportation, and prescription coverage, all already accounted for (with unique costs) onto the plan’s benefit listing.

Now, depending on your location, you may have certain plan “types” available to you, mostly detailing information designating how you’ll receive coverage under the plan, as well as what it may cost; in the listings below, you’ll see brief information about some considerations each plan type may have on its benefits.

  1. Health Maintenance Organization Plan (HMO) – 
    • You’ll be required to only use services, including doctors and facilities, in the healthcare providers network.
    • You are required to receive referrals from your primary care provider (PCP) to be given access for a specialist
    • Out-of-network services not covered – you’ll be expected to pay entirely out-of-pocket
    • You must select a primary care provider (PCP) to coordinate your medical services.
    • Usually the least expensive of the plan types, offering potentially lower copays, lower premiums, and higher benefit amounts (like allowances for ancillary benefits.)
  1. Health Maintenance Organization Point-of-Service Plan (HMO-POS) – 
    • Very similar to HMO plan; however, certain opportunities available to use services outside of the plan’s network at a higher rate (but may be less than out-of-pocket expenses.) 
    • Offered out-of-network coverage may only be allowed for very specific services or fall under a dollar amount limit.
  1. Preferred Provider Organization Plan (PPO) – 
    • Has a network of preferred doctors and facilities, but you are not forced to use them to avoid full out-of-pocket costs.
    • Different costs created for services in-network and out-of-network, making clear what will cost what depending on your choice.
    • You do not need to select a primary care provider (PCP.)
    • You do not need to receive referrals from a PCP, or anyone, to see specialists of your choice.
    • Much more flexible choice, allowing you to use your benefits far more freely; usually more expensive copays in-network and a higher premium.
  1. Special Needs Plans (SNPs) – 
    • Not a plan of its own – almost always attached to an HMO or PPO policy, which will define its rules about network operation and possible costs.
    • Created to assist those who need the most financial assistance, SNP plans typically have very low to non-existent costs, all while still offering the same amount of benefits.
    • Will always include a form of built in prescription drug coverage.
    • Not available to the general public – must have a specific reason necessary to enroll, such as a long-term condition or Medicare and Medicaid coverage combined.
  1. Private Fee-For-Service Plans (PFFS) – 
    • Allows you to visit any doctor or facility that has decided to accept the plan’s terms and conditions; typically, this includes many that work with Original Medicare.
    • You are not required to have a primary care provider (PCP.)
    • You are not required to receive referrals to see specialists.
    • Costs can be very variable – while many may accept to providing coverage for those on the plan, the actual unpaid balance may exceed what you and the plan must pay.
    • Usually includes some version of advantage plan perks – including basic dental, vision, and hearing coverage.
  1. Medical Savings Account Plan (MSA) – 
    • Not a traditional advantage plan – essentially a mixture between a valid bank account and an extremely high-deductible health policy.
    • You are provided money by Medicare per year to pay for services that are available on the policy’s listing.
    • There is no network – you can use any doctor or facility you would like, much like Original Medicare.
    • Cannot, and will not, have a premium or prescription drug coverage.
    • Only properly begins operating as health coverage once the deductible is paid in full, generally meaning high out-of-pocket costs until that point.

Situationally, depending on some of the contingencies above, your plan may be considered an MA-Only (Medicare Advantage Only) or MAPD (Medicare Advantage with Prescription Drugs) plan, which will, obviously, denote the presence of prescription drug coverage built onto the plan automatically. 

Despite your plan’s type, as well as if it has prescription drug coverage or not, take note that Medicare advantage plans will be built upon a system of copays and coinsurances that will act to provide steady, trackable rates at which to expect the cost of your services – recognize that the plan type of your choice will likely make a difference ultimately on the coverage you’ll be provided along with how it’ll be priced out against another competitive option.

Next, we look upon the many faces of the Medigap supplement plans, each a precise shift of another selection amongst its options:

  1. Medicare Supplement Policies (commonly referred to as Medigap)

Simply put, Medigap plans exist to act like a filling for all the money Medicare has left for you to pay after a service has been fulfilled – typically, this just comes down to how much, and how often, a supplement plan will lend to help cover your out-of-pocket expense. 

By paying a monthly premium, adjusted primarily by how much you’re willing to pay out-of-pocket for services yourself, you’ll be given access to a coverage that greatly mimics your Original Medicare (all while paying much more towards each individual service you are subject to.) This, unfortunately, makes dividing supplement plan types much more precise, as the changes can seem so minute to some (but significant to others) – after all, everyone has a certain limitation of costs they’re willing to pay themselves, but it all depends on what is made available to them.

Take note – Medigap plans are much more like mirrors of your Original Medicare, primarily looking to cover the “cost gaps” left behind more than anything else, and as such will have no focus on additional benefits whatsoever, generally meaning you cannot expect dental, vision, hearing, prescription, or other ancillary benefits to be a part of your plan. 

Each individual Medigap plan type is defined by an associated letter of the alphabet, including Plan A, B, C, D, F, G, K, L, M, and N – every plan uniquely offers a certain percentage of coverage for the costs you’ll owe from making using of your Original Medicare (usually amounting to about 20% of the actual bill.) Using the listing below, you can properly compare how certain plans balance their benefits between their costs; however, take note that typically the more coverage a plan choice has, the higher it’s monthly premium will be.

  • Supplement Plan A
    • 100% of Medicare Part A costs
    • 100% of Medicare Part B costs
    • 100% of your first 3 pints of blood
    • 100% of Hospice Care costs
    • No coverage for Skilled Nursing Facility
    • No coverage for Medicare Part A or B deductible
    • No coverage for excess Part B charges
    • 100% of Preventive Care Costs
  • Supplement Plan B
    • 100% of Medicare Part A costs
    • 100% of Medicare Part B costs
    • 100% of your first 3 pints of blood
    • 100% of Hospice Care costs
    • No coverage for Skilled Nursing Facility
    • 100% of Medicare Part A deductible
    • No coverage for Medicare Part B deductible
    • No coverage for excess Part B charges
    • 100% of Preventive Care Costs
  • Supplement Plan C
    • 100% of Medicare Part A costs
    • 100% of Medicare Part B costs
    • 100% of your first 3 pints of blood
    • 100% of Hospice Care costs
    • 100% of Skilled Nursing Facility costs
    • 100% of Medicare Part A and Part B deductible
    • No coverage for excess Part B charges
    • 100% of Preventive Care Costs
  • Supplement Plan D
    • 100% of Medicare Part A costs
    • 100% of Medicare Part B costs
    • 100% of your first 3 pints of blood
    • 100% of Hospice Care costs
    • 100% of Skilled Nursing Facility costs
    • 100% of Medicare Part A deductible
    • No coverage for Medicare Part B deductible
    • No coverage for excess Part B charges
    • 100% of Preventive Care Costs
  • Supplement Plan F
    • 100% of Medicare Part A costs
    • 100% of Medicare Part B costs
    • 100% of your first 3 pints of blood
    • 100% of Hospice Care costs
    • 100% of Skilled Nursing Facility costs
    • 100% of Medicare Part A and Part B deductible
    • 100% of excess Part B charges
    • 100% of Preventive Care Costs
  • Supplement Plan G
    • 100% of Medicare Part A costs
    • 100% of Medicare Part B costs
    • 100% of your first 3 pints of blood
    • 100% of Hospice Care costs
    • 100% of Skilled Nursing Facility costs
    • 100% of Medicare Part A deductible
    • No coverage for Medicare Part B deductible
    • 100% of excess Part B charges
    • 100% of Preventive Care Costs
  • Supplement Plan K
    • 100% of Medicare Part A costs
    • 50% of Medicare Part B costs
    • 50% of your first 3 pints of blood
    • 50% of Hospice Care costs
    • 50% of Skilled Nursing Facility costs
    • 50% of Medicare Part A deductible
    • No coverage for Medicare Part B deductible
    • No coverage for excess Part B charges
    • 100% of Preventive Care Costs
    • Out-of-Pocket Limit of $5,560 (When out-of-pocket expenses reach this amount, the plan will pay 100% of all costs until the end of the plan period.)
  • Supplement Plan L
    • 100% of Medicare Part A costs
    • 75% of Medicare Part B costs
    • 75% of your first 3 pints of blood
    • 75% of Hospice Care costs
    • 75% of Skilled Nursing Facility costs
    • 75% of Medicare Part A deductible
    • No coverage for Medicare Part B deductible
    • No coverage for excess Part B charges
    • 100% of Preventive Care Costs
    • Out-of-Pocket Limit of $2,780 (When out-of-pocket expenses reach this amount, the plan will pay 100% of all costs until the end of the plan period.)
  • Supplement Plan M
    • 100% of Medicare Part A costs
    • 100% of Medicare Part B costs
    • 100% of your first 3 pints of blood
    • 100% of Hospice Care costs
    • 100% of Skilled Nursing Facility costs
    • 50% of Medicare Part A deductible
    • No coverage for Medicare Part B deductible
    • No coverage for excess Part B charges
    • 100% of Preventive Care Costs
  • Supplement Plan N
    • 100% of Medicare Part A costs
    • 100% of Medicare Part B costs
    • 100% of your first 3 pints of blood
    • 100% of Hospice Care costs
    • 100% of Skilled Nursing Facility costs
    • 100% of Medicare Part A deductible
    • No coverage for Medicare Part B deductible
    • No coverage for excess Part B charges
    • 100% of Preventive Care Costs
  1. Medicare Part D – Individual Prescription Drug Plan Coverage

Separate prescription drug coverage through Medicare Part D is also not held to one standard and asked to operate through one singular method; the variety of how people may require, or prefer, their prescription drug coverage is flexible, especially because circumstances for why they are enrolling in the first place can affect their necessary inflection. Typically, enrollment into a Part D Prescription Drug Plan (PDP) is completed by those who are not currently receiving their drugs from another source, currently paying complete out-of-pocket expense for all their prescription drugs – this is not just specifically mentioning those without coverage at all; with your Original Medicare only, or even a Medigap policy, you won’t be provided drug assistance outside of the hospital, so you’ll likely be highly recommended a stand-alone drug plan alongside their coverage.

Most prescription drug plans can be parted into separate steps of how their coverage will operate over the course of a plan’s period; these steps define how much your coverage will do for you in said step, including the divide between what you or your plan will pay regarding your drugs. Listed below, these steps build a benefit structure that allows for several different Part D Prescription Drug Plans to be built from readjusting its portions: 

  1. Stage 1 – the Deductible Phase:
    1. Most plans will have a deductible amount necessary to be met before the plan pays anything towards your prescription drugs; this phase includes the out-of-pocket expenses you spend to reach this deductible.
  1. Stage 2 – the Initial Coverage Period:
    1. Once the deductible is met, you’ll likely be asked to pay about 25% of all your drugs up to a certain limit amount, set previously by you plan. 
  1. Stage 3 – the Donut Hole:
    1. After the limit amount is reached from the Initial Coverage Period, by costs added up between the provider and the enrollee themselves, a gap of the plan’s coverage is created called the Donut Hole. In this period, another limit amount is set that the enrollee must pay, usually with higher percentages now towards their necessary pay-in; Medicare may supply subsidy percentages to help to quickly take individuals out of the gap.
  1. Stage 4 – the Catastrophic Coverage Period:
    1. The final period – this occurs when you have paid past a certain point during your Donut Hole, in where a plan believes an enrollee may be paying far too much in out-of-pocket expenses, and so, greatly limits the costs the need to pay at all for the rest of the plan’s year. If you reach this period, the cost of your drugs will greatly reduce, reaching costs like that you’d find from a Medicaid beneficiary (between $3.35 and $8.35 for most generic and brand name drugs.)

This above listing is a Medicare Part D Prescription Drug Plan Type of its own called the “standard benefit,” or otherwise, a “defined standard (DS)” plan – it is considered the most minimum expectation offered by prescription healthcare providers. Other alternatives primarily just alter the expectation and rules of certain aspects of the outlined defined standard, such as:

  • Actuarially Equivalent Plans (AE,) for example, keep the same deductible you’d expect from your standard benefit plan, but opts to create a list of copays based on drug tier levels instead of the 25% of all drugs during an enrollee’s Initial Enrollment Period. Broken into Tiers 1, 2, 3, 4, 5, and 6, different drugs are given a type – like Generic, Brand, or Specialty – and then are priced accordingly by the tier they fall into based on this type.
  • Basic Alternative Plans (BA) are simple – they may have the cost-structure from either a Defined Standard or Actuarially Equivalent Plan, but with a lower deductible. Typically, less coverage is provided by a BA plan, as its primary objective is to be a cost-effective solution, rather than a high-level plan with a plethora of coverage.
  • Enhanced Alternative Plans (EA) are basically a counter-balance to the supply of BA Plans from a provider – these plans are generous, even more so than the Defined Standard, and usually include coverage that goes beyond the familiar (such as more drug provision during your time in the Donut Hole.)

References Used:

https://www.ehealthmedicare.com/original-medicare-articles/original-medicare/

https://www.aarp.org/health/medicare-qa-tool/what-is-original-medicare/

https://www.ehealthmedicare.com/original-medicare-articles/covered-services-medicare-part-b/

https://www.medicaremadeclear.com/choosing-plan/coverage/medicare-advantage-plans/types-of-medicare-advantage-plans

https://www.ehealthmedicare.com/medicare-advantage-articles/the-different-types-of-medicare-advantage-plans/

https://www.ehealthinsurance.com/medicare/supplement-all/compare-medicare-supplement-plans

https://boomerbenefits.com/medicare-supplemental-insurance/medigap-comparison-chart/

https://www.medicareadvocacy.org/medicare-info/medicare-part-d/

https://q1medicare.com/q1group/MedicareAdvantagePartDQA/FAQ.php?faq=What-is-meant-by-the-abbreviations–EA-BA-DS-AE-in-the-plan-benefit-type-&faq_id=407&category_id=1