Medicare vs Medicare Advantage Insurance

Medicare vs. Medicare Advantage: Understanding the Differences

Navigating health insurance can be confusing, especially when it comes to Medicare and Medicare Advantage plans. While they may sound similar, they work in very different ways. If you're approaching Medicare eligibility or helping a loved one choose the right plan, understanding these differences is essential.

A quick framing that helps many people. Traditional Medicare plus a Medigap plan tends to be the simplest path if you want broad provider choice and fewer insurance barriers. Medicare Advantage can be a good fit for some people, but it functions more like managed care with plan rules, networks, and authorizations.

What is Traditional Medicare?

Traditional Medicare is a federal health insurance program for people aged 65 and older, as well as some younger individuals with disabilities. It consists of two main parts:

• Medicare Part A: Covers hospital stays, skilled nursing facilities, hospice care, and some home health care.
• Medicare Part B: Covers doctor visits, outpatient care, medical supplies, and preventive services.

With Traditional Medicare, you can see any doctor or specialist who accepts Medicare, and you typically pay a deductible and coinsurance for services. Many people also choose to add a Medicare Supplement (Medigap) plan to help cover out-of-pocket costs and a Part D prescription drug plan for medication coverage.

With Traditional Medicare, you can see any doctor or specialist who accepts Medicare, and you typically pay a deductible and coinsurance for services. In most cases, you do not need prior authorization for Original Medicare to cover services or supplies. Many people also choose to add two additional layers:

• A Part D prescription drug plan (because Original Medicare does not include outpatient prescription coverage by default).
• A Medicare Supplement (Medigap) plan to help cover out-of-pocket costs like copayments, coinsurance, and deductibles.

Medigap vs Secondary insurance: similar goal, different rules

People often use “Medigap” and “secondary insurance” interchangeably. They are not the same thing.

Medigap (Medicare Supplement) is a standardized plan you buy from a private insurer that is specifically designed to help pay your share of out-of-pocket costs in Original Medicare, such as copayments, coinsurance, and deductibles.

Secondary insurance is a broader term that can include Medigap, but can also mean other coverage that pays after Medicare, such as:

• Retiree or employer group coverage.
• Medicaid, for people who qualify.
• Other supplemental plans that coordinate benefits with Medicare.

Why this matters. With many “secondary” plans, benefits can vary significantly by employer, contract, and year. With Medigap, benefits are standardized by plan letter, so it is easier to predict what the plan is designed to pay.

What Medigap actually covers, and what it does not

Medigap generally helps cover your share of costs for services that are covered by Original Medicare (Part A and Part B). It generally does not expand what Medicare covers. If Medicare does not cover a service, Medigap generally will not cover it either.

Also important. Even when Medicare covers a service, Medigap typically pays after you meet the Part B deductible, unless your specific Medigap plan also covers that deductible (only on grandfathered Medigap-F plans, no longer offered to new enrolees after 2020).

What is Medicare Advantage? (Medicare Replacement Plans)

Medicare Advantage (also called Medicare Part C) is different from Traditional Medicare. These plans are offered by private insurance companies approved by Medicare. When you enroll in a Medicare Advantage plan, you are no longer covered under Traditional Medicare for certain services - the private plan replaces your Medicare coverage.

Medicare Advantage plans must provide at least the same benefits as Medicare Parts A and B, but they often include extras like dental, vision, and prescription drug coverage. However, these plans have networks, meaning you may need to see specific doctors or get referrals for specialists. Costs like copays and deductibles vary depending on the plan. Many plans require authorization for services that Medicare automatically covers, and obtaining those authorizations can slow down services in some cases.

Medicare Advantage Replaces Medicare: A Critical Distinction

A common misconception is that people with Medicare Advantage plans still have Traditional Medicare for outpatient physical therapy. This is not true. Medicare Advantage plans replace your Original Medicare outpatient physical therapy benefits, meaning Medicare itself is no longer your primary insurance. Instead, your coverage is now through the private insurance company that offers your Medicare Advantage plan.

This distinction is crucial, especially when choosing healthcare providers. Some doctors and clinics do not accept some Medicare Advantage plans, so you may have fewer options for care compared to Traditional Medicare.

Example: Outpatient Physical Therapy Coverage

Let's say John, a 70-year-old retiree, needs outpatient physical therapy after a knee injury. His coverage will work differently depending on whether he has Traditional Medicare or a Medicare Advantage plan:

• If John has Traditional Medicare (Part B). Medicare generally pays 80% of the Medicare approved amount for covered outpatient therapy after he meets the Part B deductible. If he also has a Medigap plan, the Medigap plan generally helps pay some or all of John’s share of Medicare covered costs (often the 20% coinsurance, and possibly other gaps depending on the Medigap plan letter).
• If John has a Medicare Advantage plan his coverage will depend on the specific plan. He may have copays for each visit, need prior authorization before starting therapy, or be limited to certain in-network therapy providers. If his preferred physical therapist is out-of-network, he may have to switch providers or pay full price for treatment.

Understanding your coverage is essential before seeking care. An example: here are no "Caps" to physical therapy with traditional Medicare anymore. There are certain levels of benefits paid where the provider has to thoroughly document continued medical necessity, but Medicare does not have a hard limit on therapy services.

It's also critical to understand Medigap plans vs Secondary Insurances.

A Real Therapy Example:

RTM (remote therapeutic monitoring) may be payable under Original Medicare, but not under every non-Medigap plan

Some physical therapy care uses technology between visits to help patients stay on track at home. One example is Remote Therapeutic Monitoring (RTM). RTM can involve monitoring non-physiological therapy related data such as therapy adherence and therapy response, and then using that information to adjust care. It is an avenue your therapist can use to talk to you on the phone, text, communicate with your other providers, and many other aspects, which are absent from so much therapy because, frankly, PT's don't have excess non-billable time.

Original Medicare context. CMS designated RTM codes (including 98975, 98976, 98977, 98980, 98981) as reimbursable codes, and CMS has described RTM treatment management services as being provided remotely to beneficiaries in their homes by therapists, so traditional Medicare covers RTM, which means Medigap plans also cover those services.

Plan coverage reality. Even when something is payable under Original Medicare rules, non-Medigap plans can still deny, restrict, or exclude specific services depending on the plan’s coverage policies and benefit design.

A concrete example. Cigna’s coverage policy for Remote Therapeutic Monitoring states that RTM CPT codes 98975, 98976, 98977, 98978, 98980, and 98981 are not covered or reimbursable for any indication under that policy, when someone has a secondary insurance that is not a Medigap plan.

If you have a Medicare Advantage plan, or any other non-Medigap secondary coverage, do not assume these newer therapy add-on services are covered. Ask the plan in advance.

Choosing the Right Plan for You

When deciding between Traditional Medicare and Medicare Advantage, consider the following:

• Do you want the freedom to see any doctor, or are you okay with a network?
• Are you comfortable with copays and prior authorizations, or do you prefer predictable costs with a Medigap plan?
• Do you need extra benefits like dental and vision, which Medicare Advantage often includes?
• Do your providers accept traditional Medicare?
• Do you want access to certain higher touch therapy services (for example remote monitoring or between visit check-ins), and if so, will your specific plan cover them?‍

Understanding the differences between Medicare and Medicare Advantage can help you make an informed decision about your healthcare coverage. If you have questions, it is often worth speaking with a Medicare expert or insurance agent who can help you compare options using your specific medications, providers, and expected care needs.

Educational note. This article is general information, not insurance advice. Coverage details are plan-specific and can change year to year, so confirm benefits directly with your plan before making decisions.