The Difference Between Traditional Medicare and Medicare Advantage
- When turning 65, you find yourself overwhelmed with information
- It can all be very confusing
- Traditional Medicare is your “red, white, and blue” card and is your primary insurer
- Most seniors get a supplement if they have traditional Medicare
- They will typically get a separate drug plan
- Medicare Advantage is when an insurance company has a contract with Medicare
- Medicare pays the insurance company as the primary and sole insurance company
- This allows insurance companies to offer zero premium Medicare plans
- The only downside is that you will typically be assigned to a network
For help exploring these choices, see our Medicare planning services and Medicare planning guide. You may also want to read about dental, vision and hearing coverage questions.
See the video transcript below for your convenience.
Maria
So, John, I don’t know if you get this question a lot, but it’s something that I wonder about. What is the difference between traditional Medicare and Medicare Advantage?
John
Yeah, you know, we do get that a lot. All the time. I think the reason is when someone’s aging into Medicare and they’re turning 65, they just get overwhelmed with things. I mean, it starts 6 months prior and they get all types of material. AARP, ConnecticutCare, UnitedHealthcare, whatever it is, and they get very confused.
Maria
Sure.
John
They get very confused because it is overwhelming. Traditional Medicare is where you have your red, white, and blue card as your primary insurer. But because there’s deductibles and there’s copays, most people would then go out and get a supplement, such as AARP or Blue Cross Blue Shield. And then most will get a separate drug plan. So in traditional Medicare, you actually have 3 separate cards that you would show.
Maria
OK
John
There are advantages to traditional Medicare. There’s no network. As long as the doctors are in the United States, you can go to any doctor, any hospital in the United States. There’s very little copays in most of the plans, but there is a much higher premium. Medicare Advantage works a little differently. It was actually developed, I believe, we’re coming up on 30 years, and it has a contract, the insurance company, with
Medicare. So Medicare pays a fee to the insurance company, and they are now the primary and sole insurer for the client.
Maria
Okay.
John
So instead of over on traditional where you have 3 cards, over here you just have 1 card, regardless which company. The big advantage to Medicare Advantage is because you receive— the insurance company receives money from Medicare, they’re able to offer plans at a zero premium.
Maria
Oh!
John
And you, I know, a lot of times people come to me and they say, yeah, zero premium, it’d be nice if we could get that, right?
Maria
No kidding.
John
And a lot of times they come and say, John, I don’t understand, how can they offer a zero premium? Well, that’s how. They have a contract with the federal government and they receive money from that. Got it. Some of the things you have to be careful of is there’s a network, so make sure your doctors and hospitals are part of it. And some plans do have some smaller copays, some plans do have higher copays, some require referrals. So really what’s important is that you sit down with someone who been working in both fields for a long time, and hopefully they can give you the advice.
Maria
So that’s where you would come in and explain to them the benefits of what to do?
John
Yeah, absolutely. Okay. Absolutely.
Maria
Absolutely. Very good.
