Medicare Part D vs. Medicare Advantage

Similarities | Differences | How to choose | How to save

Medicare can be confusing to understand. You have four parts of Medicare designated with letters, and they’re called Medicare Parts A, B, C, and D. We’re going to focus on Medicare Part C and Medicare Part D.

Medicare Advantage (Part C) is an alternative way of receiving Medicare coverage that combines the benefits of Original Medicare and Medicare Part D (prescription drug coverage) into a single privately-run plan. These plans are sometimes attractive to Medicare beneficiaries because of their potential for extra benefits and often-lower costs.

Medicare Part D offers prescription drug coverage through privately-run drug plans. These optional plans provide Medicare beneficiaries with Original Medicare with prescription drug coverage.

We’ll discuss what they have in common and how they are different. Then, we’ll break down how the individual coverage types work. Finally, we’ll cover how to save money when using Medicare Part C and Medicare Part D.

What do Medicare Part D vs. Medicare Advantage have in common?

Medicare Advantage plans include the inpatient and outpatient benefits covered under Medicare Part A and Medicare Part B. 

In most cases, these private Medicare plans also include your Medicare prescription drug coverage and additional extra benefits, such as dental and vision coverage, that Original Medicare doesn’t cover. Medicare Part D, on the other hand, is stand-alone Medicare prescription drug coverage, and is only available to consumers with Original Medicare..

These two parts of Medicare have a few things in common.

• They’re contracted and administered by private insurance companies.
• They’re regulated by the Centers for Medicare & Medicaid Services.
• They can both cover prescription drugs.
• They follow the Medicare standard model for drug coverage phases.

Despite both of these parts of Medicare, including drug coverage in most cases, they are not the same. Medicare Advantage plans include hospital and medical coverage and can have drug coverage, and Medicare Part D only covers prescription drugs purchased at the pharmacy.

How do Medicare Advantage vs. Part D differ? 

As mentioned above, they have a few things in common but are quite different.

Medicare Part D plans will typically have separate costs in addition to the ones you are already paying for Parts A and B. 

Medicare Advantage plans will typically include drug coverage. In most cases, you can’t add a Part D plan to a Part C plan.

Medicare Part D plans cover prescription drugs and may cover vaccines and immunizations. Medicare Advantage plans are complete health insurance plans that cover prescription drugs and medical and hospital care.

Enrollment in a Medicare Advantage plan requires you to continue participation in the Medicare program, and this means you must have active Medicare Part A and Medicare Part B coverage. In addition to any additional coverage, you must continue to pay your Medicare Part B monthly premium.

Enrollment in Medicare Part D only requires that you are enrolled in Medicare Part A or B, which means you could have only Part A or Part B and still be able to enroll. 

How to choose between Medicare Part D vs. Medicare Part C

There isn’t a right, or best plan since everyone has different needs, wants, and concerns. However, there may be a significant amount to consider when deciding which route is the best for you.

Most beneficiaries will choose one of two directions. Either they decide to enroll in a Medicare Advantage plan or stay with their Original Medicare enrollment and a stand-alone Part D drug plan. Some beneficiaries may have secondary coverage, such as Medicaid, which will impact their decision.

A few factors that you can consider are:

• Am I healthy?
• How often do I go to a health care provider?
• How many prescription drugs do I take?
• Are your prescriptions brand names or generics?
• Do you travel?
• Are you okay with staying in-network and needing referrals for a specialist?

If you’re not in a situation where you can enroll in a Medicare Supplement plan for healthcare and a Part D plan for prescriptions, then a Medicare Advantage plan could be a good option for complete Medicare insurance.

The prescription drug coverage under both Part C and Part D is divided into four phases outlined by the Centers for Medicare & Medicaid Services: 

• Deductible Phase: You pay the total amount of the prescription until the deductible is met.
• Initial Coverage Phase: Your plan will help you pay for covered prescription drugs. The plan pays some cost and you pay a copay or coinsurance.
• Coverage Gap Phase: The coverage gap is also called the donut hole. In this phase, you’ll be responsible for paying 25% of the cost of the drug, and some plans will have coverage for specific prescriptions during this phase.
• Catastrophic Coverage Phase: The catastrophic phase is where you’ll either pay 5% of the cost for each of your drugs or $4.15 for generics and $10.35 for brand name drugs. You will be charged whichever is greater between the 5% and the standard copay. 

In addition to the coverage phases, your drug costs are determined by the drug tier or category assigned.

• Tier 1 – Preferred Generics: These drugs typically have the lowest copays.
• Tier 2 – non-Preferred Generics: These prescriptions will be the second lowest cost.
• Tier 3 – Preferred Brand: Tier 3 drugs are common brand name drugs.
• Tier 4 – non-Preferred Brand: Tier 4 prescriptions typically are high-cost brand name drugs.
• Tier 5 – Specialty Tier: Specialty drugs are typically set as a coinsurance amount. These are uncommon drugs that sometimes involve compounding.

Part C coverage 

All Medicare Advantage plans, except for Private Fee-for-Service (PFFS) plans, require prescription drug coverage. The plans must cover Medicare benefits at least as well as Original Medicare and are required to limit out-of-pocket costs for the year.

In addition to having comprehensive coverage combined into one low-cost plan, these plans also boast additional plan extras that Original Medicare doesn’t cover. These plan extras may include:

• Dental coverage
• Dentures
• Eyeglasses
• Routine Eye Exams
• Gym Memberships
• Health Food allowances
• Over-the-counter allowances to buy items such as toothpaste and aspirin
• Utility bill assistance

Not all plans will cover all of these benefits, thus if there is a particular service needed it is important to consult a licensed insurance agent. They can go over the benefits and plan extras available to help make an informed decision about which plan is best for your needs.

Since each plan is different, you can expect copays, deductibles, and formularies to differ from plan to plan. But they all follow the Medicare standard drug plan model, and Medicare Advantage plans come in several options.

The disadvantage to Medicare Advantage plans is that since private insurance companies run them, the plan administrator, not Medicare, approves and denies Medicare care referrals and procedures. In addition, many Medicare Advantage plans are network- based.

One advantage of Medicare Part C are the out-of-pocket maximums which limit individual costs. Original Medicare does not have a cap on what you could spend on medical services throughout a year.

Another benefit is that there isn’t a need to enroll and pay for additional insurance coverage to ensure all your needs are covered. Medicare Advantage plans combine parts A, B and D of Medicare into one (Part C) and may give you additional coverage for services not covered by Medicare.

Part D coverage 

Medicare Part D prescription drug coverage covers prescription drugs as well as some vaccines and immunizations, thus health coverage will be provided by Original Medicare. You can also add a Medigap plan (Medicare Supplement plan) to help cover healthcare costs. 

Some beneficiaries don’t take many prescriptions. In this situation, the question arises whether or not there is a need to enroll in drug coverage because it is not required. However, you may be subject to the Part D late enrollment penalty if you decide you need to enroll later unless you have creditable coverage or qualify for Extra Help. 

It’s always wise to have prescription drug coverage. Some have meager costs, and enrolling in a Part D plan will help avoid the penalty. The penalty doesn’t reset for most beneficiaries, unless you have creditable coverage or Extra Help, and continues to increase as long as you qualify for Part D coverage but choose not to enroll.

How to save with Medicare Part D vs. Medicare Advantage

Saving money is on the mind of every Medicare beneficiary. Fortunately, some programs allow you to save money and receive help with your Medicare costs.

The Low-Income Subsidy (LIS) program, better known as Extra Help, is federally funded and will help cover costs related to your prescription drugs. The Extra Help program helps pay for premiums, copays, deductibles, and coinsurance.

The Senior Savings Model is a new program to help insulin-dependent Medicare beneficiaries. This program will help Medicare enrollees that have diabetes. This model provides certain insulins at a copay of no more than $35 – coverage that will extend through the coverage gap phase. Not all insulin drug companies are participating, so if you are paying high costs for your insulin, consult your health care provider to see if you can change to a different insulin company that participates in the program.

No matter which type of Medicare prescription drug coverage you choose, you’re still subject to plan formularies and the coverage gap unless you have Extra Help. You may run into situations where you are paying the total price for a given drug or find a drug that isn’t covered. 

Fortunately, there is help for these situations. You may qualify for a Medicare Savings Program (MSP). MSPs are run by the state and help beneficiaries pay for Part A and Part B premiums. If you are looking for help with your prescription drug costs, you can use a free discount card from SingleCare. The discount card is used in place of your Part D coverage and may get you up to 80% off your prescription drugs. You can get your free discount card via email, text, or download.