Traditional Medicare or Medicare Advantage? Here's what you should know

The Medicare Advantage and Prescription Drug Plan Annual Election Period, or AEP, which ends Dec. 7, is a yearly opportunity for those eligible for Medicare to review their current plan, and join, switch or drop a Medicare Advantage plan.

Traditional Medicare or Medicare Advantage?

New Jersey seniors 65 and older will need to make their annual decision beginning Saturday, when Medicare's open enrollment period begins.

Their choice: Stick with traditional Medicare and see any health provider; or opt for Medicare Advantage, choose from the plan's network, and potentially save money.

"There are a number of trade-offs for people to weigh," said Gretchen Jacobson, vice president of Medicare for the Commonwealth Fund, a New York-based health research group. "It really depends upon their health needs and their budget."

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Open enrollment lasts until Dec. 7, giving upward of 1.6 million seniors in the Garden State a chance to select a health insurance plan for 2023. Seniors, trying to keep up with inflation that has been hovering at a 40-year high, would be wise to shop, experts said.

In New Jersey, they have been slow to embrace Medicare Advantage in which private insurers − and now, health providers themselves − are paid by the federal government to administer the plans. But the private plans are making inroads. In New Jersey, 41% of seniors were covered by Medicare Advantage in 2022, up from 32% in 2020, but lower than the national rate of 48%.

Seniors inundated with commercials from insurers urging them to call 800 numbers make for a confusing time, said Toby Stark of Stark Associates Insurance Agency in Tinton Falls.

"I would not be in a hurry to call an 800 number to get the benefits that you deserve," he said. "You might be steered down a path in which you don't want to go."

Here are five things to know:

How does traditional Medicare work?

The program includes three parts. Part A covers inpatient hospital care; Part B covers routine doctors' visits and outpatient services; and Part D covers prescription drugs.

The plan comes with benefits and drawbacks. Seniors have relatively modest premiums and out-of-pocket costs, and they don't need to worry if their provider is in a network; they can see anyone. But the plan doesn't cover dental, eye care or hearing aids.

What changes are in store this year?

The deductible for Part A will be $1,600, up from $1,556. But the plan also comes with a rarity: The deductible for Part B will be $226, down from $233. And the standard premium for Part B will be $164.90 a month, down from $170.10 a month. (Individuals making more than $97,000 a year and couples making more than $194,000 a year pay progressively more).

One reason for the premium reduction: The program in 2022 spent less on Aduhelm, an Alzheimer's drug whose efficacy is unclear, than it expected.

If I choose traditional Medicare am I home free?

Not entirely. Medicare Part B only covers 80% of the visit, meaning patients could be on the hook for steep out-of- pocket costs. And unlike private plans, there is no cap, Stark says.

It means consumers choosing traditional Medicare should also buy a supplemental insurance plan, known as Medigap. Premiums for a 70-year-old woman who doesn't smoke, for example, range from $124 a month to $273 a month.

Seniors can buy a supplemental policy any time, not just during open enrollment. But if they are switching from a Medicare Advantage plan, they could be denied Medigap coverage because of a pre-existing condition, experts said.

Are my prescription drugs covered?

With traditional Medicare, seniors need to buy a separate prescription drug plan known as Part D.

The average standard premium for 2023 will be $31.50 a month, down from $32.08 in 2022, along with deductibles of no more than $505, CMS said.

The plans also have what's known as a donut hole. Once seniors and their plan spend $4,660, seniors will be on the hook to pay out of pocket, although usually at a discounted rate. Catastrophic coverage kicks in at $7,400.

As part of the Inflation Reduction Act passed this year, Congress capped insulin costs beginning in 2023 at $35 for a 30-day supply. Other changes won't take effect until later. For example, insurers can't increase Part D premiums by more than 6% a year beginning in 2024. And annual out-of-pocket costs will be capped at $2,000 beginning in 2025.

Should I choose Medicare Advantage instead?

New Jersey seniors can select from upwards of 40 private plans.

CVS, which owns Aetna; and competitors UnitedHealthcare, and Clover have about 75% of the market in New Jersey. Braven, a health insurance plan started in 2021 by Horizon Blue Cross Blue Shield of New Jersey, RWJBarnabas Health and Hackensack Meridian Health, is trying to make inroads, too.

Many of the plans tout a $0 premium, although that is a bit confusing. Seniors still pay the Medicare Part B premium. And like traditional Medicare, the Advantage plans have pluses and minuses, experts said.

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The plans, for example, can include prescription drug coverage, dental visits, eye care and gym memberships. Some have no deductible. They all have out-of-pocket limits.

But the plans also have provider networks, so seniors should make sure their doctor is included before signing up, experts said.

The carriers also have been graded on a star system by CMS to give consumers an idea of their quality. Seniors can find more information at

Michael L. Diamond is a business reporter who has been writing about the New Jersey economy and health care industry for more than 20 years. He can be reached at

This article originally appeared on Asbury Park Press: Traditional Medicare or Medicare Advantage? Here's what you should know