If your 65th birthday is just around the corner, you might be thinking about what choices you have when it comes to choosing health care insurance coverage. Medicare, the federally funded health insurance program in the United States, provides health care coverage for people who are 65 and above and for those who are younger than 65 with qualifying disabilities or end-stage renal disease.
When you’re eligible to sign up for Medicare, here’s what you need to consider.
Original Medicare or Medicare Advantage?
Choosing between Original Medicare and Medicare Advantage coverage is one of the decisions you’ll have to make regarding your Medicare insurance. The option that is right for you depends on your personal situation and coverage preferences.
Original Medicare Parts A and B
Through Original Medicare, the U.S. federal government pays its share of the cost for your health care services directly to the service providers. Enrollees are free to use any health care providers, suppliers, and medical facilities anywhere in the country without prior authorization as long as they accept Medicare assignment and are currently participating in Medicare.
Most Medicare recipients qualify for premium-free Part A, so there isn’t a monthly fee, but Part A has a deductible for every benefit period ($1556.00 in 2022). Part A also comes with coinsurance which is a specific amount based on the number of days you spend as an inpatient either in a hospital or in a skilled nursing facility. Original Medicare Part B has a monthly premium, deductible, and coinsurance. Part B benefits cover outpatient health care services and supplies that are medically necessary.
Signing up for Medicare Supplement (Medigap)
Original Medicare covers many medical expenses, but there is no annual out-of-pocket cap for expenses. If you require frequent care, your costs can add up. To help fill in some of the gaps in Original Medicare coverage, many recipients choose to supplement their Original Medicare benefits by buying a Medicare Supplement, or Medigap, plan. Once you are 65 years old and enroll in Part B, you will have a 6-month Medigap Initial Enrollment Period that will give you the chance to buy any Medigap plan sold in your state. After this period is over, you will likely be subject to medical underwriting and may be charged more or refused coverage based on pre-existing conditions.
It’s important to note that you can’t have a Medigap plan if you enroll in a Medicare Advantage plan.
Medicare Advantage (Part C)
As an alternative to Original Medicare Parts A and B, Medicare Advantage (Part C) plans cover all the same health care services and supplies that Original Medicare does. Medicare Advantage plans are sold by private insurance companies that work with Medicare. These providers have the option to include additional benefits such as dental, vision, and hearing care, and many Medicare Advantage plans also include prescription drug coverage all in one plan.
Unlike Original Medicare, some MA plans require that enrollees use a network of doctors and providers and get referrals from their primary care physicians to see specialists. If beneficiaries decide to use health care providers outside the plan’s network, they may pay more for their care.
There are many different types of Medicare Advantage plans available, so you should examine what each plan in your area offers, what the network restrictions are, and what your out-of-pocket costs will be before making a final decision.
Choosing prescription drug coverage
Because Medicare Parts A and B don’t cover prescription drugs that are self-administered, you may need additional coverage. If you enroll in Original Medicare, you can also purchase a stand-alone Medicare Part D plan from a private insurance company. Or, you can sign up for a Medicare Advantage plan that includes prescription drug coverage. Each plan has its own costs, formulary (list of covered drugs), deductibles, and coinsurance amounts. You should examine all your options, and compare costs and coverage before choosing to enroll.
Compare plans before enrolling
Before enrolling, review all of the options available in your area and compare plans. Online comparison tools are free and easy to use, and with the help of a licensed sales agent, you can find a plan that’s right for you.