Because of the high cost of health care in the United States, more and more people are purchasing health insurance every year. And those who are eligible for Medicare insurance are making sure they have the best coverage they can get for their money.
In general, health insurance helps beneficiaries pay for medical expenses like preventive care services, doctor’s visits, lab work, medical equipment, emergency care, hospital care, skilled nursing care, hospice, prescription drugs, and more.
Health insurance policies are sold by private insurance companies. In the case of Original Medicare insurance, the provider is the U.S. government. For Medicare Advantage plans, providers are private insurance companies that are Medicare-affiliated.
If you’re enrolled in a Medicare Advantage plan, you will have the same benefits as Original Medicare, in addition to extra benefits. You may pay your insurance provider a monthly premium for your policy. You also pay a deductible (in most cases), copayments, or coinsurances, and plans have an annual out-of-pocket maximum or a limit on how much you have to pay for your health care.
Original Medicare or Medicare Advantage?
To get the Medicare insurance plan that best suits your health care needs and your budget, you first shop around to find an insurance provider and plan that gives you the coverage you need.
The Medicare Advantage provider may charge you a monthly premium (in addition to your Part B premium), but costs may depend on the type of plan and the amount of coverage it includes. You pay this premium, or fee, every month to have access to the health care coverage you’ve chosen.
Most plans also have a deductible which is a set amount of money you must pay out-of-pocket for your health care services before the insurance provider begins paying its share of the costs.
After you’ve met your deductible, your insurance provider pays its share of any health care costs you have. The amount your provider pays as its share depends on the plan.
In the case of Original Medicare, this amount covered is usually 80 percent of the Medicare-approved health services you get. If your provider pays 80 percent of the costs, you pay the remaining 20 percent of the final approved amount as a copayment or coinsurance.
If you have an MA plan with an annual out-of-pocket maximum, this means that once you’ve paid that amount of money for your health care, the insurance plan takes over by paying 100 percent of health care costs for the rest of the calendar year. However, even if you have reached your maximum, you must continue paying your monthly premium.
How does Medicare work?
As mentioned above, if you have Medicare benefits through Original Medicare Part A (inpatient hospital insurance) and Part B (outpatient medical insurance), your provider is the U.S. government.
Medicare Advantage plans, on the other hand, are provided by private insurance companies that contract with Medicare to provide your Part A and Part B benefits. MA plans are required to provide at least the same coverage as Original Medicare, but most plans offer additional benefits, such as prescription drug coverage, vision and dental care, and hearing exam coverage.
Original Medicare does not have an annual maximum out-of-pocket limit. This means that there is no limit to how much you can spend during the calendar year for your health care. MA plans have an annual spending cap, so once you’ve paid that amount, you will not have to pay for any more services for the remainder of the year.
Medicare Part A
Most people qualify for premium-free Part A based on taxes they paid while they worked, so they don’t have to pay a monthly premium.
Part A has a deductible of $1,484.00 (2021) which applies to benefit periods. For every benefit period that you use your Part A benefits, you must cover the deductible before Medicare begins paying your health care costs.
Medicare Part A has $0 coinsurance for the first 60 days of care as an inpatient. From days 61 to 90 the coinsurance costs are $371.00 per day, and beyond day 90 the cost goes up to $742.00 per day.
Medicare Part B
The standard monthly premium for Part B is $148.50 (2021).
The Part B deductible for 2021 is $203.00 per year (benefit periods don’t apply for Part B).
Part B coinsurance is typically 20 percent of the final approved cost of the services or supplies you receive.
Medicare Advantage (Part C)
Medicare Advantage plans must provide all the same benefits as Original Medicare Parts A and B, and have the option to include additional coverage like prescription drugs. What you pay for your monthly premium, deductible, and coinsurance depends on what the insurance provider charges for the plan you have.
Depending on the type of Part C plan you purchase, your provider may require that you use health care providers and medical suppliers that are in the plan’s network in order to get your benefits. If you go outside the network, you may have to pay 100 percent of the costs.