If you are new to Medicare, you might be overwhelmed with the many choices available. Medicare has several parts, and each part covers different expenses. It's hard to make sense of the alphabet soup of Medicare Part A, Part B, Part C, and Part D, and all the other terms, like Original Medicare, Medicare Advantage, and Medicare Supplemental Insurance, also called Medigap. With so many options, how do you choose a Medicare plan?
Your Decisions in a Nutshell
You must choose among three broad categories of Medicare plans and then fine-tune your selections within some groups. The three significant decisions are:
- Choose between Original Medicare and a Medicare Advantage Plan.
- Decide if you want coverage for prescription drugs.
- Decide about supplemental coverage.
Which is Better – Original Medicare or a Medicare Advantage Plan?
The answer to this question will depend on several factors, like the state of your health, your income, and the coverage you want.
- Original Medicare = Part A (hospital and inpatient coverage) + Part B (doctor and outpatient services coverage). You must go to a doctor, hospital, or another healthcare provider that accepts Medicare. There is usually no premium for Part A. The standard Part B premium in 2018 is $134, but the amount is income-based. You must generally pay a deductible and co-insurance, when you use Part A or Part B for medical services. Original Medicare does not provide coverage for routine dental, vision, or hearing services.
- Medicare Advantage Plans = Part A + Part B + additional services like dental, vision, and hearing coverage, depending on the plan. MA plans often have copays and deductibles. Because these plans have a cap on your annual out-of-pocket costs, your portion of the cost is often lower than with Original Medicare if you receive healthcare services. People usually pay their Part B premium, plus an additional amount for the Medicare Advantage (MA) plan. MA plans are often HMOs or PPOs, managed by private insurance companies with Medicare’s approval. You must go to doctors, hospitals, or other healthcare providers in the plan’s network.
Prescription Drug Coverage
Original Medicare does not cover prescription drugs. Therefore, if you want this coverage, besides your Part A and Part B coverage, you must buy a Part D plan. You have several drug plan options, most of which come with a monthly premium.
If you opted to buy a Medicare Advantage (MA) plan, instead of going with Original Medicare, you might not need to buy a Part D plan. Many MA plans include prescription drug coverage. You must check your policy for the specific coverage details.
You might already have prescription drug coverage through non-Medicare sources, such as your employer or union. If you are on active duty with the military or are a veteran, you might have drug coverage.
Is Supplemental Coverage Worth the Money?
It depends on the facts of your situation. Private companies offer Medigap coverage that helps to pay some costs of copayments, deductibles, and coinsurance for people with Original Medicare. If you bought a Medicare Advantage plan, you cannot get Medigap coverage, because your MA plan already provides help with your out-of-pocket costs.
An elder law attorney in your area can help you with your retirement questions, including Medicare issues. This article discusses the general law, and the regulations in your state might be different.
Centers for Medicare & Medicaid Services. “Your Medicare coverage choices.” (accessed June 14, 2018) https://www.medicare.gov/sign-up-change-plans/decide-how-to-get-medicare/your-medicare-coverage-choices.html