Medicare health insurance coverage, starting at age 65 for most Americans, is a wonderful thing -- but it's not simple. There's no single plan that serves everyone. Instead, you need to learn about Medicare, and then decide which Medicare plan is best for you. Here's a brief guide to your options.
Original Medicare vs. Medicare Advantage
Medicare enrollees get to choose between original Medicare, featuring parts A and B, and Medicare Advantage plans, which are sometimes referred to as Part C.
With traditional (or "original") Medicare, Part A covers inpatient hospital stays, hospice, and skilled-nursing facility stays, while Part B covers outpatient services, such as preventative care, laboratory tests, ambulance services, medical equipment, and necessary doctor services.
Relatively new on the scene, Medicare Advantage plans are administered by private insurers, but are regulated by the U.S. government. Each must offer at least as much coverage as original Medicare -- i.e., the benefits you'll find in Part A and Part B. Many go beyond that, though, offering broader coverage, such as vision care, dental care, and/or prescription-drug coverage.
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Which Medicare plan is best for you, and why should you choose one over the other? Original Medicare is accepted by the broadest swath of doctors, and you can see them without referrals. That's pretty good, and even means you can find and see a doctor anywhere in the U.S., which is handy if you're a traveling retiree.
Medicare Advantage plans, often in the format of Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs), feature smaller networks of doctors, or steeper costs for seeing out-of-network physicians, and are typically limited to your local region. (Some do, on a limited basis, cover healthcare outside the U.S., unlike original Medicare.)
While original Medicare will often have you footing 20% of many bills, your out-of-pocket costs in a Medicare Advantage plan are capped. (The average out-of-pocket cap was recently $5,223, but many plans feature limits below $3,000, and the limit in 2016 was $6,700.)
Once you hit the limit, the plan will pay all further costs. Better still, many plans charge the enrollee nothing in premiums. (The Medicare program pays the insurance company offering it a set sum per enrollee, and if the insurer thinks it can make a profit without charging its customers anything, it can do so.)
Medicare Advantage plans also offer relatively comprehensive coverage in a single policy, so that you don't have to fill gaps with additional coverage. Let's tackle that topic now.
Prescription drug coverage
With original Medicare, along with Part A and Part B, many enrollees opt for Part D coverage, as well, which covers prescription drugs. Just as Medicare Advantage plans are offered by private companies, so are Part D prescription drug plans.
Where you live will determine which plans are available to you. Note that many Medicare Advantage plans include drug coverage. If yours does, you won't need to buy Part D coverage.
At the Medicare website, you can look up which plans are available to you. The site will ask about the medications you take, and which pharmacies you use, and will then show you your options. It will also break out your costs for each option, including premiums, deductibles, and copays.
Supplemental coverage
Remember how Medicare Advantage plans often include coverage that original Medicare doesn't, and that they limit your out-of-pocket costs? Well, if you're opting for original Medicare, you can fill in some gaps in your coverage, and can limit some of your expense exposure with a Medicare Supplemental Insurance ("Medigap") policy.
These, too, are offered by private companies, and they cover expenses such as your copayments, coinsurance, deductibles, and perhaps even healthcare services received outside the U.S. and/or skilled nursing facility care. They won't, however, typically include vision care, eyeglasses, dental care, hearing aids, or long-term care.
Which Medicare plan is best for you?
As you can probably tell by now, deciding which Medicare plan is best for you isn't a simple matter. Still, it's not rocket science.
Spend some time at the Medicare.gov website reading up on your options. Learn which specific plans are available to you, what they cover and don't cover, and what they cost. Look into which doctors and hospitals are in-network for any Medicare Advantage plan you're considering.
Know, too, that choosing between original Medicare and a Medicare Advantage plan isn't a permanent decision. At least once a year you'll be able to switch between them during the open-enrollment period.
