Many folks nearing age 65 are still working and covered by an employer plan, so the notion of starting from scratch with Medicare may seem intimidating. At first glance, Medicare can appear to be an alphabet soup. There’s Original Medicare Parts A and B, Medicare Advantage Part C, Part D for prescription drugs and Medicare Supplement plans A-N. There’s also the Medicare Supplement insurance policy, which can help cover certain out-of-pocket costs (like deductibles and copays) for Original Medicare plans.
Whew! That’s a lot to consider. We’re here to break it down for you into manageable parts.
Tip 1: Know your Medicare options
In a nutshell, you can choose Original Medicare or a Medicare Advantage plan. This chart offers a helpful overview of the differences between them.
Original Medicare vs.Medicare Advantage
Select 2 or more plans to compare
What it is
- Administered by the federal government
- Includes Part A (hospital insurance) and Part B (medical insurance) benefits
What it covers
- Administered by private insurance companies, such as Humana
- Called Part C
- Includes Part A (hospital insurance) and Part B (medical insurance) benefits and additional features and benefits
- Hospital and doctor visits
Maximum out-of-pocket cost
- Hospital and doctor visits
- Many plans also offer coverage for prescription drugs and/or dental, vision and hearing care services
- No guaranteed limit to maximum out-of-pocket costs
Doctors and hospitals
- Guaranteed maximum yearly limit on out of pocket costs for covered medical services
- Once that limit is reached, there is no charge for covered services for the rest of the plan year
- Freedom to visit any doctor or hospital in the U.S. that accepts Medicare patients
- Emergency care covered at any facility
- Cost of services will be generally lower at network doctors and hospitals
- Typically there is no monthly premium for Medicare Part A for people who paid Medicare taxes while working
- $148.50 or higher 2021 Part B premium, depending on your income
Deductibles and coinsurance
- Many plans offer a low or $0 monthly plan premium
- Part C members must continue to pay the Part B monthly premium*
- The 2021 Part A deductible for inpatient hospital coverage is $1,484.00.
- The 2021 annual deductible for Part B is $203.00. After the deductible is met, patients typically pay 20% of the Medicare-approved amount for most doctor services. These services include outpatient therapy, most inpatient doctor services and durable medical equipment.
Prescription drug coverage
- These will vary, depending on the location, Part C plan selected and the insurance provider
- Each plan usually has a fixed deductible and/or coinsurance amount
- Cost-share will typically be higher for visiting non-network providers
- Original Medicare does not include prescription drug coverage
Plan choice flexibility
- Most Part C plans include coverage for prescription drugs
- Option to change the plan each year during the Annual Election Period, which runs from Oct. 15–Dec. 7
*The Medicare Part B premium in 2021 is $148.50 per month or higher, depending on your income.
Keep in mind
When reviewing your options and comparing plans, here are some important things to look out for:
How much will you pay for premiums, deductibles, coinsurance and copayments?
Doctors and hospitals
Does the plan have a network? Do the healthcare providers you use accept the plan? Are your doctors in the plan’s network?
Does the plan include prescription drug coverage or coverage for vision, dental and hearing care? Are these benefits important to you?
Your health history
How often have you needed care over the past few years? Are you fairly healthy or do you have a chronic condition that requires ongoing care? Do you anticipate that your healthcare needs will increase or stay about the same in the near future?
Tip 2: Use this chart to clarify your choices
Knowing what Original Medicare and Medicare Advantage plans cover is step 1. Step 2 is thinking about your own circumstances and what your specific personal needs might be.
As you can see from the chart, if you opt for Original Medicare, you may want to purchase a stand-alone prescription drug plan—called Medicare Part D—to cover prescription drugs. Part D has its own premiums, copays, coinsurance and deductibles separate from those for Original Medicare.
Most Medicare Advantage plans include prescription drug coverage.
On the other hand, Original Medicare may be your best choice if you travel a lot or have a second home, since there are no network restrictions.
Speaking of networks, Medicare Advantage provider networks have come a long way since they were introduced more than 30 years ago, but it’s a good idea to see if your doctor is in a plan’s network before committing.
Another factor to consider: Many Medicare Advantage plans offer coverage for vision, dental and hearing services—none of which are covered by Original Medicare.
Finally, consider whether a Medicare Supplement plan (or Medigap plan) has a place in your Medicare decision.
These plans are designed to help pay costs that Medicare Parts A and B don’t, including copays, deductibles and coinsurance. You can opt for Medicare, as well as a Medicare Supplement plan and a separate Part D plan, but you can't combine a Medicare Supplement plan with a Medicare Advantage plan.
If you feel that Medicare Advantage is a better fit for your needs and you’re eligible to enroll, the next step is choosing a plan.
Here are some things you’ll want to consider when comparing Medicare Advantage plans. As you’ll see once you begin shopping, the following information is easy to find on our enrollment pages:
- Which doctors and healthcare facilities are included in the plan’s network
- List of covered services
- Premium costs
- Copays and coinsurance
- Deductible amount
- Annual out-of-pocket maximum and coverage limits, if any
Relax! Choosing a Medicare plan is not a lifelong commitment. You can review your plan choices each year during the fall
Annual Election Period (Oct. 15 through Dec. 7), so if your needs change, your plan can too.