If you have plans to join a Medicare plan this year, you may be wondering which is the best.
Although there are several Medicare plan options to choose from, the best plan for you will depend on your medical and financial situation. Luckily, you can compare the pros and cons of each Medicare offer to find a plan that works for you.
What is Medicare?
Medicare is a government-funded insurance option available to people age 65 and older as well as people receiving disability benefits. When you sign up for Medicare, you can choose from a variety of coverage options.
Medicare Part A
Part A covers hospital services, including emergency room visits, inpatient care, and outpatient services. It also covers home health care visits, short-term stays in a nursing facility, and hospice care.
Medicare Part B
Part B covers general medical services, including preventive, diagnostic, and treatment services for medical conditions. It also covers costs for medical transportation.
Medicare Part C (Medicare Advantage)
Private insurance companies offer Part C, also known as Medicare Advantage. Covers Part A, Part B, prescription drugs, and additional health care services like dental and vision. You must enroll in Medicare Parts A and B to enroll in Part C.
Medicare Part D
Part D helps cover prescription drug costs and is used as a supplement to traditional Medicare.
Medigap helps cover additional medical costs and is used as a supplement to traditional Medicare.
Compare your options
Finding the best Medicare plan involves choosing a plan that meets all of your medical and financial needs.
Traditional Medicare, or Original Medicare, consists of Medicare Parts A and B. For many Americans, this covers most necessary medical expenses. However, traditional Medicare does not cover prescription drugs, vision, dental or other services.
Advantages of Traditional Medicare
- Economic. Most Americans do not have to pay a monthly premium for Part A. Also, the monthly premium for Medicare Part B starts at $135.50. If you receive payments from Social Security, your monthly Medicare costs may be automatically deducted.
- Freedom to choose providers. With Original Medicare, you can go to any provider that accepts Medicare, including specialists. This means you can continue to see your favorite health care providers after you enroll.
- Coverage throughout the country. Original Medicare is accepted throughout the United States. This can be especially beneficial for people who travel frequently.
Disadvantages of Traditional Medicare
- Lack of additional coverage. Original Medicare only covers hospital and doctor services. This can cause gaps in coverage for services like vision, dental, and more.
- No out-of-pocket maximum. Traditional Medicare has no annual maximum out-of-pocket cost. If you have frequent medical costs, this can add up quickly.
About 31% of people enrolled in Medicare have a Medicare Advantage plan. Although most Advantage plans may cost more, they can also help you save money in the long run. There are other factors to consider when you’re deciding to enroll in Medicare Advantage.
Advantages of Medicare Advantage
- Economic. Medicare Advantage can help you save money. Research suggests that people who join Advantage plans may save more money on certain health care services. Also, all Part C plans have an out-of-pocket maximum.
- Variety of plans. There are approximately five types of Advantage plan structures you can choose from, including HMOs, PPOs, PFFS, SNPs, and MSAs. Each of these has its own advantages and disadvantages.
- Coordinated care. If you’re enrolled in a Medicare Advantage plan, you’ll likely have the benefit of coordinated care from in-network providers.
Disadvantages of Medicare Advantage
- Additional upfront costs. Unlike Original Medicare, an Advantage plan’s additional costs include in-network, out-of-network, and prescription drug deductibles, copays, and coinsurance.
- Provider Limitations. Most Medicare Advantage plans are either HMOs or PPOs, and both have some provider limitations. Other plan offerings may also have additional provider limitations.
- State-specific coverage. Medicare Advantage plans cover you within the state in which you signed up, usually the state where you live. This means that if you travel, your out-of-state medical expenses may not be covered.
Medicare Part D
Part D offers additional prescription drug coverage for any drug not included under Original Medicare. A Medicare Advantage plan can replace Part D. If you don’t want Medicare Advantage, Part D is a wonderful alternative.
Advantages of Medicare Part D
Standardized coverage. When you join a Part D plan, each plan must guarantee a certain amount of coverage defined by Medicare. No matter how much the cost of your medications, you can rest assured that your plan will cover the specified amount.
Disadvantages of Medicare Part D
- Different drug forms. Prescription drugs covered under Medicare Part D vary by plan. This means that you will need to find a plan that specifically covers your medications. In some cases, you will have to compromise.
- Coverage rules. There are some restrictions for prescription drugs under the Part D coverage rules. For example, some drugs require prior authorization, which can be inconvenient if you need that drug right away.
Medigap is a private supplemental insurance option that can help pay Medicare costs like deductibles, copays, and coinsurance.
Medigap is not necessarily an alternative to Medicare Advantage, but rather an affordable alternative for people who choose not to enroll in Medicare Advantage.
- Financial coverage. Medigap is a good supplemental option for anyone who needs additional coverage for medical expenses. Medigap begins to cover the extra costs after Medicare pays its share.
- Coverage outside the country. If you add a Medigap policy to your Medicare plan, you’re also covered for services outside the country. This is beneficial for anyone who enjoys traveling outside of the United States.
Disadvantages of Medigap
- Individual coverage. Medigap is a single-user policy, so your spouse will not be covered. If you and your spouse require supplemental insurance, you will need to enroll in separate Medigap plans.
- No additional health care benefits. Medigap does not offer additional coverage for services such as prescription drugs, dental, hearing, or vision. If you need more coverage than Original Medicare, consider a Medicare Advantage plan.
Other factors to consider
If you’re still wondering which Medicare plan is best for you or a loved one, it’s a good idea to consider the pros and cons of each plan.
Here are the main factors to consider when choosing the best Medicare plan:
- the type of coverage you already have
- the type of coverage you need
- how often do you need medical services
- the prescription drugs you take
- how often do you fill your prescriptions
- whether you travel frequently or not
- how much can you pay each month and year
If you need help estimating costs for plans in your area, visit Medicare.gov and use their Find a Medicare 2020 Plan tool. This can help you compare plan type, cost, coverage, and more.
IMPORTANT MEDICARE DEADLINES
To make sure you sign up on time and avoid coverage gaps and late penalties, pay close attention to the following Medicare deadlines:
- Your 65th birthday. You can sign up for Medicare any time within 3 months before or after your 65th birthday.
- Six months after your 65th birthday. If you want to enroll in Medicare Supplemental, you can also do so up to 6 months after your 65th birthday.
- From January 1 to March 31. This is the enrollment period for anyone who didn’t sign up for a Medicare plan when they were eligible (although there are penalties for waiting). You can also sign up for a Medicare Advantage plan during this period.
- From April 1 to June 30. If you’re interested in adding Part D to your Original Medicare plan, you can sign up now. However, it’s important to enroll in a Part D plan as soon as you’re eligible to avoid a permanent penalty.
- From October 15 to December 7. This is the open enrollment period. During this time, you can join, drop, or change your Medicare Part C or Part D plan.
- Special Enrollment Period. Under some circumstances, you may qualify for a special enrollment period. During your special enrollment period, you will have 8 months to enroll in a plan.
The best Medicare plan is the one that covers all your necessary medical and financial needs. There are pros and cons to each Medicare plan option, ranging from cost-effectiveness to provider limitations, and more.
Whether you choose Original Medicare with Supplements or Medicare Advantage, shop around and compare the best Medicare plan for you.