Understanding Your Medicare Coverage Options

Medicare is designed to help people stay on top of their health-related expenses as they age, especially after they retire and stop receiving employer-sponsored coverage. With so many options and different components, navigating the Medicare system and enrolling in a plan can seem complicated. The good news is that understanding this system is possible with a little research and support from a knowledgeable licensed advisor.

What You Need to Know

When you first enroll in Medicare, you can choose how you receive coverage. You can choose Original Medicare or a Medicare Advantage Plan. Original Medicare is a government-run program that is broken down into several different parts, which are identified by letters. These parts cover different types of medical expenses.

Medicare Advantage Plans are more like bundles because there are more services covered under a single plan. These plans are administered by private insurance companies, so the plan structures and costs can vary.

What Is Original Medicare?

Original Medicare includes both Medicare Part A (hospital insurance) and Part B (medical insurance). Prescription drugs are covered under Part D, and you can purchase a Medicare Supplemental Insurance plan (Medigap) to help pay for out-of-pocket costs.

When you enroll in Original Medicare, you can seek care at any doctor or hospital in the United States that accepts Medicare. If you need to see a specialist, you won’t need a referral in most cases.

What Is a Medicare Advantage Plan?

Medicare Advantage, also known as Part C, is a Medicare-approved plan purchased through a private company. This is an alternative to Original Medicare for both health and prescription drug coverage. Most of these plans are packaged together to include the benefits from Part A, Part B, and Part D. 

Many Medicare Advantage plans provide extra benefits not covered by Original Medicare, such as dental, hearing, and vision services. Additionally, these plans may have lower out-of-pocket costs.

However, Medicare Advantage enrollees are expected to seek care from providers within their plan’s network to receive the proper coverage.

The Costs of Original Medicare and a Medicare Advantage Plan

There’s a lot to consider when comparing Original Medicare and Medicare Advantage. For many people, this decision is as much about finances as it is about their health needs. 

Original Medicare

People typically do not pay a premium for Part A because they or their spouse paid into the Medicare tax system or enrolled before age 65. There is a deductible for Part A, meaning a certain amount of money paid out of pocket before the policy takes over hospital-related expenses.

There are both premiums and deductibles for Part B, as well as 20% coinsurance for covered services after meeting your deductible. If you purchase Part D prescription drug coverage, you’ll pay a separate premium for it. Deductibles, copays, and coinsurance will depend on the plan you choose and the pharmacy you buy from.

Medigap coverage can help pay for your Part A and Part B expenses. This plan has its own premium, which can vary based on the policy you choose and where you live.

It’s important to note that there’s no annual limit on what you pay out of pocket. Benefits are covered in defined periods, and there can be multiple benefits periods in a year.

Medicare Advantage Plans

Since these plans are administered by private companies, you may find more variations in costs. The trade-off is that there are typically more services covered under one plan compared to Original Medicare. But there’s one constant: You’re responsible for a monthly Part B premium in addition to the Medicare Advantage plan’s premium. 

Out-of-pocket costs vary by plan, but it will pay 100% of your covered costs once you hit that limit.

Which Type of Medicare Is Best?

There’s no one-size-fits-all answer to this question. You must compare the details of each plan type to ensure you make an informed decision that suits your medical and financial circumstances.

With a licensed Medicare advisor on your side, it’s much easier to make a confident decision about your future. 

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