Understand Your Choices: Pros and Cons of Medicare Plans
Knowing your Medicare plan alternatives may increase your benefits and decrease your cost
Reviewed by: Selah Lee, Licensed Insurance Agent.
Key Takeaways
After you enroll in Medicare Part AMedicare Part A, also called "hospital insurance," covers the care you receive while admitted to the hospital, skilled nursing facility, or other inpatient services. Medicare Part A is part of Original Medicare. and Part BMedicare Part B is the portion of Medicare that covers your medical expenses. Sometimes called "medical insurance," Part B helps pay for the Medicare-approved services you receive., you have options to add more coverage with MedigapMedicare Supplement Insurance (Medigap) is designed to provide coverage that Original Medicare (Parts A and B) does not. Medigap policies are purchased in addition to Original Medicare and have their own monthly premiums you'll need to pay. or Part DMedicare Prescription Drug Plan (Part D) is prescription drug coverage for people enrolled in Medicare. Part D is optional and is offered by private insurance companies. or switch to a Medicare AdvantageMedicare Advantage (Medicare Part C) is health insurance for Americans aged 65 and older that blends Medicare benefits with private health insurance. This typically includes a bundle of Original Medicare (Parts A and B) and Medicare Prescription Drug Plan (Part D). plan.
Medicare Advantage (Part C) replaces Original Medicare (Part A & B), but offers the same Part A & B benefits or coverages as Original Medicare.
Original Medicare does not cover all your costs.
After your deductibleA deductible is an amount you pay out of pocket before your insurance company covers its portion of your medical bills. For example: If your deductible is $1,000, your insurance company will not cover any costs until you pay the first $1,000 yourself., Original Medicare has 80/20 cost sharing without an out-of-pocket maximum limit.
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Armed with the right information, you can make the right decision as to which Medicare plan works best for you.
A Major Decision: Original Medicare vs. Medicare Advantage
Medicare Advantage (Part C) replaces Original Medicare (Part A & B), but offers the same Part A & B benefits or coverages as Original Medicare. Along with receiving Part A & B benefits, Medicare Part C often bundles your benefits with additional ones like dental, hearing, vision, and prescription drug coverage.
When you have Medicare Part C, your Part C benefits ID card replaces your Medicare ‘Red, White & Blue’ card at every visit.
Original Medicare
Pros
- Can see any doctor or hospital that accepts Medicare without network constraints
- Not required to obtain a referral to see a specialist
- Get added coverage with a Medicare Part D plan and a Medicare Supplement Plan (Medigap Plan)
- Covered no matter where you live in the United States
Cons
- Does not cover dental, vision, hearing, or overseas care
- No limits to out-of-pocket costs
- Must buy additional plans and pay premiums for prescription drugs
Medicare Advantage
Pros
- If you have a preexisting condition, you will not be denied enrollment or charged increased premiums. Acceptance into Medicare Advantage is guaranteed.
- Members don’t have to submit claims
- Covers all the services that Original Medicare covers. Some plans may include extra benefits such as dental, vision, hearing, and prescriptions – not covered by Original Medicare.
- $0 premium plans available
- Premiums can be lower than those on Medicare Supplement and Prescription Drug Plans
Out-of-pocket costs may be lower than original Medicare
Cons
- Members are responsible for copayments and deductibles
- May require referrals to see a specialist
- The provider network limits the choice of doctors/hospitals and doctors may not accept certain Medicare Advantage plans
- Members are required to pay full price for services outside the provider network
- Plans may change annually
- May not be covered if you live in two different places during the calendar year
Need More Coverage than Part A and Part B offer?
If you need a service that isn’t covered by Original Medicare, you may need to pay out of pocket or consider a Medicare Advantage plan. Here are some examples of services that are not covered by Original Medicare.
Dental Care
Dental Care: Dental care is not seen as medically necessary by Original Medicare, and therefore, does not cover routine dental care such as oral exams, cleanings, fillings or dentures.
Most Medicare Advantage (Part C) plans cover routine dental services and dentures if you need regular dental care coverage.
Hearing Exams or Aids
Hearing Exams or Aids: Original Medicare plans don’t cover routine hearing exams, hearing aids, or fittings.
If you need hearing coverage, some Medicare Advantage Plans (Part C) provide these benefits.
Podiatry
Podiatry: Original Medicare does not cover routine care for feet, but Medicare Part B does cover foot exams or treatment if it is diabetes-related nerve damage. Medically necessary treatment is also covered.
If you need routine podiatry care, most Medicare Advantage (Part C) plans cover podiatry services that are not medically related.
Vision Services
Vision Services: Original Medicare does not cover routine vision services such as eye exams, eyeglasses or contact lenses. If you are only enrolled in Original Medicare and don’t have other insurance, you will be required to pay 100% of these services out-of-pocket.
If you need vision services, Medicare Advantage (Part C) plans offer coverage for vision services.
Your Network Can Be Important in More Ways Than One
While a Medicare provider network may present boundaries, the benefit of staying within the network is that it keeps your medical costs down. Networks can change every year, and rural areas often have limited options, while urban areas may have more options.
There are various choices when it comes to the types of Medicare Advantage plans, including Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), and Medicare Private-Fee-for-Service (PFFS.)
Here is a breakdown of the differences between HMP, PPO and PFFS plans.
Health Maintenance Organization (HMO)
An HMO is a health plan that requires you to have a primary care physician who will manage most of your care and refer you to specialists if needed. An HMO presents lower copayments and premiums.
Pros
- May help to lower premium increases year over year for someone not likely to require specialized medical care
- It offers high-quality plans by negotiating with specific doctors and hospitals. These providers may agree to lower their prices to be part of a specified network.
Cons
- You must stay in-network. If you utilize out-of-network providers or services, you are responsible for 100% of the costs.
- PCP referrals are required to see a specialist
Preferred Provider Organization (PPO)
A PPO is a health plan that does not require you to have a primary care physician, and you do not need a referral to see a specialist. You’re also not restricted to a network, as you’re able to see out-of-network doctors. But if you seek out-of-network doctors you will pay more for that care.
Pros
- Flexibility in selecting a doctor or hospital as you are not restricted to a network
- Not required to have a primary care physician, and you don’t need a referral to see a specialist
Cons
- Will pay more for an out-of-network doctor
- Usually more expensive than other Medicare Advantage options
Fee-for-Service (FFS)
A Medicare Advantage Fee-for-Service (PFFS) plan provides you flexibility to seek care from out-of-network Medicare providers, but you will have lower costs if you stay in the network. Plans change every year, and you will need to ensure that your doctor accepts the FFS plan’s payment terms every time you see the doctor.
Pros
- Covers any service that is considered medically necessary under Original Medicare
- Not restricted by a network
- Can add a stand-alone Medicare Part D plan
Cons
- You need to confirm that your doctor accepts the plan on every visit
- Higher out-of-pocket costs
Make Your Medicare Decision Easier: A Breakdown
There are four parts of Medicare: Part A, Part B, part C and Part D. Each part covers different health plan services, and it’s critical that you understand the options that best fit your unique needs.
To learn more about the costs associated with Medicare Part A and B, here’s a Medicare Part A and B cost breakdown and explanation.
The Four Parts of Medicare
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Part A | Part B | Part C | Part D |
Coverage Services Inpatient hospital stays, skilled nursing facility, home health visits, in-home hospice care | Doctor visits, outpatient surgery, preventative health, home health, lab tests, X-rays, medical equipment, cancer treatment | Similar to Part A + B, wellness services, vision exams, hearing exams and aids, dental care, gym membership, routine foot care | Outpatient prescription drugs |
Cost Medicare calculates Part A premium costs by how long you or your spouse have paid Medicare taxes Part A is free for most beneficiaries | Part B has a cost and charges deductibles, copays and coinsurance $148.50 monthly premium for 2021 $203 annual deductible – once you meet the deductible, you pay 20% of the approved cost of service. There is no cap on your out-of-pocket expense | $148.50 monthly for the Part B premium for 2021, plus any additional premium set by the insurer | Premium varies by plan, averages $33 monthly for 2021 |
Part A | |||
Coverage Services | Inpatient hospital stays, skilled nursing facility, home health visits, in-home hospice care | ||
Cost | Medicare calculates Part A premium costs by how long you or your spouse have paid Medicare taxes Part A is free for most beneficiaries | ||
Part B | |||
Coverage Services | Doctor visits, outpatient surgery, preventative health, home health, lab tests, X-rays, medical equipment, cancer treatment | ||
Cost | Part B has a cost and charges deductibles, copays and coinsurance $148.50 monthly premium for 2021 $203 annual deductible – once you meet the deductible, you pay 20% of the approved cost of service. There is no cap on your out-of-pocket expense | ||
Part C | |||
Coverage Services | Similar to Part A + B, wellness services, vision exams, hearing exams and aids, dental care, gym membership, routine foot care | ||
Cost | $148.50 monthly for the Part B premium for 2021, plus any additional premium set by the insurer | ||
Part D | |||
Coverage Services | Outpatient prescription drugs | ||
Cost | Premium varies by plan, averages $33 monthly for 2021 |
FAQs
How much does Medicare cost per year?
For most people, Medicare Part A is premium-free as long as you or your spouse paid taxes through full-time employment for ten years.
Medicare Part B comes with a monthly premium and cost sharing. The premium, copayment and deductible are adjusted by Social Security each year. For example, the Part B premium in 2020 was $144.60 and in 2021 the premium was $148.50.
Is Medicare Supplement Insurance worth the cost?
Medicare Supplement Insurance (Medigap) plans are standardized, and some cover copays and coinsurance, and some cover Medicare deductibles. You can choose from many different plans that range from minimal to comprehensive additional coverage. When shopping Medigap plans, it usually comes down to cost and peace of mind. If you’re looking for the Medigap plan to cover every copay and deductible, you will pay a higher cost for that peace of mind. If you’re looking for a little less expensive coverage, you can choose from any of the ten plans available (depending on your state).
Is Private Insurance better than Medicare?
You can’t make an apples-to-apples comparison of the two. The best health insurance plan will always come down to the enrollee and their health needs and goals. Both options provide many options at many different costs. The best thing anyone looking for coverage can do is write down what you need from your health insurance today and in the near future. Use your list to begin comparing your options.
Another great option to compare options and understand available plans with total confidence is to contact a GoHealth licensed insurance agent. An agent can help you compare costs, coverage, and with understanding the little details.