Understand Your Choices: Pros and Cons of Medicare Plans
Key Takeaways
- After you enroll in Medicare Part AMedicare Part A is hospital insurance, which covers the care you receive while admitted to a hospital, skilled nursing facility, or other inpatient facility. Medicare Part A is part of Original Medicare. and Part BMedicare Part B is medical insurance that covers Medicare-approved services — such as medically necessary treatment and preventive services — and certain other costs, like durable medical equipment. Medicare Part B is part of Original Medicare. , 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 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.
Armed with the right information, you can make the right decision as to which Medicare plan works best for you.
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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 (Medigap) and prescription drug plans (Part D).
- 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 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: 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: 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: 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 may offer coverage.
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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 HMO, 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.
- 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.
- 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 standalone Medicare Part D plan.
- 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
Part A
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
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
$174.70 monthly premium for 2024
$240 annual deductible for 2024 – 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
Similar to Part A + B, wellness services, vision exams, hearing exams and aids, dental care, gym membership, routine foot care
Cost
$174.70 monthly for the Part B premium for 2024, plus any additional premium set by the insurer
Part D
Outpatient prescription drugs
Cost
Premium varies by plan, averages $55.50 monthly for 2024
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How much does Medicare cost per year?
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 2024 is $174.70.
Is Medicare Supplement Insurance worth the cost?
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?
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.
Sources
This website is operated by GoHealth, LLC., a licensed health insurance company. The website and its contents are for informational and educational purposes; helping people understand Medicare in a simple way. The purpose of this website is the solicitation of insurance. Contact will be made by a licensed insurance agent/producer or insurance company. Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. Our mission is to help every American get better health insurance and save money.
Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.