Choosing the right Medicare plan is easier once you learn about the different types of coverage.
There are two types of Medicare coverage: (1) Medicare Part A and Part B and (2) Private Medicare Insurance.
Medicare Part A and Part B is offered by the federal government. It provides basic inpatient and outpatient health coverage. You must be 65 years or older to be eligible. Those under 65 may qualify if they are disabled.
Medicare Part A and Part B consists of Part A, which is for inpatient or hospital coverage, and Part B, which is for doctor’s office or outpatient coverage. The monthly premiums for Part A tend to be $0 for those who have paid federal taxes for ten working years. For those who did not pay taxes, premiums can be up to $413 or more per month in 2021. The premiums for Part B are around $134 per month in 2021 for both those individuals who have paid taxes, and those who have not paid taxes in the last 10 years.
Medicare Part A has a deductible of $1,408 per year. You must pay this deductible in full before the insurance pays for the rest of your hospital or inpatient costs. If you are hospitalized multiple times per year, you may have to pay this deductible for each new hospitalization. If you are hospitalized for more than 60 consecutive days, you could face a copayment of $352 to $704 per day.
The deductible for Medicare Part B is $198 per year. When using outpatient services, Medicare Part B will cover 80% of the costs. It is up to you to pay for the remaining 20% of costs out-of-pocket.
Some individuals who need frequent medical care find that out-of-pocket costs may be unaffordable with Medicare Part A and Part B alone. That’s because Medicare Part A and Part B does not have a limit or cap on out-of-pocket costs.
Medicare Part A and Part B also provides prescription drug coverage only to those under inpatient care. In other words, those who regularly take prescription medication might end up paying for some of their drug costs out of their own pocket. Additionally, Medicare Part A and Part B does not provide coverage for dental, vision, certain long term care, health care when traveling overseas, and other benefits.
Learn more about Medicare Part A and Part B here.
Private Medicare insurance is a great way to lower your out-of-pocket costs and get additional health care benefits. In other words, Private Medicare Insurance helps provide additional coverage where Medicare Part A and Part B do not provide coverage.
Medigap plans, also known as Medicare Supplement plans, are purchased in addition to your Medicare Part A and Part B coverage. These plans may lower your out-of-pocket costs. Medigap plans will pay for your Medicare Part A deductible of $1,408 per hospital visit. Most Medigap plans will also pay for your out-of-pocket costs when visiting the doctor, or that 20% of costs that Medicare Part A and Part B Part B does not pay. Many Medigap plans also offer additional benefits, such as long term care, or coverage for emergency medical services when traveling overseas. In turn, Medigap plans have monthly premiums that must be paid for coverage. Learn more about Medigap plans here.
Medicare Advantage plans offer the same benefits that Medicare Part A and Part B offers, and also provides additional coverage as well. This is why Medicare Advantage plans replace, instead of complement, Medicare Part A and Part B plans. Additional coverage varies depending on the insurer and the plan. For this reason, Medicare Advantage may feel similar to the HMO and PPO plans you may have previously had through an employer. Medicare Advantage plans may help to lower your out-of-pocket costs. Additionally, and unlike Medicare Part A and Part B, Medicare Advantage plans place a limit on your total out-of-pocket costs. The maximum out-of-pocket limit is set by law and is around $6,700 in 2020. However, many plans may have substantially lower limits. Learn more about Medicare Advantage plans here.
Medicare Part D plans provide you with full prescription drug coverage. Medicare Part A and Part B only includes prescription drug coverage when hospitalized, and not at the pharmacy. For those who regularly take prescription medication, it is recommended to purchase a Medicare Part D plan. These plans can be purchased as a standalone plan -- to be used alongside Medicare Part A and Part B or with Medigap - or they can be included within a Medicare Advantage plan. Learn more about Medicare Part D plans here.
To start comparing Medigap, Medicare Advantage, and Part D plans, please submit your zip code to begin the process.