If you’re planning to enroll in a Medicare plan this year, you may be wondering what the best plan is.
While there are a number of Medicare plan options to choose from, the best plan for you will depend on your medical and financial situation. Luckily, you can compare the advantages and disadvantages of each Medicare offering to find a plan that works well for you.
Medicare is a government-funded insurance option available to people age 65 or older, as well as individuals receiving disability benefits. When you enroll in 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 limited home healthcare visits, short-term skilled nursing facility stays, and hospice care.
Medicare Part B
Medicare Part C (Medicare Advantage)
Part C, also known as Medicare Advantage, is offered by private insurance companies. It can cover Part A, Part B, prescription drugs, and additional healthcare services, such as dental and vision care. You must be enrolled in Medicare parts A and B to enroll in Part C.
Medicare Part D
Part D helps cover prescription drug costs. Private insurance companies offer these plans as an add-on to original Medicare.
Medigap helps cover out-of-pocket medical costs and is also used as an add-on to original Medicare.
Finding the best Medicare plan involves choosing a plan that fits all 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 doesn’t cover prescription drugs, vision, dental, or other services.
Advantages of traditional Medicare
- Cost-effective. Most Americans don’t have to pay a monthly premium for Part A. In addition, the monthly premium for Medicare Part B starts as low as $144.60. If you receive Social Security payments, your monthly Medicare costs can be automatically deducted.
- Provider freedom. With original Medicare, you can visit any provider that accepts Medicare, including specialists. This means that you may be able to continue seeing your favorite healthcare providers after enrollment.
- Nationwide coverage. Original Medicare is accepted all over 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 medical services. This can lead to coverage gaps for services such as vision, dental, and more.
- No out-of-pocket maximum. Traditional Medicare has no yearly out-of-pocket maximum cost. If you have frequent medical costs, this can add up quickly.
Advantages of Medicare Advantage
- Cost-effective. Medicare Advantage can help save you money.
Researchsuggests that those enrolled in Advantage plans can save more money on certain healthcare services. In addition, all Part C plans have an out-of-pocket maximum.
- Plan variety. There are roughly five types of Advantage plan structures to choose from, including HMO, PPO, PFFS, SNP, and MSA. 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 up-front costs. Unlike original Medicare, the additional costs of an Advantage plan include in-network, out-of-network, and prescription drug deductibles, copays, and coinsurance.
- Provider limitations. Most Medicare Advantage plans are either HMO or PPO plans, both of which have some provider limitations. Other plan offers may also come with additional provider limitations.
- State-specific coverage. Medicare Advantage plans cover you within the state you enrolled, typically the state you live in. This means that if you travel, you may not be covered for out-of-state medical expenses.
Medicare Part D
Part D offers additional prescription drug coverage for any medications that aren’t included under original Medicare. A Medicare Advantage plan can take the place of Part D. If you don’t want Medicare Advantage, Part D is a great alternative.
Advantages of Medicare Part D
- Standardized coverage. When you enroll in a Part D plan, each plan must follow a set amount of coverage defined by Medicare. No matter how much your medications cost, you can rest assured that your plan will cover a set amount.
Disadvantages of Medicare Part D
- Varied formularies. The prescription drugs covered under Medicare Part D vary by plan. This means that you’ll need to find a plan that specifically covers your medications. In some cases, you may need to make compromises.
- Coverage rules. There are some prescription restrictions under Part D coverage rules. For example, some medications require prior authorization to be filled, which can be inconvenient if you need the medicine immediately.
Medigap is a supplemental private insurance option that can help pay for Medicare costs, such as deductibles, copays, and coinsurance.
Medigap isn’t necessarily an alternative to Medicare Advantage but rather, a cost-effective alternative for those who choose not to enroll in Medicare Advantage.
Advantages of Medigap
- Financial coverage. Medigap is a good supplemental option for anyone who needs additional coverage for medical fees. Medigap kicks in to cover additional costs after Medicare pays its share.
- Out-of-country coverage. If you add a Medigap policy to your Medicare plan, you’re also covered for out-of-country services. This is beneficial for anyone who likes to travel outside the United States.
Disadvantages of Medigap
- Single coverage. Medigap is a single-user policy, which means that your spouse won’t be covered. If you and your spouse both require supplemental insurance, you’ll need to enroll in separate Medigap plans.
- No additional healthcare benefits. Medigap doesn’t 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.
If you’re still wondering what the best Medicare plan is for you or a loved one, consider the advantages and disadvantages of each plan.
Here are some important things to consider when choosing the best Medicare plan for you:
- The type of coverage you already have: do you have veteran’s benefits or coverage under an employer or spouse’s employer?
- The type of coverage you need: are you managing any chronic conditions or know that you’ll need a surgical procedure in the near future?
- The prescription drugs you take: do you take several medications each month or specialty drugs?
- Foreign travel: do you travel abroad and want emergency coverage overseas?
- How much you can afford to pay for medical care: how much is your income each month? Each year?
If you need help calculating costs for plans in your area, visit Medicare.gov and use their find a Medicare plan tool. This can help you compare plan type, cost, coverage, and more.
Important Medicare enrollment deadlines
To ensure that you enroll on time to avoid coverage gaps and late penalties, pay close attention to the following Medicare enrollment periods:
- Your 65th birthday. You can enroll in Medicare any time within the 3 months before or after your 65th birthday.
- Six months following your 65th birthday. If you want to enroll in Medigap, you can do so for up to 6 months after your 65th birthday.
- January 1 to March 31. This is the enrollment period for anyone who didn’t sign up for a Medicare plan when first eligible (although there are penalties for waiting). You can also sign up for a Medicare Advantage plan during this period.
- April 1 to June 30. If you’re interested in adding Part D to your original Medicare plan, you can enroll at this time. However, it’s important that you enroll in a Part D plan as soon as you’re eligible to avoid a permanent penalty.
- October 15 to December 7. This is the open enrollment period. During this time, you can enroll in, 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’ll have 8 months to enroll in a plan.
The best Medicare plan is one that covers all your necessary medical and financial needs. There are advantages and disadvantages to each Medicare plan option, ranging from cost-effectiveness to provider limitations, and more.
Whether you choose original Medicare with add-ons or Medicare Advantage, shop around and compare the best Medicare plan for you.
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