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With various plan options, Medicare Supplement insurance plans, Medicare Advantage Plans and different amounts of cost and coverage, understanding the Medicare system can be confusing. Here are 10 things you need to know to start analyzing Medicare plan options and which one you would like to purchase.
Medicare Parts A and B include coverage for hospital stays, outpatient care, preventative care, rehab, equipment and testing. One thing it doesn’t cover is prescription drugs, which is covered under Medicare Part D.
Medicare Supplement insurance plans sound like they’re simply an add-on to basic Medicare coverage, but in fact depending on your individual needs they can help reduce the cost of your care in the long run. It can help to speak with an insurance agent about your specific situation and shop around for the best deal.
The best time to enroll in a Medicare Supplement Plan is during your Open Enrollment Period (OEP), which lasts six months. Your Medicare Supplement OEP begins the first day of the month you turn 65 or older and are enrolled in Medicare Part B. You can also enroll if you meet the criteria for a guaranteed issue period. If you are not in your OEP or a guaranteed issue period, in most states you’ll need to pass medical underwriting to enroll in a Medicare Supplement policy.
If newly eligible for Medicare, you’re able to enroll for Medicare Advantage plans during your Initial Enrollment Period. If you already have Medicare coverage you can sign up for, make changes to, or disenroll from a Medicare Advantage plan during the Annual Enrollment Period which runs from October 15 to December 7 each year. No health information or underwriting is used or required for enrollment in Medicare Advantage or prescription drug plans.
Premiums are the standard monthly cost associated with any insurance plan. Deductibles are the amount of out-of-pocket coverage you pay before the insurance plan begins to pay. Copayments are a fixed amount paid after the deductible is paid. Typically, health plans with a high premium will have a lower deductible, and vice versa. This means a healthy person who doesn’t anticipate using hospital services very often can often benefit by buying into a plan with a very high deductible. Because they won’t use services often, they won’t end up paying more in deductibles than they would in monthly premiums over time. On the other hand, someone who requires regular medical services like an ongoing prescription or monthly testing may benefit from a plan with a low deductible/copayment and higher premium cost.
Medicare Supplement insurance plans like Plan G are, as the name suggests, supplemental to the basic coverage provided in Medicare Parts A and B. Medicare Advantage, however, also known as Medicare Part C means going through a private insurer to replace all aspects of that coverage. Medicare Advantage plans can be cheaper or more expensive than buying into Medicare Parts A and B plus Medicare Supplement. Medicare Advantage plans typically offer more coverage, but what they cover exactly varies. They’re legally required to cover at least the minimum of Original Medicare.
Medicare Advantage—also known as Medicare Part C—plans often save consumers money on out-of-pocket drug costs, because they're structured differently than buying into Medicare Part D. Medicare Part D includes a pay structure that can create very high out-of-pocket expenses for people who use prescription drugs regularly. This became known as the “Medicare Part D donut hole” and is one reason for the popularity of Medicare Advantage plans. As of 2020, what is known as the “Medicare Part D donut hole” is closing. This means Original Medicare with Medicare Part D will be a more affordable option for most people than it was before, though there are still many Medicare Advantage plans that are cheaper.
Medicare Supplement Plan F used to be the most popular Medicare Supplement insurance plan because it offers a high deductible and lower monthly premiums, which is more manageable for most people, especially if they’re generally healthy. However, because Plan F doesn’t cover the Medicare Part B deductible, it’s no longer available for people turning 65 to enroll in as of 2020. Medicare Supplement Plan G is the new lowest-premium option out of all the Medicare Supplement insurance plans, though it’s not quite as cost effective as Plan F.
People who take out social security benefits are automatically enrolled in Medicare Parts A and B, though it’s possible to opt out of the monthly premiums for Part B. People who choose to wait to take out social security until after they turn 65 need to enroll themselves in Medicare in order to take advantage of the initial enrollment window that begins three months before age 65 and ends three months after one’s 65th birthday (for those who qualify for Medicare due to age). However, people who are still working when they turn 65 are able to enroll at a later date and keep the insurance associated with work for longer if they choose to.
People with Medicare Advantage plans can enroll in a different plan during the Annual Enrollment Period that lasts from October 15 to December 7 each year. Sometimes it’s possible to switch to other Medicare supplemental plans during this period, although outside of the initial enrollment window around turning 65, people can be declined because of health status.
Original Medicare plans—buying the minimum required coverage which is Original Medicare Parts A and B—doesn’t cover eye exams, hearing aids, routine dental care or nursing home visits over 100 days. Getting a Medicare Advantage plan or buying a Medicare Supplement insurance plan are good ways to get coverage for these types of needs.
