With various plans, supplemental 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 information about plans and which one you would like to purchase.
- Basic Medicare coverage includes Medicare Part A and Medicare Part B
Medicare Parts A and B include coverage for hospital stays, inpatient visits, outpatient care, preventative care, rehab, equipment and testing. One thing it doesn’t cover is prescription drugs, which is covered under Medicare Part D. Everyone enrolled in a Medicare plan of any kind is legally required to have the things Medicare Parts A and B covered somehow, whether directly through enrollment in Medicare Parts A and B or through a comparable plan like Medicare Advantage.
- Sometimes Supplemental Medicare Plans Can Save You Money
Supplemental Medicare plans sound like they’re simply an add-on to basic Medicare coverage, but in fact depending on your individual needs they can sometimes turn out to be cheaper in the long run. For example, for someone who has to take regular prescription medication, the cost of buying into Medicare Parts A, B and D—rather than buying a supplemental plan or Medicare Advantage plan that bundles these costs together—may end up paying more in copayments to access their medications over time. The only way to know for sure is to speak with an insurance agent about your specific situation and shop around for the best deal.
- The Best Time to Sign Up for Almost Any Plan is the Open Enrollment Window
During the Medicare open enrollment window, all individuals regardless of health status are eligible to purchase any Medicare plan, including supplemental plans and Medicare Advantage plans, at the same price. This means even someone with a chronic condition that will cost Medicare more money to treat will not be charged a higher rate than anyone else. The open enrollment period for most individuals is three months before turning 65, and three months after turning 65. Open enrollment is important to take advantage of because people who wait until after the window has passed can be charged higher because of age.
- There’s Usually a Tradeoff Between Premium and Deductible/Copayment Cost
Premiums are the standard monthly cost associated with any insurance plan. Deductibles are the fees paid at the point of service, such as when receiving a hospital bill. Copayments are the portion of a service put to the consumer, such as paying 20% of the cost of a prescription drug you buy. Typically, a Medicare plan 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 is likely to benefit from a plan with a low deductible/copayment and higher premium cost.
- Medicare Advantage is a Replacement of Standard Medicare
Supplemental Medicare plans like Medicare 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 a 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 a standard Medicare plan.
- Medicare Advantage Plans Typically Help Save on Drug Costs
Medicare Advantage—also known as Medicare Part C—plans typically 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 standard 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 Plan G is a High-Deductible, Low-Premium Option
Medicare Plan F used to be the most popular Medicare 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 Medicare 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 Plan G is the new lowest-premium option out of all the Medicare supplement plans, though it’s not quite as cost effective as Plan F.
- People Taking Social Security Are Automatically Enrolled in Medicare
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 open enrollment window that begins three months before age 65 and ends three months after one’s 65th birthday. However, people who are still working when they turn 65 are able to delay the open enrollment window and keep the insurance associated with work for longer if they choose to.
- Medicare Can Be Changed During the Yearly Open Enrollment
People with Medicare plans can make adjustments to some aspects of their plans during the yearly enrollment period that lasts from October 15 to December 7 each year. Typically the changes will be to Medicare Part D, the prescription drug part of the coverage. Sometimes it’s possible to switch to other Medicare supplemental plans during this period, although outside of the open enrollment window around turning 65, the cost can vary depending on age and health status.
- Basic Medicare Plans Don’t Cover Everything
Basic Medicare plans—buying the minimum required coverage which is Medicare Parts A and B—doesn’t cover eye exams, hearing aids, dental care or nursing home visits over 100 days. Getting a Medicare Advantage plan or buying a Medicare supplement is the best way to get coverage for these types of needs.