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Comparing Medicare Insurance Plans

There are several different types of Medicare coverage. Below is a detailed comparison of all types of Medicare plans so you can make an informed decision about the best plan for your health care needs. 

The different types of Medicare plans and Medicare coverage include:

  1. Medicare Part A
  2. Medicare Part B
  3. Medicare Advantage (Medicare Part C)
  4. Medicare Part D prescription drug coverage
  5. Medicare Supplement Insurance (Medigap)

It's important to note that Medicare is not the same as Obamacare or Medicaid. You can learn more about the differences between Medicare vs. Obamacare and Medicare vs. Medicaid to better understand how these different coverages work.

Medicare Part A

Medicare Part A provides coverage for inpatient care. Many people are automatically enrolled in Part A, and most people do not even pay a premium for their Part A coverage (often referred to as premium-free Part A). 

  • What it covers
    Part A covers inpatient hospital stays and certain other types of inpatient care

  • What it doesn’t cover
    Part A does not cover routine doctor’s appointments, other types of outpatient care, prescription drugs or routine dental and vision care.

  • Who it’s provided by
    The federal government administers Medicare Part A.

  • What it costs
    If you paid Medicare taxes for at least 40 quarters (10 full years), you won’t pay any premiums for your Part A coverage. If you don’t qualify for premium-free Part A, you have the option to buy it. If you paid Medicare taxes for between 30 and 39 quarters you will pay $252 per month in 2020. If you paid Medicare taxes for fewer than 30 quarters, you will pay $458 per month.

    Medicare Part A includes certain out-of-pocket costs like deductibles and coinsurance.

    The Part A deductible is $1,408 per benefit period in 2020. A benefit period begins once you are admitted for inpatient care and ends when you haven’t received inpatient care for 60 days in a row.

    If you experience an inpatient hospital stay longer than 60 days, your Part A coinsurance cost is $352 per day in 2020 until your 90th After that, you pay $704 per day for each lifetime reserve day you use per benefit period. After you’ve used your 60 lifetime reserve days, you’re responsible for all costs.

  • Who should choose it
    Medicare Part A is typically required in order to enroll in most other type of Medicare plan. If you enroll in Medicare, you will typically at least enroll in Part A. 

Medicare Part B

Medicare Part B is optional, although some people are automatically enrolled in Part B and then given a chance to opt out. Medicare Part A and Part B are known together as “Original Medicare.” 

  • What it covers
    Medicare Part B covers most doctor’s appointments, other types of outpatient care, preventive care and durable medical equipment (DME). 

  • What it doesn’t cover
    Part B doesn’t cover inpatient hospital costs, prescription drugs, cosmetic surgery, alternative or holistic medicine, or routine dental and vision care. 

  • Who it’s provided by
    The federal government provides and administers Medicare Part B.

  • What it costs
    The standard Medicare Part B premium is $144.60 per month in 2020. Some beneficiaries may pay higher Part B premiums based on their income if they have a reported income that is above a certain threshold. This is called a Medicare Income-Related Adjustment Amount (IRMAA).

  • Who should choose it
    Anyone who wants coverage for outpatient care and doctor’s appointments may want to consider enrolling in Part B (or keeping their Part B coverage if they’re automatically enrolled). You are required to enroll in Part B in order to sign up for some other types of Medicare coverage.

Learn more about Medicare Part A vs. Part B.

Smiling couple on a sailboat on a sunny day

Medicare Advantage (Medicare Part C)

Medicare Part C is also known as “Medicare Advantage.”

  • What it covers
    Medicare Advantage plans – which are sold by private insurance companies – cover at least the same benefits offered by Medicare Part A and Part B. In addition, most Medicare Advantage plans also offer prescription drug coverage, and many plans may also offer coverage for routine dental, vision and hearing care – all of which are not covered by Original Medicare.

    Some Medicare Advantage plans may also cover things like transportation to your doctor’s office, installation of bathroom grab bars in your house, healthy home-delivered meals and more.  

    Coverage varies by plan. Extra benefits such as dental, vision, hearing and prescription drugs will vary by plan.

  • What it doesn’t cover
    Not all plans provide coverage for the “extra” benefits like dental care or prescription drugs. Medicare Advantage plans often have provider networks, which means you may receive less coverage (or no coverage at all) if you seek care outside of your plan network. 

    Check with your plan carrier to learn more about what your plan may or may not cover.

  • Who it’s provided by
    Private insurance companies provide Medicare Advantage plans, which some regulation and oversight provided by the federal government.

  • What it costs
    Premiums vary according to things like the plan you have, where you live and your plan carrier. The average monthly premium for a Medicare Advantage plan that includes prescription drug coverage in 2020 is $26 per month.1

  • Who should choose it
    If you want coverage for things that Original Medicare doesn’t cover, such as prescription drugs or routine dental, hearing and vision care, you may want to consider enrolling in a Medicare Advantage plan that offers those benefits.

Medicare Part D

Medicare Part D plans provide coverage exclusively for prescription drugs. A Part D prescription drug plan (PDP) may be used together with Original Medicare, or with certain Medicare Advantage plans that do not provide prescription drug coverage. 

  • What it covers
    Part D plans help cover the costs for many commercially available prescription drugs. Some PDPs may also offer allowances to help pay for certain over-the-counter (OTC) drugs.

  • What it doesn’t cover
    Part D plans don’t cover any health services such as services provided by a doctor or other health care professional.

  • Who it’s provided by
    Private insurance companies provide Medicare Part D plans, which some regulation and oversight provided by the federal government.

  • What it costs
    Part D premiums may vary by plan, where you live and the carrier who provides your plan. The average monthly premium for a Part D plan in 2020 is projected to be $42.05.2

  • Who should choose it
    You may want to consider enrolling in a Medicare Part D plan if you want coverage for prescription drug costs. 

Medicare Supplement Insurance

Medicare Supplement Insurance plans, also called Medigap, do not provide coverage for services, but rather for certain out-of-pocket Medicare costs.

  • What it covers
    Medigap plans can be used alongside Medicare Part A and Part B to provide coverage for certain out-of-pocket costs that are required by Original Medicare. These costs can include Medicare deductibles, copayments and coinsurance; foreign travel emergency care; Medicare Part B excess charges and more. Coverage varies by the type of Medigap plan you have. 

  • What it doesn’t cover
    Medicare Supplement Insurance does not provide coverage for health care services or devices. Medicare Supplement plans also do not cover prescription drug costs. 

  • Who it’s provided by
    Private insurance companies provide Medicare Supplement plans. The types of Medigap plans that are available can vary from one location to the next.

  • What it costs
    Monthly premiums for Medigap plans may vary by plan type, location and carrier. The average premium paid for a Medigap plan in 2018 was $125.93 per month.3

  • Who should choose it
    If you have Original Medicare and want help covering some of your out-of-pocket costs and want to have more predictable health care spending, you may want to consider applying for a Medicare Supplement plan.

Pharmacist gives patient his prescription

How to compare different types of Medicare plans

There are a number of factors you may want to consider when comparing your Medicare coverage options. Below, we compare and contrast some of the different types of Medicare coverage.

Original Medicare vs. Medicare Advantage

Among the biggest decisions beneficiaries must face is whether to enroll in a Original Medicare or Medicare Advantage plan. 

  • Medicare Advantage plans are required by law to cover the same benefits that are offered by Original Medicare (Part A and Part B).

  • If you have alternative coverage for things like dental and vision care (such as through an employer-provided dental plan or an individual vision plan, for example), you may decide that you prefer staying with Original Medicare vs. enrolling in a Medicare Advantage plan. 

    However, if your dental, vision or hearing aid expenses prove to be costly, a Medicare Advantage plan that covers these benefits might help cover some of your costs.

  • When you have a Medicare Advantage plan, you must continue to pay your Medicare Part B monthly premium (along with any required Part A premiums) in addition to any premium imposed by your chosen Medicare Advantage plan.

Some Medicare Advantage plans may feature $0 monthly premiums. A $0 premium Medicare Advantage plan might be a good fit for you if you want low monthly costs for your health care coverage.

Medicare Advantage plans also include an annual out-of-pocket spending limit, which Original Medicare doesn’t offer. This spending limit can potentially help protect you from high inpatient medical care costs or expensive outpatient treatment costs, which can add up quickly.

Medicare Advantage vs. Medicare Part D

Part D plans provide coverage exclusively for prescription drugs. Most Medicare Advantage plans also provide drug coverage, in addition to the other hospital insurance and medical insurance benefits they offer. 

You may only carry both types of plans if your Medicare Advantage plan does not provide Part D drug coverage and the plan’s terms and conditions allow for the beneficiary to also enroll in a Part D plan. 

Choosing between these two types of plans may depend on your prescription drug needs.

If there are no Medicare Advantage plans available in your area that include drug coverage, or no plans that include coverage for the drugs you need, you may want to consider enrolling in a Part D plan in order to address your prescription needs.

But of course, if you do not routinely take any prescription drugs, you may decide to enroll in a Medicare Advantage plan that doesn’t include Part D coverage, if this type of plan is available where you live.

Medicare Advantage vs. Medigap

Medicare Supplement plans and Medicare Advantage plans are not the same thing. You are not allowed to have a Medicare Advantage plan and a Medigap plan at the same time.

One primary difference between Medicare Advantage and Medigap is that Medicare Advantage provides coverage for services, while Medigap provides coverage for certain Medicare costs.

Deciding between these two types of plans may come down to whether you want one plan that covers your Medicare Part A and Part B benefits as well as potentially some additional benefits, or if you want to keep your Original Medicare coverage and have a plan that helps pay your Medicare costs such as deductibles, copays, coinsurance and more.

Learn more about Medicare Supplement vs. Medicare Advantage.

Original Medicare vs. Medigap

As noted above, Medigap plans work alongside your Original Medicare coverage to help pay for deductibles, coinsurance and copayments that Original Medicare doesn’t cover.

Having a Medigap plan can help you lower your out-of-pocket Medicare costs in exchange for a monthly plan premium.

Anyone who wishes to reduce the unexpected out-of-pocket costs associated with Original Medicare might consider applying for a Medigap plan. A Medigap plan can help make your health care spending more predictable and easier to budget for. 

Learn more about Medicare Supplement vs. Original Medicare.

How to choose the best Medicare plan for you

Settling on the right Medicare plan for you requires addressing your individual health care needs.

There are eight typical combinations of Medicare coverage you might be able to consider: 

  1. Medicare Part A only
  2. Medicare Part A and Part B
  3. Medicare Advantage (which requires enrollment in both Part A and Part B)
  4. Medicare Advantage and Medicare Part D (if allowed)
  5. Medicare Part A and Part D (you must have Part A in order to have Part D)
  6. Medicare Part A, Part B and Part D 
  7. Medicare Part A, Part B and Medigap
  8. Medicare Part A, Part B, Part D and Medigap

First, understand what each type of Medicare plan covers and determine which type of plan best addresses your health care needs.

Then you can work with a licensed insurance agent to go over the plans that are available in your area and to review the cost and coverage of each one to decide which plan is best for you. A licensed agent can help you determine your eligibility, and – if you’re eligible – they can help guide you through the enrollment process. 

 

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