According to The Centers for Medicare & Medicaid Services (CMS), over 63.9 million people in the United States are enrolled in Medicare, the federal health insurance program.
Adults ages 65 or over can sign up to get health insurance through Medicare. People below age 65 who have certain disabilities, end-stage renal disease (ESRD), or amyotrophic lateral sclerosis (ALS) are also eligible.
A person can complete Medicare enrollment in one of two ways, either through original Medicare or through a Medicare Advantage (Part C) plan.
Original Medicare provides coverage in two areas: hospital insurance (Part A) and medical insurance (Part B). A person can add prescription drug coverage by joining a Medicare prescription drug plan (Part D).
Part A is free for most people and usually includes inpatient hospital stays, skilled nursing facility care, hospice care, and some home healthcare. Part B costs a monthly premium and usually covers doctor’s services, outpatient care, medical care supplies, and preventive services.
If a person enrolls in original Medicare, they may also need to sign up for Medigap, or Medicare supplement insurance. This is a supplementary plan that fills in policy gaps.
As an alternative to original Medicare, people who qualify can opt for Medicare Advantage. This is a Medicare-approved plan from a private company.
A person must consider many factors when choosing the best Medicare plan options for their needs. Comparing Medicare Advantage, Medigap, and Medicare Part D plans will help determine which options are the right fit for each individual.
Medicare Advantage (Part C) plans must provide the same services covered in Part A and Part B of original Medicare. Part C also usually covers the prescription drugs covered under Part D.
While original Medicare does not cover vision, hearing, or dental care, Medicare Advantage Plans may cover these areas. In some cases, these plans may also cover other wellness services, like gym memberships.
Medicare Advantage plans are available through private companies. A person can obtain them through:
- Health Maintenance Organization (HMO) plans
- Preferred Provider Organization (PPO) plans
- Private Fee-For-Service (PFFS) plans
- Special Needs Plans (SNPs)
Examples of insurance providers that offer Medicare Advantage plans include Aetna, Anthem, Cigna, Humana, Blue Shield, United Healthcare, and Kaiser.
Medicare will contribute to a fixed amount of a Medical Advantage healthcare plan, but each plan may charge different out-of-pocket costs for services.
Medicare Advantage plans also have yearly limits on out-of-pocket costs for Part A and Part B services. If out-of-pocket limits are reached, Medicare Advantage will pay for any additional costs for Part A or Part B care, as long as the services are covered under the plan.
Medigap is a supplement to original Medicare that fills in gaps where insurance coverage does not cover costs. Similar to Medicare Advantage, a person obtains this supplement insurance through private companies.
Original Medicare pays an approved amount toward medical care. A Medigap plan can fill in additional costs — including coinsurance, copayment, and deductibles.
In some cases, Medigap policies will also cover emergency out-of-country healthcare services. However, Medigap policies do not usually cover vision care, dental services, long-term care, or private-duty nursing.
Medigap coverage is available from state-approved insurance companies and costs a monthly premium.
People who choose Medicare Advantage (Part C) cannot purchase a Medigap policy; It is available only to people with original Medicare (parts A and B).
In order to get prescription drug coverage under original Medicare, a person can join a separate Medicare drug plan (Part D) for an additional cost, called a premium.
Currently, Medigap is not sold with prescription drug coverage. Since January 1, 2006, prescription drug coverage can no longer be included with Medigap. However, if someone already has a Medigap plan that includes drug coverage, they can keep this coverage.
In contrast with original Medicare, Medicare Advantage usually includes Part D coverage. However, it may be necessary to join a separate Medicare drug plan to have prescriptions covered if Part D is not included with a specific Medicare Advantage plan.
There are some advantages to choosing Medicare Advantage instead of Original Medicare. A few of these reasons include:
- Medicare Advantage may provide the opportunity to get a bundled plan that combines coverage of parts A and B with Part D.
- Some Medicare Advantage plans have a $0 premium.
- Plans can provide some benefits that original Medicare does not offer, such as vision, hearing, and dental care.
- Some Medicare Advantage plans have lower out-of-pocket costs than original Medicare.
- While original Medicare does not put a yearly limit on out-of-pocket costs, Medicare Advantage plans have a yearly limit on these costs for Part A and Part B.
- There is no need to buy Medigap.
Though Medicare Advantage has many benefits, it is important to be aware of potential weaknesses. These include:
- With original Medicare, a person can choose their doctor, hospital, and other medical service providers, but with Medicare Advantage a person can usually use only in-network doctors.
- If a person uses a doctor outside of their Medicare Advantage plan, they may have to pay all or most costs out of pocket.
- Most of the time, a person must pay a copayment or coinsurance for covered services.
- Some Medicare Advantage plans will require a monthly premium for Part B of original Medicare as well as an additional monthly premium for Medicare Advantage.
- While referrals aren’t usually needed to see a specialist with original Medicare, people with Medicare Advantage may need a referral to see one.
- Plans usually don’t cover out-of-country medical care.
- Some plans may not be a good fit for those with ESRD.
Some of the benefits of Medigap include:
- It fills in gaps for copayments, coinsurance, and deductibles.
- It can cover emergency healthcare services and supplies when traveling out of the country.
Keep in mind that Medigap policies have certain limitations. Cons include:
- It does not cover long-term care or private duty nursing.
- It does not cover vision or dental services. (Hearing aids and eyeglasses are not covered.)
- Medigap policies cannot be sold with prescription drug coverage.
- Medigap policies cover only one person. (Separate policies are needed for spouses.)
- Medigap plans no longer cover the Part B deductible for plans sold after January 2020.
- Medigap plans cost an additional monthly premium, in addition to the monthly premium for Part B of original Medicare.
- Medigap premiums can go up.
- Medigap policies cannot be purchased by people with Medicare Advantage plans.
To have prescription drugs included in medical coverage, Medicare drug coverage (Part D) is necessary. Benefits include:
- Plans help cover the cost of prescription medications.
- Plans may help lower medication costs or protect against higher costs.
- Plans usually cover at least two medications per prescription drug category.
- People with Medicare drug coverage who take insulin may be able to get discounts on their prescriptions.
- Coinsurance or copayment costs may go up when drug manufacturers raise prices.
- Coinsurance or copayment costs may increase for brand name drugs if the plan starts offering a generic form of the drug.
- Plans may switch coverage from name brand drugs to generic drugs with only 30 days of notice.
Medicare Advantage cost
According to Medicare.gov, the standard Part B premium in 2022 is $170.10, but it can be higher depending on a person’s income. Those with social security benefits may pay less than $130.
Medicare Advantage Plans have predetermined costs for premiums, deductibles, copayments, and coinsurance. People with Medicare Advantage may also need to pay an additional premium for Part B.
Before a plan pays for medical care and services, they must meet a deductible. How much it costs to reach the deductible will vary based on the particular plan a person has.
Additionally, after paying a deductible, a person may need to pay coinsurance or a copay.
Coinsurance is usually a certain percentage of the cost for the total amount of services, and a copayment is usually a set fee. For example, coinsurance may be 20% of the cost of a doctor’s visit or prescription, while a copay would be a set amount, such as $15 for the visit or for a prescription.
Medicare Advantage plans usually have out-of-pocket limits, which means that a person won’t have to pay more than a certain amount for services covered in Part A or Part B.
How much Medicare Advantage costs yearly will depend on several factors, including:
- how often health care services are needed
- how much copayments or coinsurance cost
- how much it costs to reach the deductible
- whether a visit is to an in-network doctor or doctor who accepts Medicare coverage
- what benefits are included in the plan and how much extra certain benefits cost
- whether a person has a Medicaid or a Medicare Savings Program
- what the maximum out-of-pocket limits are for the plan
Medigap supplement cost
Like Medicare Advantage, Medigap policy prices can vary based on the plan. Different plans can provide the same coverage but charge different prices, so it’s important to compare policies.
Medigap policy prices are set in three ways:
- Community-rated: These policies are the same price for everyone on the policy, regardless of age.
- Issue-age-rated: These policies are priced based on the age a person is when they buy the policy.
- Attained-age-rated: These policies are priced based on a person’s current age, so they go up as the individual gets older.
Factors that can influence the cost of a Medigap plan include:
- whether certain qualifying discounts are available, such as discounts for non-smokers, purchasing multiple policies, or certain types of payment
- whether the insurance company offers a high deductible option for Plan F and Plan G
- whether the insurance company charges a separate deductible for foreign coverage
- Medicare Select policies that require specific providers may be less expensive
- what Type of Plan J (policy to minimize out-of-pocket costs) a person has and when it was purchased
Medicare drug coverage (Part D) cost
Premiums for Part D will vary based on a person’s income. Those with higher incomes may pay more for Part D. (This includes those filing over $97,000 individually or $194,000 for joint filing in 2023).
Total costs for Part D will vary based on:
Finding the right plan will vary based on the individual’s needs. Factors to consider include:
- the price of the plan, copayments, and coinsurance payments
- what coverage is offered
- whether referrals are needed to see specialists
- whether vision, dental, and hearing care is included in the plan
- whether a person has other coverage, such as through employment or a spouse
- what supplement coverage may be needed, such as Medigap or Part D for original Medicare
- what prescription drugs are included in the plan or if Part D is needed for prescription medication coverage
- which doctors and hospitals are available in the network
- the plan’s reputation for quality of care and services
- whether travel outside the United States is included in the plan
If a person is eligible for Medicare, they can sign up for original Medicare, Medicare Advantage, Medigap, or a Medicare drug plan (Part D) during initial enrollment period, open enrollment period, or Medicare Advantage open enrollment period.