Where do you start when it comes to understanding Medicare? If you’re feeling overwhelmed about where to begin, you’re not alone. Many people often feel like there are too many options to consider. A general overview of the Medicare program and all it entails is just what you need to get started. Here are the different Medicare options explained.
The Structure of Medicare
Medicare has a specific format you’ll need to understand first. Four main parts make up the Medicare program, including Part A, Part B, Part C, and Part D. Here is a general overview of the different parts. If you need more specific information, Boomer Benefits has your Medicare answers.
Medicare Part A covers your inpatient hospital needs. In other words, it helps pay for your room and board, food, nursing care, and more while you are admitted to a hospital. While Part A covers your inpatient care, Medicare Part B covers your outpatient medical services.
For example, when you receive blood work, visit your doctor, or have surgery done, Part B will step in to help pay. However, Part B only pays for 80% of Medicare-approved services, meaning you are responsible for the remaining 20%. Fortunately, you can enroll in a Medicare Supplement plan to help cover the 20%.
Part A and Part B are provided by the federal government, while the other parts of Medicare are provided by private insurance companies. Medicare Part C, also known as Medicare Advantage, is an alternative way for you to receive your Part A and Part B benefits and Medicare Part D, helps cover your retail prescription drugs.
Your Medicare Options
When the time comes, you will enroll in Medicare Part A and Part B through Social Security (SS.) Once you have Part A and Part B, there are two main plan options. The first option is to sign up for a Medicare Supplement plan and a Part D plan. The second option is to join a Medicare Advantage plan.
Medicare Supplement Plan + Part D Plan
A Medicare Supplement plan, also known as a Medigap plan, helps cover your portion of cost-sharing with Medicare, including copayments, coinsurance, and deductibles. There are ten plans to choose from that you can purchase through a private insurance company. For example, one of the most popular plans is Medigap Plan G, as this plan covers all 20% of your costs once you meet the Part B deductible.
Medigap plans tend to have higher premiums with lower out-of-pocket costs. Additionally, you can use a Medigap plan anywhere in the U.S. as long as the healthcare provider accepts Medicare insurance.
However, Medigap plans don’t cover prescription medications. This is where a Part D plan comes into play, as the government created these plans specifically to help with medication costs. You would purchase a Part D plan through a private insurance carrier. These carriers decide how much their Part D plans will cost, including monthly premiums, deductibles, and copays for specific medications.
Medicare Advantage Plans
When you enroll in an Advantage plan, you receive the same Part A and Part B benefits through a private insurance carrier instead of the federal government. So, your Advantage plan would provide your Part A and Part B benefits. Most Advantage plans also include built-in Part D benefits, so they’re sometimes referred to as all-in-one plans.
Additionally, Advantage plans often have lower monthly premiums compared to Medigap Plans in exchange for higher out-of-pocket costs as you go. So, they can be more cost-effective for some people, but not everyone. However, keep in mind, Advantage plans operate within specific network areas, meaning you may not have the freedom to choose all the doctors you prefer.
How to Choose the Right Plan
Now, you may be wondering which option is right for you. Ultimately, this decision comes down to personal factors, including your budget, health status, and lifestyle choices.
For example, suppose you plan to travel a lot in retirement. You might want to choose a Medigap plan if possible since they have no network restrictions. Or maybe you are relatively healthy and don’t have strong preferences for the doctors you see. In that case, an Advantage plan might be a good option.
Understanding Medicare and all the different plan options can be overwhelming. It’s best to start your research ahead of time so you’re ready to go when the time comes. To help, you may consider starting with the basics and continuing from there.
Author: Alexandria Roland
Alexandria Roland is a Medicare expert, licensed insurance agent, and digital marketing coordinator at Boomer Benefits. As a content creator, she shares her knowledge of Medicare through many outlets, including writing. Alex helps to manage a growing online community of over 30,000 seniors in the Boomer Benefits Medicare Q&A Facebook Group.