Learning Center > Medicare 101: Understanding the Basics

Medicare 101: Understanding the Basics

It’s no secret that there are plenty of Medicare choices out there for you. But getting lost in the alphabet soup of Medicare plans can be overwhelming. After all, there are 11 different Medicare plans: A, B, C, D, High Deductible Plans F and G, K, L, M, and N.

It might be tempting to follow the advice of a family member or friend of which Medicare plan is best for you. You may even think, “If that plan works for them, it’ll work for me, too,” which is not always the case.

The truth is: Every person has different healthcare needs. So if you’re wondering how to pick the right plan for you but don’t know where to start, you’re not alone.

It’s key to understand the different Medicare parts, what they cover, and how to get the most affordable price on the plan that’s right for you. Let’s start by breaking down the Medicare plan options into digestible terms.

What is Medicare?

Medicare is health insurance for:

  • People who are 65 or older.
  • People under 65 years old who are disabled and have been receiving Social Security Disability benefits for at least 24 months.
  • People suffering from End Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis, also known as ALS or Lou Gehrig’s disease.

Medicare Part A

Provides coverage for inpatient and hospital care.

Medicare Part B

Provides coverage for doctors and outpatient services.

Medicare Advantage Plans (Medicare Part C)

Typically covers Parts A, B and D with one bundled insurance policy for all Medicare coverage.

Prescription Drug Plans (Medicare Part D)

Provides coverage for the cost of your medications.

Medicare Plans A-N (Medicare Supplement or Medigap)

Coverage varies by plan benefits, but these plans help cover benefits that Medicare Part A and Part B don’t cover. Plans C, E, F, H, I, and J are no longer sold to new enrollees.

How does Medicare work?

Many people automatically get Original Medicare - also known as Part A and Part B - especially if they’re receiving Social Security retirement benefits when becoming eligible for Medicare coverage.

You will have the option to enroll in Medicare Part A, Part B, or both when you join Medicare. But you might be in a situation where you have other health insurance besides Medicare, like a plan through your employer, so you can delay your enrollment in Part B without being penalized.

But even if you enroll in both Part A and Part B, it’s important to know that Original Medicare does not cover everything. That said, it’s recommended to learn the various Medicare parts and Medicare Supplement plan options that can help cover what Original Medicare doesn't.

The good news is you can add on to your Original Medicare coverage in two different ways:

  • Enroll in a Medicare Part D prescription drug plan.
  • Enroll in a Medicare Supplement insurance plan. More on this option below.

Many people choose to have both options, but be sure to always evaluate your specific healthcare needs and budget before making your choice.

What is Medicare Advantage?

Medicare Advantage plans are offered by a private health insurance company that works with Medicare to provide your Part A and Part B benefits. These bundled plans also typically include Medicare Part D (prescription drugs coverage).

Some Medicare Advantange plans offer extra coverage for dental, vision and hearing services. But each Medicare Advantage plan can charge different out-of-pocket costs.

What is a Medigap plan?

Medicare Supplement plans (also known as Medigap) help cover gaps in insurance that Medicare doesn't cover. So if you want coverage that might pay for all or part of certain Medicare out-of-pocket expenses, then you may want to explore Medigap plans. In layman's terms, a Medicare Supplement plan is additional health insurance coverage used to supplement a more comprehensive plan.

While there are different Medicare Supplement plans, each one usually covers at least 50% of your Part B coinsurance. It’s also worth noting that each standardized plan also covers hospital costs and expenses up to 365 days after your Medicare coverage has ended.

How do Medicare Supplement plans work?

Medicare coverage has many holes in it. Original Medicare often pays a bulk of your medical expenses, but not all of them in instances where you become very ill or seriously injured. This is where Medicare supplement plans (Medigap plans) come into play: These plans may offer protection from steep out-of-pocket medical costs that result from numerous doctor or hospital visits.

Think about it: You’ve worked hard for too long, so you don’t want your hard-earned nest egg diminished by unexpected major medical expenses like costly hospital stays.

So, you may want to consider buying a Medicare supplement insurance plan to supplement your Medicare Part A and Medicare Part B coverage particularly if:

  • You’re likely to have numerous hospital stays during a year
  • You have regular doctor visits and/or medical services
  • You frequently travel outside the U.S. and want insurance coverage for emergency medical care overseas, which Medicare Part A and Medicare Part B may not provide. Note: Some Medicare supplement plans provide international travel coverage.

How do I choose the best Medicare supplement plan for me?

Medicare supplement plans are sold through private insurance companies in the U.S. These plans are designed to help you cover the leftover costs after Original Medicare (Part A and Part B) benefits are applied.

In all U.S. states except Minnesota, Massachusetts, and Wisconsin, Medicare supplement plans are available in 11 standardized benefits packages and vary based on the amount of expenses they cover. In most cases, the more expense the supplement plan will pick up, the higher the premium will be.

Here are steps to choose the right plan for you:

#1: Analyze your options.

Start by looking up Medicare quotes online, comparing things like plan costs, features, benefits and credibility of the private insurance company.

Medigap plans come in standardized benefit packages: You can use all of them anywhere a provider accepts Medicare payments. So the good news is that you don’t have to pull out a spreadsheet to compare networks, deductibles, and copays.

Plan M and Plan N are good cost-sharing plans with cheaper premiums, making them more appealing to healthier retirees. And while all Medicare supplemental insurance plans offer basic benefits, some offer extra benefits, like Silver Sneakers.

The reputation of an insurance company is also important choosing a Medicare Supplement policy. Two or more insurance companies may have the same premiums and pricing, but you may be more inclined to go with the company that has the higher consumer rating.

#2: Understand pricing.

When you're age 65, you might purchase a Medicare policy that seems relatively inexpensive at the time, but it might come with a bigger price tag later on in life. That said, you don’t have to automatically jump on the supplemental plan with the lowest price because that plan might face a price hike as the years pass.

Although Medicare Supplement plans are standardized, premiums can vary considerably for the same plan. For example, the amount you pay can depend on your gender, age, where you live, tobacco usage, and overall health.

Most insurance companies in the U.S. can use several different methods to set their Medicare supplement plan prices. They're typically calculated in three different ways:

  • Community-rated: The same premium amount is charged to everyone, regardless of age.
  • Issue-age rated: The premium amount depends on your age when you purchase the policy but will never go up specifically based on your age.
  • Attained-age rated: The premium amount starts lower for younger-aged buyers at purchase, but it goes up as you get older.

#3: Know your healthcare needs.

Knowing your own health history as well as your current and future health care needs is key in choosing the right supplemental plan. Ask yourself the following:

Do I have pre-existing conditions?

In all states, you have a right to purchase a Medicare supplement policy for six months starting on the first day of the month you’re at least 65 years old and enrolled in Medicare Part B.

Your insurance company isn’t allowed to turn you down during this grace period, or charge you a higher amount because you have a pre-existing medical condition. This is known as "guaranteed issue."

But after that, you’re only entitled to guaranteed issue in such instances as your retiree group Medicare plan has shut down, your Medicare Advantage plan has shut down, or you moved out of the service area.

A few states, such as Massachusetts, Connecticut and New York, have specific rules that let their residents switch supplement plans regardless of pre-existing conditions.

Do I need prescription drugs or other types of coverage?

Medicare supplement plans don’t cover prescription drugs, so you’ll have to consider purchasing a separate Part D drug plan.

Keep in mind that supplemental plans also don’t cover hearing aids, vision care, dental care, or long-term care.

How do I buy a Medicare supplement policy?

You can often find Medicare supplemental plans and their costs online or through an agent. Just be sure to carefully review the policy before applying.

You can then pay for your supplement policy by check, bank draft, or money order.

When should I start shopping for Medicare?

The best time to start shopping for Medicare is 90 days before you turn 65, so your plan will be effective the month you turn 65.

During this period, insurance companies can’t deny coverage or charge you higher premium amounts regardless of your health. In other words, they can’t do any of the following:

  • Charge you a higher premium for a supplemental policy than they charge people with no health issues
  • Refuse to sell you any supplemental insurance policy it offers
  • Make you wait for insurance coverage to start

If you purchase or change Medicare supplement plans outside of the open enrollment period and your guaranteed issue, you might be turned down or may be charged more depending on your health status.

Be sure to review all of your options even if you have an existing Medicare supplement plan: You may be able to save money with the same insurance plan by switching to a different insurer.

You can submit your application for supplemental insurance as early as six months before the first of the month in which you turn 65, which has two main advantages:

  • Many insurance companies determine your premium rates based on the signature date. Signing early will ensure that you get the best rate while avoiding any risk of rate hikes that may occur between your start date and your signature date.
  • You’ll likely feel much more comfortable and relaxed when the process is complete, and you’ll have your insurance policy and ID cards in hand by the start date.

Wait times

Under federal law, Medicare Supplement insurers may impose a waiting period for up to six months to cover services related to pre-existing conditions. However, if the applicant had at least six months of prior continuous major medical coverage, there is no waiting period.

Get help with your Medicare plan

Though we just covered a variety of options, you don't have to go it alone.

Why spend your free time doing hours of research on Medicare plans? Try our easy plan comparison tool get Medicare quotes or get help from one of our licensed Medicare agents.

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What you should read next

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Mark Your Calendar This may seem like an obvious tip, but it’s worth mentioning: Mark your calendar for October 15 through December 7 if you’d like to make a change to your Medicare plan. You might even set aside a few hours to research and compare Medicare Advantage plans and Prescription Drug plans ahead of October 15. These plans announce their benefits for the next year starting on October 1. Writing down these Medicare AEP dates and to-dos will help you to commit to these priorities. 2. Review Your Medicare Annual Notice of Change You’ll receive lots of information over the next month or so, so if you’re currently enrolled in a Medicare Advantage or Prescription Drug Plan, the Annual Notice of Change (ANOC) is one piece of mail you’ll want to read. Your Medicare plan will mail your Annual Notice of Change letter to you by September 30. 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Just enter your zip code to see Medicare Advantage plans that are available in your area. More Medicare Options for People With Kidney Failure One major change happening for the 2021 plan year is that people with End Stage Renal Disease (ESRD), also known as kidney failure, will now have the option to enroll in a Medicare Advantage plan. The Centers for Medicare & Medicaid Services (CMS) estimates that more than 80,000 people living with ESRD will enroll in a Medicare Advantage plan by 2026 - a significant increase of 63%. Medicare Advantage plans may provide ESRD patients with better coverage compared to Original Medicare. Many Medicare Advantage plans include access to coordinated care, which helps ensure all your doctors are on the same page regarding your treatment. What Are Medicare Advantage Special Needs Plans? Medicare beneficiaries also have access to Medicare Advantage plans designed for unique needs. These are called Special Needs Plans (SNPs). Like other types of Medicare Advantage plans, SNPs vary based on location. You may be able to switch to a Special Needs Plan during the Medicare Annual Enrollment Period if one of these situations apply: You’ve been diagnosed with a serious medical condition by a doctor. There are SNPs for certain chronic conditions, such as kidney and heart failure, diabetes and dementia. Services are tailored to the specific condition the plan covers. You need or have received skilled nursing care for at least 90 days at your home or at an institution, such as a nursing home or long-term care facility. You qualify for both Medicare and Medicaid. Medicaid eligibility is based on your income and assets. If you qualify, Medicaid will pay most of the costs for your Medicare Special Needs Plan. Special Needs Plans include all the same benefits as regular Medicare Advantage plans, plus some expanded coverage. For example, all Special Needs Plans must include prescription drug coverage, which is usually tailored to the specific condition the plan covers. Although most regular Medicare Advantage plans include prescription drugs, some do not. Some SNPs also provide a care coordinator to help you stay on track with your doctor appointments and treatment plan. What If My Income Has Changed in 2020? The coronavirus crisis has affected the financial well-being of many Americans, including those on Medicare. If you’ve experienced a decrease to your income or assets, the Medicare AEP 2020 season is a great time to switch to a more affordable plan. If you have limited income, you might qualify for extra savings on Medicare costs through these programs: Medicare Savings Programs. These programs help pay for some of your Medicare Part A and Part B out-of-pocket costs, such as copays, deductibles and premiums. Most programs are for Medicare beneficiaries who also qualify for Medicaid. And as mentioned, Medicaid covers the majority of your costs when you join a Medicare Advantage Special Needs Plan. You can check if you qualify through your local Medicaid office. Medicare Extra Help. Extra Help reduces your Medicare prescription drug plan costs. You should contact Social Security to check your eligibility for Extra Help if you have an existing Medicare drug plan or you join one during AEP. How To Enroll During the Medicare Annual Enrollment Period To enroll in an eligible plan during the Medicare Annual Enrollment Period, you can visit Medicare plan comparison websites like healthinsurance.com or Medicare.gov. Or, you might prefer to talk to a licensed insurance agent to get help enrolling in Medicare. Whatever option you choose, be sure to have 3 items handy before you enroll in a plan or make changes to your current plan during AEP: Your Medicare card Your list of doctors, prescriptions and what is important to your health Pen and paper to take notes More on Medicare Eligibility Medicare is a federal health insurance program developed in 1965. To be eligible for Medicare you must meet one of the following criteria: You are age 65 or older You are under age 65, disabled, and have been receiving Social Security disability benefits for at least 24 months. You have End Stage Renal Disease or Lou Gehrig’s Disease (also known as Amyotrophic Lateral Sclerosis or ALS). You can visit Medicare.gov to see if you’re eligible for Medicare and calculate your estimated premiums for certain plans. Medicare Resources You don’t have to go it alone when choosing a Medicare Advantage plan or Prescription Drug Plan. We’re here to help you navigate the Medicare Annual Enrollment Period through a number of ways, including our Medicare resources and our licensed insurance agents. You can also read through some of our articles to learn more about Medicare. Medicare 101 Guide Top Medicare Frequently Asked Questions Understanding Original Medicare vs. Medicare Advantage
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People often have questions about Medicare as they get close to age 65: Does Medicare cover my prescription drugs? Will my doctor accept my Medicare plan? Does my Medicare plan cover dental, vision, and hearing? These are questions we often hear, and we’re here to help get you these answers and more. Let’s start by reviewing the basics of Original Medicare, including coverage and out-of-pocket costs. Then we’ll cover some options to reduce your Medicare costs and add valuable benefits to your coverage. How Original Medicare coverage works Original Medicare is split into two parts – Part A and Part B. Medicare Part A Covers some of the costs of care provided by the following facilities and providers: Inpatient hospital care Hospice Care Home Health Care Skilled Nursing Facility Care Medicare Part B Covers medically necessary services and supplies, including: Doctor’s visits Diagnostic tests (x-rays, blood work, MRIs, etc.) Therapy visits (physical, occupational) Some cancer treatments like chemotherapy Outpatient surgeries like arthroscopic surgeries Outpatient mental health visits Durable medical equipment like bottled oxygen How much does Original Medicare cost? When you use your Medicare insurance, you will have to pay for some of the costs out of pocket. But the out-of-pocket costs are different for Parts A and B. When you have a hospital stay, you’ll have to pay the Part A deductible which is $1,408 in 2020. You’ll pay this inpatient hospital deductible each time you are admitted to the hospital, provided you haven’t received hospital or skilled nursing facility services within the previous 60-day benefit period. Meanwhile, Part B has three types of charges: Part B deductible: $198 for 2020, which you only pay once each year. After that, Medicare will pay 80% of the cost, and you’ll pay 20% for every Medicare-covered Part B service or procedure you receive. Part B coinsurance: 20% of the cost for each service or procedure Part B excess charges: Up to 15% of the Medicare-approved charge if your doctor does not accept the Medicare-approved amount for a service (known as Medicare assignment). For the most part, your out-of-pocket costs could be quite low if you’re healthy and don’t need many health care services. And if you get the flu or need some therapy for a sprained ankle, your 20% coinsurance could total a few hundred dollars for the entire year. But your out-of-pocket costs could be very high if you suffer a major illness or need specialized surgery. Plus, Original Medicare does not cover prescriptions. So if you need medications, costs could be high. One last point on costs: There’s no cap on your spending with Original Medicare. This means there’s no out-of-pocket maximum cap like you may have seen with your previous traditional, private health insurance plan. And this means your out-of-pocket costs could be extremely high if you require treatment for a chronic condition or illness. Medicare Advantage may help control costs Many Medicare beneficiaries choose to enroll in Medicare Advantage plans to curb out-of-pocket costs and get prescription drug coverage. Medicare Advantage (also known as Medicare Part C) is a contract between the Centers for Medicare and Medicaid Services (CMS) and a private health insurance company. Medicare Advantage plans must cover everything that Original Medicare covers. When you join a Medicare Advantage plan, you may still pay for certain expenses including: Monthly plan premium (if any): Many plans have a low-cost or $0 monthly premium. (You must continue to pay your monthly Part B premium). Annual deductible (if any) Copayments and/or coinsurance Still, these costs are often lower than what you’d pay under Part A or B. One big benefit of a Medicare Advantage plan is that it includes an annual out-of-pocket maximum - so you’ll know your costs are capped, no matter what services or treatments you might need during a year. Medicare Advantage provides extra benefits Medicare Advantage can serve as a way to cover services that Original Medicare doesn’t. That’s because these plans often go beyond Original Medicare coverage offerings. These extra benefits can vary by state and health plan, but they often include: Chiropractic care and acupuncture. Dental coverage: Sometimes for an additional premium. Emergency coverage outside of the United States Fitness benefits: Discounted or free gym memberships and silver sneakers programs. Hearing coverage: Exams, and sometimes discounted hearing aids. Prescription drug coverage: You’ll typically share the cost of your medications with your insurance company in the form of copayments or coinsurance for each prescription. Transportation: To and from medical appointments. Vision coverage: Exams, lenses, and the cost of frames. An example of how it works Let’s take vision coverage as an example. Original Medicare doesn’t cover basic vision services like eye exams and lenses. If you pay out of pocket, you can expect to pay (on average): $114 for an eye exam $113 for lenses $238 for frames Based on these averages, you could pay a total of $465 for an exam, lenses, and frames. While benefits vary by state and insurance company, many Medicare Advantage plans have exams and lenses for $0. Many companies could also give you a credit towards the purchase of frames. And though you probably don’t buy new glasses every year, it’s unlikely that prices for lenses and frames will decrease. Getting frames from a Medicare Advantage plan can save you quite a bit of cash, especially given the relatively low (or $0) plan premiums they charge. You will find that other extra benefits work in the same way. The hearing or dental coverage available from Medicare Advantage plans may not be completely comprehensive or free, but it’s often less expensive than what you can get from an individual policy. How Medicare Supplements can help control costs Medicare Supplement insurance is another way to lower your Medicare out-of-pocket costs. These policies are offered by private insurance companies and work with Original Medicare, paying for some or all of the costs that you’d normally pay. The costs you have to pay with Original Medicare are known as “gaps in coverage.” Medicare Supplements help to fill these gaps - hence the name “Medigap” plans. You’ll pay a premium directly to your insurance company for Medigap coverage. And Medigap can help with some or all of: Part A deductibles Part B deductibles Part B coinsurance Part B excess charges Medicare Supplement plans come in standardized plans, with each plan paying a slightly different portion of the Original Medicare gaps. The standardized plans are known by letter: A, B, C, D, F, G, K, L, M, and N. Plans F, G, and N are among the most popular with people on Medicare. Medigap plans offer a lot of freedom when it comes to choosing a doctor. Your coverage is portable all over the country, so you can see any doctor who accepts Medicare patients. You don’t have to deal with a network, or get a referral from a primary care physician. As an added bonus: Many Medigap plans also cover you outside the United States, so you can have emergency coverage while you’re traveling as part of your retirement routine. What Medigap plans don’t cover There are a number of items that Medicare Supplement insurance doesn’t cover. For starters, they don’t cover prescription drugs, so you’ll need to enroll in a stand alone prescription drug plan to help cover costs. These are also available from private insurance companies. Medigap plans also don’t cover vision, hearing, or dental. While it’s possible that some Medigap plans offer discounts on these items, none provide comprehensive coverage. Medigap plans also provide no coverage for staying in a nursing home or other facility for long-term care. Instead, you’ll have to purchase individual coverage from an insurance company to cover these items. Or, you may be able to purchase coverage for some of these items from your Medigap insurer in a separate supplemental policy. With either option, you’d pay an additional premium for the coverage, but buying standalone vision or dental coverage from another company might be the more expensive option. How to enroll in a Medicare Advantage or Medigap plan The most important thing to know is that you’re not “stuck” in a Medicare plan: If you want to switch Medicare plans, you can do so during the Annual Enrollment Period, which is from October 15 to December 7 each year. You can also switch from one Medicare Advantage plan to another, or go back to Original Medicare during the Medicare Advantage Open Enrollment Period, which is from January 1 to March 31 each year. And if you want to learn how to reduce your out-of-pocket medical expenses in the meantime, you just need to get smart on maximizing your Medicare benefits. Save time, learn more Let us do the hard work for you, so you can save time and find the best Medicare plan for your needs. Working together, we can find and compare Medicare Advantage plans in your area to see if they work with your doctors and cover your medications.
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Are you turning 65? Turns out, you’ll be joined by thousands of birthday buddies. In fact, 10,000 Americans turn 65 every day - a real cause for celebration, whether it’s the milestone of retirement or your journey to the right Medicare coverage. Still, many Americans are confused by Medicare: how to enroll, when their enrollment period is and what plan to even enroll in. But the process doesn’t need to be so complex. Here’s your Medicare checklist for turning 65. 1. Make Sure You Qualify For Premium-Free Medicare Part A Most people qualify for Medicare Part A because of their work history. If you’re a U.S. citizen or permanent legal resident, you qualify for premium-free Part A as long as you have paid payroll taxes for at least 10 years. Call your local Social Security Office to see if you’re eligible for Medicare Part A. You may receive a paper statement from SSA [sample here] as a reference, or you can create an account online at ssa.gov. What If You Didn’t Work Enough? You may still qualify for Medicare Part A through your spouse if you don’t (or won’t) have 40 quarters of work history. You’re eligible if your spouse qualifies for premium-free Part A, and: You have been married for at least one year and your spouse is eligible for Social Security benefits. You're divorced and your former spouse is eligible for Social Security benefits. You must have been married at least 10 years, and you must be single now. You’re widowed, but were married for at least nine months, and you are currently single. If you don’t meet any of these criteria, you can either continue working until you’ve logged 40 quarters, or pay for Part A. For 2020, the Part A premium is $458 per month, but this amount may be reduced if you have some work history. 2. Figure Out When You’re Going To Need Part B If you are currently employed and you are covered by an employer health plan, and your employer has more than 20 employees, you don’t have to sign up for Part B until you retire and give up your employer-based health coverage. Many people can’t take full Social Security benefits until age 66, so it’s common to delay retirement by a year. You can delay Part B as long as your employer coverage meets Medicare’s minimum requirements. But if you work for a small company with less than 20 employees, you’ll probably need to enroll in Part B when you’re first eligible. Be sure to talk about this with your employer before your 65th birthday. There’s no reason to pay the Part B premium until you’ll actually need Medicare. 3. Decide When You’re Taking Social Security There are a few nuances to receiving Social Security and how it impacts when you can enroll in Medicare Parts A and B: If you take Social Security at age 65, your enrollment in Medicare will be automatic. If you pass on Social Security at age 65, but want to sign up for Medicare, you’ll have to apply for it separately. You can use ssa.gov to enroll if you choose to enroll before your 65th birthday. If you wait until after you’re 65, you’ll have to visit a Social Security office to sign up for Medicare. 4. Know Which Doctors You Want To See When You Have Medicare Make sure the doctors you see, or want to see, accept Medicare. Finding out ahead of time can help you avoid surprises. If you plan to move during your retirement, it’s wise to get recommendations for doctors in your new hometown and see if they accept Medicare patients. 5. Get A Firm Understanding Of Your Medications When it comes to medications and aging into Medicare, there are 3 steps to take: You should always know your medications and their doses. Talk to your doctor about generic versions of your prescriptions to reduce costs. Find out if your doctor thinks you might need a new or different medication in the future. 6. Understand The Gaps In Original Medicare Medicare doesn’t cover 100% of your health care costs. Instead, you’ll pay a portion out of your own pocket. The costs you pay for Part A differ from what you’ll pay for Part B. Gaps In Medicare Part A Part A will cover you for inpatient type of events, like: Hospital stays Home health care Hospice Skilled nursing facilities When you have a hospital stay, you’ll have to pay the Part A deductible. For 2020, the deductible is $1,408. You’ll pay this inpatient hospital deductible each time you are admitted to the hospital, provided you haven’t received hospital or skilled nursing facility services within the previous 60-day benefit period. Gaps In Medicare Part B Part B of Original Medicare covers the services you’d receive in an outpatient setting, including: Doctors and therapy appointments Lab work and diagnostic imaging Outpatient surgeries Medical equipment like oxygen machines Some cancer treatments like chemotherapy When you use Part B coverage, you can expect to pay out of pocket for each service. Your share of cost can include: Part B deductible: $198 for 2020 (you only pay the Part B deductible once each year). Part B coinsurance: 20% of the cost for each service or procedure. Part B excess charges: Up to 15% of the Medicare-approved charge if your doctor does not accept the Medicare-approved amount for a service (known as Medicare assignment). The biggest Part B expense is the 20% coinsurance, which you’ll pay throughout the year. There are other costs you can expect to pay out of pocket with Original Medicare, including things like dental care, eye exams, hearing aids, and more. Keep in mind that there is no cap on how much you can spend out of pocket with Original Medicare. How To Find The Right Plan For You Make sure any Medicare plan you consider: Covers the doctors you want to see Covers the medications you need Has a premium you can afford You can also narrow your choices down further by asking yourself: Do I intend to split my time between two or more States? Am I comfortable with an HMO-type arrangement, or using a set group of doctors and facilities? If you spend a lot of time travelling or living in a second home, you’ll want to consider Medicare Supplement Insurance. But if you’re comfortable with a particular HMO-type medical group and plan to live in one place, then Medicare Advantage could be right for you. Your Options Beyond Original Medicare There are Medicare plans available that help close the coverage gap of what Original Medicare doesn’t cover. They include: Medicare Advantage Medicare Part D (Prescription Drug Plans) Medicare Supplement (Medigap) Medicare Advantage Plans Medicare Advantage plans, also known as Medicare Part C, is a contract between a private insurer and Medicare. These plans must cover everything that Original Medicare covers. Medicare Advantage plans work like traditional private health insurance, so you may see certain out-of-pocket costs with Medicare Advantage, including: Monthly premium: Many Part C plans don’t have a monthly premium. Annual deductible: Most plans don’t have a deductible. Copayments or coinsurance for services and procedures. Medicare Advantage plans also offer a number of added benefits, which vary by state and health plan. Some benefits include: Fitness programs like Silver Sneakers or free memberships to local gyms. Vision coverage for exams, lenses, and sometimes frames. Hearing coverage for exams and discounted hearing aids. Dental coverage for basic dental services. Transportation to and from medical appointments Prescription drug coverage (some plans) Medicare Advantage plans can also provide emergency coverage outside the United States. With the international coverage, out of pocket maximum protection, and a wide range of extra benefits, you can see why many people choose Medicare Advantage plans. Prescription Drug Plans Prescription Drug plans (PDPs or Medicare Part D) help with the cost of prescription drugs. Each company creates their PDPs differently, but you can expect to pay these costs for coverage: Monthly premium, which varies based on income Annual deductible (although many plans don’t have a deductible) Copayment or coinsurance per filled prescription The copayments and coinsurance costs increase as the total amount your plan pays rises above certain thresholds, also known as coverage stages: Coverage Stage 1 – Deductible Stage: You pay full price until you’ve spent $435 (for 2020). Coverage Stage 2 – Initial Coverage Stage: You pay small copayments or coinsurance for each prescription. Coverage Stage 3 – Coverage Gap Stage: Also known as the Medicare “Donut Hole.” Once your total drug costs (what you’ve paid plus what your plan has paid) exceed $4,020, you hit the coverage gap. You’d then pay 25% of the cost of prescriptions. Coverage Stage 4 – Catastrophic Stage: Once your total drug costs (excluding what your plan has paid) exceed $6,350, you pay no more than 5% for medications These coverage stages reset on January 1 each year. But it’s important to know that there is no out-of-pocket cap on drug costs under Part D. Medicare Supplement Insurance Medicare Supplement Insurance, also known as Medigap, is designed to fill the gaps in Original Medicare. Medigap supplements Original Medicare by paying some or all of the expenses that you’d normally have to pay out of pocket. Medigap policies are issued in 10 standardized plans: A, B, C, D, F, G, K, L, M, and N. Each of these plans cover a slightly different portion of the Original Medicare gaps. Plan G is a popular Medigap option that covers every gap except for the Part B deductible. If you have Plan G, you can expect to pay for the first $198 in Part B expenses (like doctor’s visits). Plan G will then cover every penny of any Medicare-approved service or procedure. Several Medicare supplements provide some international coverage, including plans C, D, F, G, M, and N. Medigap plans also give you maximum flexibility, so you can see any doctor or use any facility that accepts Medicare patients, anywhere in the United States. You’re not bound to a network, or reliant upon referrals. Medicare Supplement Insurance plans don’t cover prescription drugs, so you’ll need to enroll in a stand alone Prescription Drug plan to get drug coverage. Considerations Before Choosing A Plan Make sure any Medicare plan you consider: Covers the doctors you want to see Covers the medications you need Has a premium you can afford You can also narrow your choices down further by asking yourself: Do I intend to split my time between two or more States? Am I comfortable with an HMO-type arrangement, or using a set group of doctors and facilities? If you spend a lot of time travelling or living in a second home, you’ll want to consider Medicare Supplement Insurance. But if you’re fine with HMO-type medical groups and plan to live in one place, then Medicare Advantage could be right for you. As you approach age 65, it’s important to start your research sooner rather than later. Make sure you know what plans your doctors will accept, and which plans cover your medications. Comparing Medicare plan features and costs doesn’t have to be complicated though. You can find and compare Medicare quotes or enroll in a plan through our site. We also have licensed Medicare agents available to help answer any questions you may have.
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