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.
Part A (Original Medicare)
Provides coverage for inpatient and hospital care.
Part B (Original Medicare)
Provides coverage for doctors and outpatient services.
Part C (Medicare Advantage Plan)
Typically covers Parts A, B and D with one bundled insurance policy for all Medicare coverage.
Part D (Prescription Drugs)
Provides coverage for the cost of your medications.
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.
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.