Traditional Medicare vs. Private Medicare Plans

Older Americans and younger people with certain conditions can choose health insurance coverage through either Original Medicare, supplemental plans, or private Medicare plans. These programs come with a wide variety of services and stipulations which can be challenging to understand. Here’s a primer to help you navigate your Medicare options with confidence.

Key takeaways:
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    Most older Americans get enrolled in Medicare automatically around the time they reach 65.
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    Original Medicare lets you see any healthcare provider who accepts Medicare, but services may be limited.
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    To avoid recurring fees on top of your premium, be sure to enroll in Parts B and D when you become eligible for Original Medicare or sign up for Medicare Advantage.
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    Medicare Part C or Medicare Advantage plans are privately managed and can vary with cost, location, and scope of services, but they must include the same provisions as Original Medicare.

What is Original Medicare?

Original Medicare is a health insurance program sponsored by the federal government. It is designed for adults aged 65 and older, individuals with disabilities, end-stage kidney disease, or Lou Gehrig’s disease. This plan lets you use any healthcare provider or hospital in the U.S. that accepts Medicare. Medicare Part A is hospital insurance and Medicare Part B is called Medical Insurance.

What does Medicare Part A cover?

Medicare Part A can cover services including:

  • Inpatient hospital stays
  • Skilled nursing facility stays
  • Home health care
  • Hospice

How much would I pay for Medicare Part A?

If you have paid enough money into Medicare through payroll taxes, you might qualify for a free premium. Otherwise, you must “buy in” at a rate of $278 or $506 for 2023, depending on how much Medicare taxes you or your spouse have paid.

Under Medicare Part A, the annual deductible for a hospital visit will be $1,600 in 2023. This is what you’d have to pay before Original Medicare starts paying benefits.

What does Medicare Part B cover?

Medicare Part B covers medically necessary services and preventive services from providers who accept Medicare. You can get coverage for:

  • Ambulance
  • Clinical research
  • Home health care
  • Durable medical equipment
  • Mental health services

When does Medicare coverage start?

Medicare coverage usually begins during your Initial Enrollment Period, which is when you turn 65. This timeframe starts 3 months before your 65th birthday and ends 3 months after the month you turn 65.

If you miss this Initial Enrollment Period, you may have to pay a recurring late enrollment penalty each month as long as you have Part B coverage. The longer you wait, the higher the penalty grows. If you pay a Part A premium, you’ll be paying an additional penalty as well.

What doesn’t Original Medicare cover?

Original Medicare doesn’t cover every service, though. Also, there is no annual limit on your out-of-pocket costs, unless you acquire supplemental coverage or a Medicare Advantage plan.

  • Coinsurance
  • Prescription drugs
  • Most dental care or dentures
  • Hearing aids and fitting exams
  • Eye exams for prescription glasses
  • Cosmetic surgery
  • Covered services or items from an opt-out doctor, except in urgent cases

See if Medicare covers your service or item here.

What Is Medicare Part C?

Medicare Advantage Plans, also called Part C or MA plans, are private health insurance plans that combine Original Medicare’s Part A and Part B. These plans are Medicare-approved and must follow Medicare’s rules. If you enroll in a Medicare Advantage plan, you’ll still have Medicare but most of your Part A and Part B benefits will come from your Medicare Advantage plan.

What does Medicare Part C cover?

Medicare Advantage plans often include benefits beyond those of Original Medicare, such as some hearing, vision, and dental services. Some Part C plans offer fitness programs, over-the-counter medications, and transportation to doctor visits. Most also add prescription drug coverage (Medicare Part D).

Unlike Original Medicare, Medicare Advantage plans normally use a network of healthcare professionals. It’s important to shop for a plan that works with your healthcare providers, prescriptions, and budget.

How much would I pay for Medicare Advantage?

Part C policies come with different premiums, copays, out-of-pocket limits, and provider networks. Plans may have low or no premiums but higher copays or a smaller provider network. Drug coverage may cost more with some plans, too.

What Is Medicare Part D?

Medicare Part D provides prescription drug coverage. You can get it as a stand-alone plan from a private company or as part of a Medicare Advantage plan. You can only get a Part D plan if you are signed up for Part A, Part B, or Part C.

What would I pay for Medicare Part D?

Medicare Part D monthly premiums also differ by plan and income. The amount can change yearly. You might be subject to paying a penalty if you don’t enroll in a Part D plan when you first get Medicare or go 63 days without similar drug coverage.

Most Part D plans charge a deductible, which depends on the plan you join. Your out-of-pocket costs also depend on your medications and the pharmacy you use. People with limited resources might find assistance with paying drug costs such as premiums, deductibles, and copays.

How do I enroll in Medicare?

Most eligible adults get enrolled automatically in Original Medicare Part A. Part B and Part D are voluntary, but you’ll be charged a penalty for not signing up as soon as possible.

If you want to enroll in an Original Medicare or Medicare Advantage plan, you’ll need to do so during the Medicare Annual Election Period of October 15 to December 7 for the following year. If you can’t reach the Social Security Administration due to issues with Social Security’s telephone system between January 1, 2022, and December 30, 2022, you may be able to get extra time to sign up.

Medicare beneficiaries may have other options available. Your state Medicaid office can provide details. For more details, call 1-800-MEDICARE or consult Medicare.gov at any time.

Medicare is a health insurance program for people aged 65 and older or younger people with certain disabilities. Government-run Original Medicare covers any Medicare-approved health care services, equipment, and medications with Parts A, B, and D. Part C or Medicare Advantage, administered by private insurers, typically uses a network of providers but offers many services not covered by Original Medicare, including fitness and wellness programs.

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