Original Medicare and Medicare Advantage
If you are newly eligible for Medicare, you have a 7-month opportunity window to enroll.
Otherwise, if you want to change your Medicare coverage, you must do so during the open enrollment period between October 15th and December 7th. During this time, you can change your original Medicare coverage to a Medicare Advantage (MA) plan or switch between MA plans. Your new coverage will start January 1st.
Your Medicare Options
Medicare-eligible individuals have two options for obtaining health insurance: Original Medicare or a Medicare Advantage plan.
Original Medicare, the government insurance program geared primarily for seniors, has three parts:
- Part A, hospitalization insurance. Medicare Part A helps cover inpatient care in hospitals and skilled nursing facilities. It also helps cover hospice care and some home health care. It does not cover custodial or long-term care.
U.S. citizens and lawfully admitted aliens who have lived in the U.S. for a five-year period when they turn 65 automatically qualify for Part A coverage. Individuals who develop end-stage renal disease or certain other disabilities may also qualify. Most people do not pay a premium.
- Part B, medical insurance. Medicare Part B helps pay for doctors’ services and outpatient care. It covers some other medical services. These include physical and occupational therapist services and some home health care when medically necessary. For most people, the federal government pays about 75 percent of the cost of Part B coverage; enrollees pay the rest. Higher-income people (about 5 percent of beneficiaries) will pay higher premiums.
- Medicare Part D, prescription drug insurance. The Part D monthly premium varies by plan and your income—higher-income consumers may pay more. The Centers for Medicare & Medicaid Services (CMS) estimated average 2022 premiums for basic Medicare Part D plans at $33.00 per month. As with Part B, higher-income people will pay more.
- Medicare supplement (“Medigap”) plans. Unlike Medicare Parts A, B and D, private insurers underwrite Medigap policies. They must adhere to specific plan designs that cover a specific set of benefits. In most states, policies are identified by letters. Not all plans are available in all states.
As the name suggests, Medicare supplement plans supplement the coverage under traditional Medicare. These policies can help pay some of the out-of-pocket costs you’ll have with original Medicare, such as copayments, coinsurance and deductibles. Some Medigap policies also cover services that original Medicare excludes, such as medical care when you travel outside the U.S. If you have original Medicare and you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs. Then your Medigap policy pays its share.
Medicare Advantage Pros and Considerations
Pros: Many MA plans offer “richer” benefits and/or lower copayments and deductibles to members. Seniors on limited budgets and those used to manage care plans might like MA plans for that reason.
Some MA plans cover medical care you receive outside the U.S. Original Medicare only pays for medical care received abroad in very limited instances, such as an emergency where a Canadian hospital is closer to the insured’s home than one in the U.S. If you travel abroad, please read plan documents carefully to make sure the plan you choose provides coverage or contact us for other options.
Unlike original Medicare, Medicare Advantage plans limit your annual out-of-pocket expenses. For 2022, the most you would pay for covered hospitalization and medical expenses is $7,550 per year. After that, your plan would pay 100 percent of your covered expenses. For those with limited funds, this limit might be important.
Other Considerations
As with other types of health insurance, your ultimate costs depend upon more than your monthly premiums. Each Medicare Advantage Plan can charge different out-of-pocket costs. These include:
- The annual deductible
- The copayment or coinsurance, or the amount you pay for each office visit or service you use. For example, some plans require you to pay $20 whenever you see a doctor. Copayments and coinsurance amounts under MA plans can differ from those under Original Medicare.
- Whether you use network providers or not. Some plans, particularly PPO or HMO plans will cover a lower percentage of your charges if you use a provider that’s not a member of its network.
- The annual out-of-pocket limit. Original Medicare places no limit on your annual out-of-pocket expenses. However, Medicare rules require MA plans to limit out-of-pocket costs for medical and hospitalization charges to $7,550 per year.
As health insurance specialists, we can help you choose from the variety of Medicare Advantage plans available in your area. For more information, please contact us.
