You have 4 basic choices if you’re eligible for Medicare:
- You can rely on Original Medicare (Parts A and B) to provide your coverage. Original Medicare is provided by the federal government and offers Medicare Part A (hospital) coverage and Part B (medical) coverage. Usually, a fee is charged for each healthcare service or supply you get. This fee is in addition to the Medicare Part B premium, which you must pay each month. In 2020 the standard Part B premium was $144.60.
Original Medicare is available to all people who are 65 years of age and older, or people who qualify through disability. What many people don’t know is that Original Medicare doesn’t cover everything. Original Medicare only pays about 80 percent of your expenses. The remaining 20 percent is your responsibility, and it could add up to thousands of dollars each year. Plus there is an annual deductible for Part B before any benefits are paid; in 2020 that annual deductible was $198.
- You can choose a Medicare Advantage plan (Part C) instead of Original Medicare.
Most Medicare Advantage plans provide extra benefits like annual physicals, dental, vision, hearing, prescriptions drug coverage, reimbursements for eyewear, fitness, and wellness programs. Some offer riders that include full dental coverage for routine services like fillings, more advanced crowns, root canals, and more.
Most Medicare Advantage plans also cover worldwide emergency and urgent care (an important benefit Original Medicare does not cover) and they cap your out-of-pocket medical expenses so you have peace of mind in knowing your total covered medical costs are limited to an annual amount.
Medicare Advantage plans are all-in-one coverage. You get medical and, with most plans, prescription drug coverage. With Original Medicare you need a stand-alone Prescription Drug plan, and if you want to cover the gaps in Original Medicare, a Medicare Supplemental plan.
- You can choose a Medicare Supplement plan to fill coverage gaps in Original Medicare, like the annual hospital deductible ($1,408 in 2020), the Part B Premium ($144.60 in 2020), and the coinsurance of 20 percent of Part B medical costs. Some Medicare Supplement plans offer worldwide coverage for emergencies and fitness benefits. Plus you could be subject to pre-existing limitations to exclude certain medical conditions you had prior to becoming a Medicare Supplement member. And remember, you must purchase a separate prescription drug plan if you want your out-of-hospital drugs covered. You can add a prescription drug plan (Part D) to Original Medicare by joining a Medicare prescription drug plan. A Part D prescription drug plan can help you save money even if you don’t take a lot of prescription drugs.
- You can add a prescription drug plan (Part D) to Original Medicare by joining a Medicare prescription drug plan. Stand-alone prescription drug plans can be combined with Original Medicare and/or a Medicare Supplement plan. If you’re eligible to join a Medicare prescription drug plan and choose not to enroll, you may have to pay a late enrollment penalty when you do join. Medicare calculates the penalty by multiplying 1 percent of the “national base beneficiary premium” ($33.06 in 2021) times the number of full, uncovered months you didn’t have Part D or credible coverage. Credible coverage includes a Medicare Part D plan or a Part C Medicare Advantage plan that has prescription drug coverage.