The Three Most Common Medicare Options
Medicare can be complicated. But what makes it complicated is also its best feature - the many options to choose from when it comes to your Medicare benefits. Three coverage options are particularly common, and each offers different types of coverage. Before you sign up for Medicare, it’s important to know what each option covers and which one best meets your health care needs.
In most cases, Original Medicare (Part A and Part B) covers 80 percent of your medical costs. This leaves 20 percent of medical bills and 100 percent of prescription drug costs up to you to pay. Original Medicare provides no limit on how much you might have to spend out of your own pocket. These expenses can add up quickly, and without extra protection, an unexpected illness or injury can put your savings and retirement at risk. To avoid that risk, most people limit their out-of-pocket costs by getting additional coverage. But before we get into those options, let’s go over what Original Medicare is and what it covers.
Original Medicare – Part A (Hospital Insurance)
Medicare Part A is the only premium-free part of Medicare. If you or your spouse has made contributions to Social Security for at least 10 years, you shouldn’t have to pay a monthly premium. This doesn’t, however, mean that you’ll pay nothing for your hospital expenses.
In general, Part A helps pay for medically necessary care that requires a hospital or skilled nursing facility stay, hospice care if terminally ill and some skilled home health care. But before that coverage kicks in, you will have to meet a $1,340 deductible per hospital stay for each benefit period in 2018. A “benefit period” starts when you’re admitted to the hospital and ends when you’ve been out of the hospital for 60 days in a row. If you happen to be in the hospital longer than 60 days, you’ll pay a copayment of $335 per day for days 61-90 and $670 per day for days 91 to 150. If you’re in the hospital more than 150 days, you’ll be responsible for all hospital-related costs. There’s no cap on how much you’ll have to pay out of pocket.
Original Medicare – Part B (Medical Insurance)
Part B of Original Medicare comes with a monthly premium of $134 per month for 2018. Premiums can be adjusted based on income, but $134 is the standard. Part B also comes with a small annual deductible of $183. After that deductible is met, Medicare will generally cover about 80 percent of your medical care costs. With Part B, you’ll still be responsible for the majority of your prescription drug costs, as well as extras like dental and vision. Like Part A, Medicare Part B has no cap on how much you might have to spend for your medical expenses.
With a basic understanding of the costs associated with Original Medicare, it’s easier to see why most people choose an additional coverage plan. Here’s an overview of the three most common options.
1. Original Medicare + Part D Drug Plan
Adding a Part D prescription drug plan to Original Medicare is one popular option. Part D prescription drug plans are offered by private insurance companies and require you to pay a monthly premium in addition to your Part B premium. People purchase Part D plans to help cover the cost of prescriptions. In 2018, the monthly premiums in Missouri and Illinois range from $24 to more than $1,002. Those premiums can change based on income and may include a deductible. It’s also important to note that you could face late enrollment penalties if, at any time after your initial enrollment period is over, there’s a time frame of 63 or more days in a row when you don’t have Part D or other credible prescription coverage.
2. Original Medicare + Part D Drug Plans + Medicare Supplements
Another common choice is to purchase a Part D prescription drug plan and then also add a Medicare supplement through a private insurance company to make up for the things Medicare Parts A and B don’t cover. Several different types of supplements are available with some of the most popular plans being F and C. Cost sharing and premiums vary depending on the type of plan you choose, but as a general rule, the more generous the coverage, the higher the premium. For this coverage option, you’ll pay a Part B premium, a Part D premium and a premium for your supplement that averages around $194 a month. That number can rise based on your age when you enroll, pre-existing medical conditions or tobacco use. They can also increase over time with an increase of, on average, around 4 percent per year.
3. Medicare Advantage Plans
By joining a Medicare Advantage (MA) plan, you’ll have coverage for all the things that Original Medicare covers, plus that 20 percent that Original Medicare does not cover. In addition, most plans include Part D prescription drug coverage and often add in valuable extras like dental, vision and hearing coverage at no extra cost. MA plans are a popular option for Medicare recipients who want a simple way to get comprehensive coverage but also don’t want to pay a lot out of pocket. Most MA plans offer $0 premiums and low copays. They also include a built in “safety net” that puts a limit on the amount you’ll have to pay out of your own pocket each year.
For more information, visit Medicare.gov.