Starting Medicare for the first time can quickly become a confusing process, especially when there are many plans to consider. You may not even know where to begin or how to select the best plan for your needs. However, once you understand Medicare and the differences between Medicare plans, you can move forward with more confidence.

The Parts of Medicare

It’s important to understand the structure of Medicare before trying to understand the differences between all the plans. First, Medicare is a national health insurance program run by the federal government for people 65 and older. It can also cover people under 65 with a qualifying disability or health condition.

Medicare consists of two main parts: Part A and Part B. Part A is your hospital coverage, including room and board, meals, and more. Part B helps cover your outpatient medical services, including doctor visits, lab work, and surgeries. However, there are two other parts that are sold by private insurance companies and are optional. There is Part C, also known as the Medicare Advantage Plan program. It is an alternative way to receive your Medicare benefits. There is also Medicare Part D, which is coverage for your prescription medications.

In addition to these four parts, there are Medicare Supplement plans, also known as Medigap plans. These plans help fill in the gaps after Medicare pays its portion of approved services. The most popular Medigap plans are Plan F, G, and N: boomerbenefits.com/medigap-plan-f-vs-plan-g-vs-plan-n/

You have two main plan options when you enroll in Medicare Part A and Part B. The first option is to sign up for a Medigap plan and a Part D plan. The second option is to sign up for a Medicare Advantage plan. Let’s take a closer look at these options.

Medigap Plans

Private insurance companies, not Medicare, offer Medigap plans. These plans help cover your portion of Medicare costs, including deductibles, copays, and coinsurance. Medicare Part B only pays 80% of approved medical services, leaving you with 20%. However, a Medigap plan can help cover some or all of this remaining 20%, depending on your plan.

There are ten Medigap plans to choose from: Plan A, B, C, D, F, G, K, L, M, and N. Each plan offers a different amount of coverage. For example, Plan G covers 100% of the Part A deductible, but Plan K only covers 50%. However, Medigap plans are standardized, meaning their benefits will stay the same no matter which carrier you have. So, a Plan N with United Healthcare will offer the same benefits as a Plan N with Blue Cross Blue Shield.

The only difference will be the price. Medigap plans tend to have higher premiums but lower out-of-pocket costs. The premium for a Medigap plan depends on various factors, including your zip code, gender, age, tobacco use, and more.

Another thing to keep in mind about Medigap plans is that they have no networks. With a Medigap plan, you can see any healthcare provider in the nation that accepts Medicare. Having this freedom is great for you if you like to choose which providers you can see.

Part D Plans

However, Medigap plans do not include prescription drug coverage. That’s where a Part D plan comes in. Offered by private insurance carriers, Part D plans can help cover your costs for medications at retail pharmacies, like CVS, Walmart, and more.

Each Part D plan is different and covers its own list of medications. So, when you choose a Part D plan, you will want to refer to the plan’s drug formulary to make sure your medications are covered under that plan.

The cost of a Part D plan can vary as well. Each plan has a premium and copays for their different covered medications, set by its insurance carrier. Some Part D plans also have a deductible. In 2022, that deductible cannot be higher than $480.

Medicare Advantage Plans

Medicare Advantage plans are an alternative way to receive your Medicare benefits. When you sign up for an Advantage plan, you agree to receive your Part A and Part Benefits through that plan, not Medicare. Most Advantage plans also include built-in drug prescription coverage. Advantage plans can also offer additional benefits that you can’t get with a Medigap plan, including dental, vision, and hearing benefits.

Regarding cost, most Advantage plans have $0 or low premiums. However, your out-of-pocket expenses will be higher. This may not be an issue if you are relatively healthy and do not see the doctor often. But, if you do go to the doctor often, your out-of-pocket costs can add up quickly.

Unlike Medigap plans, Advantage plans also operate within network areas, meaning you can only see healthcare providers included in your plan’s network. In most cases, if you go outside your plan’s network, you will pay more money. Some plans can be more lenient than others, so you’ll want to check each plan for specifics.

Which option should you choose?

The right plan for you ultimately depends on your budget, lifestyle, and personal preferences. For example, Medigap plans can be suitable for people who like to be prepared for unexpected health issues as these plans tend to have more comprehensive coverage. On the other hand, some people prefer low monthly premiums and pay for services as they go with an Advantage plan.

Consider questions like these: Do you plan to travel often? How frequently do you see the doctor? Are you concerned about unexpected expenses due to your health condition? Do your preferred healthcare providers participate in Advantage plans, or do they only accept Original Medicare?

Final Thoughts

It’s important to understand the differences between Medicare plans before deciding. If you don’t research beforehand, you may regret your decision later. However, if you do, you’ll be well on your way to finding the right plan for you and your needs.