Paul Sanchez
Medicare is federal health insurance for anyone aged 65 and over, as well as some people under 65 with certain disabilities. There are two main ways to get Medicare coverage: Original Medicare and Medicare Advantage Plans. Original Medicare includes Part A (Hospital Insurance) and Part B (Medical Insurance). Medicare Advantage Plans are offered by Medicare-approved private companies and may be available across an entire state or only in certain counties. These plans typically include Part D (drug coverage) and may also include other benefits such as prescription drugs, depending on the specific plan chosen.
| Characteristics | Values |
|---|---|
| Type of insurance plan | Medicare Advantage Plans (Part C) |
| Who can avail it? | Anyone above the age of 65 and some people under 65 with certain disabilities or conditions |
| What does it include? | Part A (Hospital Insurance) and Part B (Medical Insurance) |
| Drug coverage | Most Medicare Advantage Plans include Part D coverage |
| Cost | Most plans have a monthly premium that you pay in addition to your Part B premium |
| Availability | Insurance companies decide if a plan will be available to everyone with Medicare in a state or only in certain counties |
| Disenrollment | A Medicare Advantage Plan can disenroll you if you move outside the plan's service area, lose Medicare or Medicaid eligibility, or join a drug plan |
| Medicare Supplement Insurance (Medigap) | Extra insurance you can buy from a private company to help pay your share of costs in Original Medicare |
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What You'll Learn
Medicare Advantage Plans
There are different types of Medicare Advantage Plans, including Health Maintenance Organizations (HMOs), which typically only cover care provided by in-network providers, and Preferred Provider Organizations (PPOs), which offer access to out-of-network providers at a higher cost. Other types include Special Needs Plans (SNPs), Medicare Medical Savings Accounts (MSAs), and Private Fee-for-Service Plans (PFFS).
In 2023, 49% of Medicare beneficiaries were enrolled in Medicare Advantage Plans, and this number is projected to increase in the future. These plans offer a bundled approach to health insurance, allowing individuals to receive hospital, medical, and drug benefits through a single insurance company.
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Medicare Part A and Part B
Medicare is federal health insurance for anyone aged 65 or older and some people under 65 with certain disabilities or conditions. Medicare Part A and Part B are two of the different parts of Medicare.
Medicare Part A
Medicare Part A is hospital insurance. It helps cover inpatient care in hospitals, skilled nursing facility care, hospice care, and home health care. Most people get Part A for free, but some have to pay a premium for this coverage. To be eligible for premium-free Part A, an individual must be entitled to receive Medicare based on their own earnings or those of a spouse, parent, or child. To receive premium-free Part A, the worker must have a specified number of quarters of coverage (QCs) and file an application for Social Security or Railroad Retirement Board (RRB) benefits. The exact number of QCs required depends on whether the person is filing for Part A based on age, disability, or End Stage Renal Disease (ESRD). People who must pay a premium for Part A do not automatically get Medicare when they turn 65. They must file an application to enrol and also enrol in or already have Part B. To keep premium Part A, the person must continue to pay all monthly premiums and stay enrolled in Part B. This means that the person must pay both the premium for Part B and the premium for Part A to keep this coverage. Premium Part A coverage begins the month after the month of enrolment.
Medicare Part B
Medicare Part B is medical insurance. After signing up for Part A and Part B, individuals can choose how they get their health coverage. There are two main ways to get Medicare coverage: Original Medicare and Medicare Advantage. With Original Medicare, when an individual gets a covered service, Medicare pays part of the cost and the individual pays their share. They can see any doctor or hospital that accepts Medicare, anywhere in the US. They can also shop for and buy supplemental coverage that helps pay their out-of-pocket costs. Medicare Advantage is a Medicare-approved plan from a private company that offers an alternative to Original Medicare for health and drug coverage. These "bundled" plans include Part A, Part B, and usually Part D. In many cases, individuals can only use doctors who are in the plan's network. Plans often have different out-of-pocket costs than Original Medicare or supplemental coverage.
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Medicare with Medicaid
Medicare and Medicaid are both government-funded healthcare programs in the US. Medicare is federal health insurance for anyone aged 65 and older, as well as some people under 65 with certain disabilities or conditions. Medicaid, on the other hand, is a joint federal and state program that provides health coverage for certain low-income individuals, families, children, pregnant women, the elderly, and people with disabilities. The eligibility criteria and benefits offered by Medicaid vary from state to state.
If an individual has both Medicare and full Medicaid coverage, they are considered "dually eligible". In such cases, Medicare pays first for Medicare-covered services, and Medicaid may cover additional costs such as deductibles, coinsurance, copayments, and prescription drugs not covered by Medicare. Additionally, Medicaid offers benefits not typically covered by Medicare, including nursing home care and personal care services.
To be eligible for Medicaid, individuals must meet their state's rules for income and resources, as well as residency requirements. Some states allow individuals to “spend down” their income above the Medicaid limit by paying for non-covered medical expenses until they qualify. The specific benefits and coverage provided by Medicaid can vary across states, and major changes to the program are expected in 2026.
In summary, while Medicare is a federal program providing health insurance to older adults and some individuals with disabilities, Medicaid is a joint federal and state program offering health coverage to low-income individuals, families, and vulnerable populations. When an individual has both Medicare and Medicaid, there are specific coordination rules that determine which program pays first for covered services, and each program may cover different aspects of an individual's healthcare costs.
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Medicare Supplement Insurance (Medigap)
Medicare Supplement Insurance, also known as Medigap, is extra insurance that you can purchase from a private health insurance company. This insurance helps cover out-of-pocket costs associated with Original Medicare (Part A and Part B). It's important to note that Medigap is not a replacement for Original Medicare but rather a supplement to help with the costs. Most Medigap policies do not cover long-term care, such as nursing home stays, or certain specific services like vision, dental, hearing aids, private nursing, or prescription drugs.
To be eligible for Medigap, you typically need to have both Part A and Part B of Original Medicare. In most states, Medigap policies are standardised and named by letters, like Plan G or Plan K. The benefits offered by each lettered plan are consistent across insurance companies, with the price being the only differentiating factor. It is recommended to purchase a Medigap policy within six months of enrolling in Part A and Part B to avoid potential issues with eligibility or increased costs.
Medigap policies can provide valuable financial assistance for those with significant medical expenses not fully covered by Original Medicare. They can help cover deductibles, coinsurance, and copayments. Some Medigap policies even offer coverage for emergency medical care received outside of the United States.
It is important to carefully review the specific benefits and exclusions of Medigap policies, as they do not cover every type of medical expense. Additionally, individuals should consider their own health needs and financial situation when deciding whether to purchase Medigap insurance. For those who anticipate high medical costs, Medigap can provide peace of mind and financial protection. However, for those with minimal medical expenses, it may not be necessary.
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Medicare drug plans
Medicare drug coverage, also known as Part D coverage, is optional and available to everyone with Medicare. It helps pay for prescription drugs.
If you have Original Medicare and want to add drug coverage, you can join a separate Medicare drug plan. Most Medicare Advantage Plans include Part D coverage, and in most cases, you can't join a separate Medicare drug plan. Medicare Advantage Plans are offered by Medicare-approved private companies that must follow rules set by Medicare.
Each Medicare drug plan has a list of covered drugs, called a "formulary", which can vary in cost and specific drugs covered. Most plans have a monthly premium that you pay in addition to your Part B premium.
You may pay a Part D late enrollment penalty if you don’t join a Medicare drug plan when you first get Medicare and go 63 days or more without creditable drug coverage. The penalty increases the longer you wait to join a plan, and in most cases, you pay this monthly penalty for as long as you have Part D coverage, even if you switch plans.
Medicare Supplement Insurance (Medigap) is extra insurance you can buy from a private company to help pay your share of out-of-pocket costs in Original Medicare. Medigap policies are standardized, and in most states, they are named by letters, like Plan G or Plan K. The benefits in each lettered plan are the same, regardless of the insurance company. The price is the only difference between policies with the same letter sold by different companies.
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Frequently asked questions
Medicare is federal health insurance for anyone aged 65 and older, as well as some people under 65 with certain disabilities or conditions.
Medicare Plus Insurance, also known as Medicare Advantage, is a Medicare-approved plan from a private company that offers an alternative to Original Medicare for health and drug coverage. Original Medicare includes Part A (Hospital Insurance) and Part B (Medical Insurance).
Once you have signed up for Part A and Part B, you can choose to get your health coverage through Medicare Plus Insurance. These plans are offered by private companies that contract with Medicare. You can also contact your local State Health Insurance Assistance Program (SHIP) for free personalized health insurance counselling.
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