Medicare

With Original Medicare, individuals entitled to Part A (Hospital) and Part B (Medical) will have coverage for their doctors', inpatient hospital care, preventive services, and tests. Medicare covers 80% of the service costs and the individual pays 20%. Creditable drug coverage will still be necessary, or the individual will be penalized.

Medicare Supplements (Medigap) are insurance policies that can pay for the remaining costs of medical expenses that Original Medicare does not cover, such as copays and deductibles. There is a premium associated with Medicare Supplements and if an individual wants to apply for one after their Initial Enrollment Period, underwriting will be necessary.

Medicare Advantage plans are offered by private companies contracted with Medicare. These plans include Medicare Parts A, B, and sometimes D. Some plans may include additional benefits not covered by Original Medicare. Plans include an out-of-pocket max and may have a monthly premium as well as a drug/health deductible.

Standalone Prescription Drug Plans allow individuals to pay lower costs for prescriptions in most circumstances. These plans generally have a monthly premium and are often paired with Original Medicare/Medigap. Some plans also include deductibles on higher-tier prescription drugs.

Whether you choose an Advantage plan or a Standalone Prescription Drug plan, drug formularies vary by plan and carrier. Some plans cover prescriptions better than others and some may even have drug deductibles. Pharmacies may also vary between carriers.

Prescription Drugs are (generally) split into five tiers; higher tiers result in higher expenses.

Determining whether a primary care provider(s) and/or specialist(s) is in-network is an important aspect of choosing a Medicare plan. Not all plans and carriers have the same in-network providers. When looking at MAPDs, understand that if a care provider isn't in-network, expenses could be higher than if they were.

A premium is a set amount an individual must pay, generally monthly. Deductibles are expenses to be paid before health services or certain prescription drugs are covered.

Out-of-pocket max is the maximum annual amount an individual will pay for their share of covered health service expenses.

Understanding one's coverage area is another important factor in making the right decision when choosing a Medicare plan. Some plans, like HMOs, only have in-network coverage, meaning an individual must use services within the service area to receive coverage. PPOs, on the other hand, also offer out-of-network coverage, allowing individuals to travel outside their service area to seek health assistance at a higher expense. Medicare Supplements (Medigap) will allow coverage anywhere in the United States where Medicare assignment is accepted.