You’ve hit a milestone once you become an official “senior citizen” — you qualify for senior citizen discounts and get your AARP card. You’re also eligible for Medicare when you turn 65. The Medicare plan you choose will impact your health care coverage for the rest of your years. Medicare can be confusing, so Benzinga has sifted through the facts. Here’s what you need to know to choose the right plan.
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Best Medicare Plans:
- Aetna: Best Overall & Cheapest Medicare
- Highmark: Best Medicare Coverage
- Blue Care Network: Best for Extras
Medicare is a federally-funded health insurance plan created for seniors 65 and older. You’re eligible to sign up 3 months before and 3 months after your 65th birthday. You could pay a late penalty if you don’t sign up during this time.
There’s also a Special Enrollment Period, which allows you to sign up for a plan or switch plans if you’ve experienced a life event such as a move or a marriage. Medicare is also available to people under 65 with certain disabilities as determined by the Social Security Administration.
You qualify to enroll in Medicare if you’re a U.S. citizen who has paid Medicare taxes throughout your working years — you won’t be eligible if you’ve never paid in. Medicare is divided into 4 parts:
Part A covers inpatient hospital stays, skilled nursing facilities and some home care.
Part B covers inpatient care, doctor and specialist visits, medical supplies and equipment. Parts A and Part B are referred to as Original Medicare.
Part C takes the place of Part A and B and is known as Medicare Advantage coverage. Medicare Advantage plans, offered by private insurance companies, are meant to take the place of Part A and Part B. Medicare Advantage plans are regulated by the federal government and often feature extras such as health and wellness plans.
Part D covers prescription drug costs. You can enroll in Original Medicare or a Medicare Advantage and add on a Part D plan. You can also buy a Part D plan on its own. Many Medicare Advantage plans come with built-in prescription drug coverage — it’s why they’re so popular.
The majority of the 64 million people enrolled in Medicare are covered by traditional Medicare, but 34% are enrolled in Medicare Advantage plans, according to the Henry J. Kaiser Family Foundation. Over the past 10 years, enrollment in private Medicare plans has doubled from 11.1 million to 22 million.
Another option to consider is a Medicare Supplemental Insurance plan, which you can buy to fill in any gaps in your Original Medicare plan. Medicare Supplement plans are also offered by private insurers.
Average Medicare Insurance Costs for Seniors
There are many variables to Medicare plans, depending on what you choose, so it’s hard to come up with an average Medicare plan cost. Here are some examples from Medicare.gov:
- Part A premiums: $240–$437 a month
- Part A hospital inpatient deductible and coinsurance: $1,364 for each benefit period
- Part B premium: $135.50 (higher depending on your income)
- Part B deductible and coinsurance: $185 per year
- Part C premium: Varies according to plan
- Part D premium: Varies according to plan
Terms to know:
Premium: A monthly fee you pay to maintain your insurance coverage.
Deductible: The amount you pay out of your pocket before your insurance company starts paying any expenses.
Coinsurance: The amount you pay to supplement the amount your insurance company pays to cover the cost of a health care procedure or hospital visit.
Comparing Medicare Advantage Plans
Consider cost as well as plan features when you compare Medicare Advantage plans. Do you need a prescription drug plan? How about dental, vision or hearing coverage? Is a fitness plan important to you? Your answers will help you narrow down your plan options.
Another factor to consider is the rating Medicare Advantage plans receive from the Centers for Medicare and Medicaid Services (CMS). CMS is the federal agency that oversees and regulates Medicare Advantage plans. CMS sets guidelines for marketing practices, pricing and performance standards.
CMS assigns star ratings of 1-5 (5 is excellent) to each plan based on factors such as performance, providers and pricing. Plans that don’t meet guidelines can be fined or have their plans terminated, depending on the violation.
You’ll have two main plan types to choose from:
Health maintenance organizations (HMOs): HMOs are regional networks of doctors, specialists and hospitals you must choose from. Let’s say you want to see a specialist. You’ll need a referral from your primary care doctor.
HMOs also focus on health and wellness — if your BMI is too high, you smoke or have high blood pressure, you’ll be required to improve through medications, diet or smoking cessation programs. HMOs are a bit more limiting than PPOs due to network limitations, but they’re usually cheaper.
Preferred provider organizations (PPOs): PPOs are large national networks of doctors, specialists and hospitals you can choose from. All providers in the network agree to charge a set amount for services and care. You can choose a doctor who is out of network, but you’ll pay more. No referrals are needed. PPOs cost more than HMOs.
Benzinga used Medicare’s plan finder tool to show you a few examples of typical plan costs:
|Plan Name||Company||Plan Type||Health and Drug Costs||Star Rating|
|Primary Choice Medicare||HAP||HMO||$3,950||3.5|
|Aetna Medicare Value Plan||Aetna||PPO||$4,480||4|
|HAP Senior Plus Option 1||HAP||PPO||$4,490||3.5|
Of course, these rates are estimates and depend on the features you add on, your income, how much you paid in Medicare taxes, where you live and other factors. Read on to learn more.
What Impacts Medicare Rates for Seniors
Certain factors play a role in determining Medicare rates, such as:
Income: You’ll be subject to a surcharge called the income-related monthly adjustment amount (IRMAA) if your gross income increases significantly. Your monthly premiums could go up to $100–$300 a month, depending on your income.
Cost of living: CMS takes the cost of living into account when it reviews Medicare Advantage plan rates. Rates go up as the cost of living increases.
Age: You’ll pay more for Medicare if you’re 75 and older compared to 65–75 because your health care needs increase as you age.
Health status: You’ll pay more for Medicare as a smoker compared to a non-smoker because you’re more of a health risk.
Health status is the area you can control the most and you’ll pay less for a Medicare insurance plan if you maintain a healthy lifestyle.
1. Best Overall Medicare Provider: Aetna
Many of Aetna’s Medicare Advantage plans have above-average star ratings. Aetna is also among the top picks in J.D. Power and Associate’s annual Medicare Advantage study.
The study rates plans for overall satisfaction, billing and payment, communication, cost, coverage and benefits, provider choice and customer satisfaction.
2. Cheapest Medicare Provider: Aetna
Aetna offers affordable HMO and PPO plans in all 50 states. The company also offers plans with monthly premiums as low as $0, with reasonable copays and deductibles. Again, Aetna’s a great choice since it’s a top-rated plan with high rankings in J.D. Power and Associate’s studies.
3. Best Coverage for Medicare Provider: Highmark
Highmark received top honors for provider choice from J.D. Power and Associates. Its website features a Find a Provider tool so you can easily search for doctors and specialists in your area.
Choose a Medicare Advantage plan that offers a large network of providers so you can continue to see the doctors you trust.
4. Best for Extras: Blue Care Network
Blue Care Network’s Medicare Advantage plans offer extras you can add on, including hearing, dental and vision coverage for less than $25 more a month.
Blue Care Network also offers free fitness programs in every state. Its plans are also top-ranked among J.D. Power and Associate’s studies and many plans have above-average star ratings.
Do Your Research, then Sign Up
You don’t have to wait until you turn 65 to research Original Medicare and Medicare Advantage plans. Use resources like Medicare.gov, J.D. Power and Associates and CMS to compare plans and choose the one that meets your health care and budget needs.
Frequently Asked Questions
1) Q: What are the different parts of Medicare?
Medicare has 4 parts named Parts A, B, C, and D. Part A provides hospitalization coverage while Part B provides outpatient coverage, like doctor visits. Parts A and B make up Medicare’s core coverages. Part C is provides private-market Medicare plans, called Medicare Advantage Plans. Part C coverage often includes additional benefits. Medicare Part D provides coverage for prescription drugs. Get a Medicare Insurance Quote through the top providers here.
2) Q: Is Medicare free?
Because there are 4 parts to Medicare, there can be different cost structures. Most people won’t have to pay for Medicare Part A (hospitalization). Eligibility for premium-free Part A is based on your work history during which you paid Medicare taxes. Many people do pay a monthly premium for Medicare Part B, however, which covers outpatient medical services, like doctor visits. Deductibles also apply to services covered under Medicare Parts A and B, so you’ll pay a part of the annual cost.
Medicare Parts C and D are optional coverages and have premium costs of their own. Medicare Part C refers to Medicare Advantage Plans that offer additional coverage in exchange for a monthly premium. Part D, the prescription plan, reduces the cost of medications but also requires a monthly premium. Subsidies may be available for low income households to help reduce overall Medicare costs.
3) Q: Do I need to sign up for Medicare?
If you signed up for Social Security before age 65, you were enrolled in Medicare automatically but benefits will begin at age 65. In most cases, there are penalties for not enrolling at age 65, so it pays to sign up on time. Click here to get a medicare quote in minutes from the best providers.
If you have employer coverage, you may be able to delay Medicare coverage while your work plan is still in force. However, the size of the employer determines whether you’ll pay a penalty for not enrolling at age 65. Employees (and their spouses) of companies that offer group health insurance to 20 or more people are usually exempt from late sign-up penalties if they are covered by the employer’s plan.