Are you about to turn 65? If so, you’ve likely been inundated with information about Medicare — from commercials and radio ads to brochures and letters. We get it — Medicare is a topic that can be confusing. We’ll break down common Medicare terms and compare costs so you can make the best decision for you.
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Quick Look: Most Affordable Medicare
Medicare is a national health insurance plan established under the Social Security Administration. It’s available to people 65 and older and some younger recipients with disabilities recognized by the Social Security Administration. For example, if you have end-stage renal disease (permanent kidney failure), you qualify for Medicare no matter your age.
You must be an American citizen or legal permanent resident to be eligible for Medicare. Medicare is divided into 2 parts:
- Part A: Hospital insurance. Part A covers care in a hospital, skilled nursing facility, and in some cases, home.
- Part B: Medical insurance. Part B covers certain doctor’s services, medical supplies, outpatient care and preventive services. Medicare Part A and B are known as Original Medicare.
- Medicare Part C, which replaces Parts A and B, is hospital and medical insurance provided by private insurance plans. Part C plans are also called Medicare Advantage plans.
- Medicare Part D is prescription coverage that can be added on to the government’s Part A and Part B plans or a Part C plan. Part D plans can also be added to Private-Fee-for-Service plans and Medicare Medical Savings Account plans. Generally, you can sign up for Medicare 3 months before your 65th birthday.
Medicare Advantage programs are governed by the Centers for Medicare & Medicaid Services, or CMS. CMS dictates what insurance companies can charge and sets rules about how they can market their plans. Medicare rates plans using a 5-star system based on categories such as customer service and quality of care. Generally, a plan must be rated 3 stars or higher to be considered credible.
Average Medicare Insurance Costs
Based on sample rates listed on Medicare.gov, the average cost for health services and drugs runs between $3,000–$4,000 per year. This amount can vary based on the plan you choose and what’s included.
HMO and HMO-POS plans are health maintenance organizations that are made up of a network of doctors and hospitals you must choose from. If you want to see a specialist, you’ll usually need a referral. HMOs are also focused on preventive health and maintenance. Preferred Provider Organizations (PPOs) have a large network of doctors and hospitals who all agree to established rates.
Here are some sample rates for both types of health plans:
- HAP Primary Choice Medicare (HMO): $2,980
- Priority Medicare Key (HMO-POS): $3,000
- Aetna Medicare Value Plan (PPO): $3,010
- BCN Advantage HealthySaver (HMO): $3,220
- Priority Medicare Ideal (PPO): $3,340
- Humana Gold Plus (HMO): $4,310
What Impacts Medicare Rates
Many factors impact the cost of Medicare:
- CMS: This federal organization described above oversees, monitors and approves national insurance rates.
- Your income: Let’s say you’re in a higher income bracket because you’ve earned more money throughout your life. You’ll pay higher premiums. On the other hand, if you’re in a lower income bracket, you’ll pay less. You can qualify for extra help based on your income in some cases. You may qualify for a free or low-cost Medicare Advantage plan if you meet poverty level guidelines.
- Your age: You may have more health care needs if you’re over 75 compared to if you’re 65–75 — age is a consideration.
- The cost of living: Rates may increase or drop based on the national average cost of necessities such as housing, transportation, food and other necessities.
- Location: The state you live in may have the authority to raise certain Medicare rates, as rates vary from state to state.
- Health status: You may pay higher rates if you’re overweight with a BMI over 25, smoke or have a health condition due to eating habits or lifestyle.
Some recipients who receive Original Medicare still have gaps in coverage. In those cases, you can purchase Medicare Supplemental insurance from private insurance companies. The cost of these plans vary and are regulated by the federal government.
How to Get a Medicare Quote
You can go to the Medicare Plan Finder on Medicare.gov. to decide which plan is best for you. You can perform a basic search by entering your zip code and answer a few questions. Your results will include:
- Prescription drug plans with Original Medicare
- Medicare Advantage plans without prescription drug plans
- Medicare Advantage plans with prescription drug plans
Your results are based on factors such as your location and budget needs. You can sign up through the site and review the plans and its star ratings. You might prefer to reach out to an individual health plan provider — contact a sales or customer service agent to get started.
Companies that Offer Medicare
There are many aspects of health care plans to think about as you choose a Medicare plan. Here are a few to consider:
- Ask your friends and family members who have Medicare plans for their recommendations.
- Compare plan star ratings and reviews.
- Look at sites such as Medicare.gov to compare plan features and costs.
The majority of the 64 million on Medicare are covered by Original Medicare, according to the Kaiser Family Foundation, but 1/3 are enrolled in Medicare Advantage plans. In fact, the number of Medicare Advantage enrollees has nearly doubled over the past 10 years, from 11.1 million to 20 million.
We’ve put together a list of the top Medicare providers according to rates and customer satisfaction surveys.
1. Best Overall Medicare Provider: Humana
Humana offers affordable Medicare Advantage plans and is ranked 3rd in J.D. Power’s 2019 Medicare Advantage survey. The survey is based on:
- Coverage and benefits
- Provider choice
- Customer service
- Information and communication
- Service and billing
2. Cheapest Medicare Provider: Health Alliance Plan (HAP)
HAP is the cheapest Medicare provider based on rates alone. HAP Primary Choice Medicare also features hearing, dental and vision coverage and is rated 3.5 out of 5 stars.
HAP also offers free gym memberships and up to $400 per year toward over-the-counter medications.
3. Best Coverage for Medicare Provider: Humana
Humana offers discounts on eye exams and contact lenses, access to a nurse helpline 24/7 and special offers on massage therapy and weight loss programs.
It also offers competitive rates and is top-ranked by consumers. Humana received a score of 3 of 4 on J.D. Power’s Medicare survey.
4. Best Coverage for Provider Choices: Blue Cross Blue Shield
Blue Cross Blue Shield insures more than 106 million Americans — 1 out of 3 Medicare recipients across the country. It’s also a top-ranked provider by J.D. Power and among the top results on the Medicare.gov search engine. Approximately 95% of the nation’s doctors, hospitals and specialists contract with Blue Cross Blue Shield, the highest percentage among health insurers. BCBS also offers automatic enrollment, doesn’t require referrals and offers many low-cost plans.
5. Best Online Portal: Aetna
Aetna has the best online portal, according to Retirement Living’s survey of Medicare Advantage plans in 2019. It’s user-friendly and features online information so you can compare each plans in your state. Your account is also easy to manage online. Aetna is ranked 4th on J.D. Power’s survey, so it’s a top plan all around.
Do Your Research and Choose Wisely
You may feel pressure to choose a particular Medicare plan from commercials and brochures you receive in the mail, but take your time and research what each plan offers. Resources like Medicare.gov, CMS.gov, the Kaiser Family Foundation and J.D. Power can offer up plenty of information. Make a list of the features you need, compare plans, consider price and service and then sign up for the one that best suits you.
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.