Private health insurance companies offer Medicare Part C, or Medicare Advantage, plans. These are alternatives to original Medicare.
These plans must offer at least the same basic coverage as original Medicare, but they may also offer prescription drug, vision, hearing, and wellness services.
This article will provide an overview of Medicare. It will also look at the different Medicare Advantage plans available, plus enrollment and costs.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare is a government-funded healthcare insurance program for people in the United States.
Medicare has four parts:
- Part A is hospital insurance.
- Part B is medical insurance.
- Part C, or Medicare Advantage, is an alternative to original Medicare (parts A and B).
- Part D covers prescription drugs.
Medicare Part A
If someone needs care as an inpatient in a hospital, mental health unit, or skilled nursing facility, original Medicare Part A provides coverage. Part A also covers home health and hospice care.
Most people do not pay a monthly premium for Part A because they paid Social Security taxes, amounting to 40 quarters, while employed. However, if a person did not pay taxes for at least 40 quarters, they will need to pay a monthly premium up to a maximum of $471.
In 2021, an individual must also pay an annual deductible of $1,484 per benefit period, plus a copay.
Medicare Part B
Medicare Part B covers preventive services and medically necessary treatments. Coverage includes visits to a primary care physician, therapeutic services, and diagnostic tests.
Part B also covers emergency room visits when the hospital does not admit the person.
In 2021, Part B costs include the standard monthly premium of $148.50, an annual deductible of $203, and a 20% coinsurance.
Medicare Part C
Medicare Part C, or Medicare Advantage, is an alternative to original Medicare (parts A and B). All plans must offer at least the same basic coverage as original Medicare and may include other benefits, such as dental, vision, or hearing treatment.
Medicare Advantage plans often include prescription drug coverage, too.
Medicare Part D
Private health insurance companies also provide Medicare Part D plans, which cover some prescription medication costs for people with original Medicare.
These plans use a formulary, which is a list of covered drugs. A person will pay a monthly premium, a deductible, and a copay or coinsurance for their prescription medications.
Premium costs vary, but in 2021, the average premium for Medicare Part D is expected to be around $30.50, according to the Centers for Medicare & Medicaid Services (CMS).
Private health insurance companies administer Medicare Advantage plans as an all-in-one alternative to original Medicare.
These plans must offer the same coverage level as original Medicare, and they usually include additional benefits, such as prescription drug coverage, vision, dental, and hearing care. Many plans also include wellness and fitness services.
Medicare Advantage plans use healthcare provider networks, and some plans require people to choose a primary care physician to coordinate their care. People may have to pay more if they use a provider outside the plan’s network.
According to the CMS, Medicare Advantage plan choices in 2021 will increase from an average of 39 plans per county to around 47 plans per county.
If a person is enrolled in original Medicare, they can switch to a Medicare Advantage plan. Costs may include the plan premium as well as deductibles and copays.
The four most common Medicare Advantage plans include:
- Health Maintenance Organization (HMO)
- Preferred Provider Organization
- Private Fee-for-Service
- Special Needs Plans (SNPs)
Other Medicare Advantage plans include Medicare savings accounts and HMO Point-of-Service plans, though these are less common.
A person with end stage renal disease (ESRD) can enroll in a Medicare Advantage plan only if it is an SNP that accepts people with the condition.
If a person’s Medicare Advantage plan stops participating in Medicare, the person has a choice to enroll in another Advantage plan in their area or switch back to original Medicare.
Most people become eligible for Medicare 3 months before they turn 65 years old. If an individual has received disability benefits for 24 months, or if they have received a diagnosis of amyotrophic lateral sclerosis or ESRD, they also qualify for Medicare.
During the open enrollment period (OEP) in 2021, a person can expect to choose from more than 4,800 Medicare Advantage plans, according to the CMS.
Medicare has several enrollment periods each year, including the following:
- Initial enrollment period (IEP): The IEP begins 3 months before a person turns 65 years old and lasts for 7 months in total. People who do not enroll during the IEP may have a late enrollment penalty.
- General enrollment period (GEP): The GEP runs from January 1 to March 31 each year.
- OEP: The OEP runs from October 15 to December 7 each year. During this period, a person can change their plan.
- Special enrollment period (SEP): Events such as a change in marital status can trigger a SEP. Medicare will waive late enrollment penalties during this period.
How to enroll
People can enroll in Medicare in several ways. For example, they can:
- Use the Medicare “Plan Finder” tool.
- Call 800-633-4227 to find out which plans are available in their area.
- Ask the Medicare Advantage plan provider for a paper enrollment form, then complete and return the form.
Medicare will automatically enroll people into parts A and B if Supplemental Security Income or the Railroad Retirement Board have provided a person with disability benefits for 24 months.
Using a Medicare checklist may also be useful to help a person remember some points to check about a Medicare Advantage plan before enrolling in it.
A person enrolled in a Medicare Advantage plan will pay the premium to the plan provider, and they must also pay their original Medicare premiums. There is no Medicare Part A premium cost for most people, and the Medicare Part B premium in 2021 is $148.50.
The average monthly premium for Medicare Advantage plans in 2021 may be lower than it has been in 2020, at $21.00. This is according to a CMS estimate.
People with a Medicare Advantage plan must also pay annual deductibles, copays, and coinsurance, which will vary according to the plan provider.
This online tool can help a person compare Medicare Advantage plans. People can also visit their local State Health Insurance Assistance Program (SHIP), which provides impartial and free advice about Medicare.
In general, a person may pay higher monthly premiums with original Medicare than with a Medicare Advantage plan, but they may also have fewer out-of-pocket costs. Medicare Advantage plans may have lower monthly premiums but higher out-of-pocket expenses.
Some Medicare Advantage plans offer zero monthly premiums and include prescription drug coverage, which means that a person has to pay only the original Medicare Part B premium.
A person can check coverage details and costs with the Medicare Advantage plan provider before enrolling. This online tool can also help a person calculate out-of-pocket costs.
Original Medicare includes Part A, which is hospital insurance, and Part B, which is medical insurance. A person may instead choose to enroll in a Medicare Advantage plan, which is an alternative to original Medicare.
Medicare Advantage plans provide the same healthcare coverage as original Medicare but may also include other benefits, such as dental, vision, and hearing care. Many plans also include prescription drug coverage.
The Medicare website and SHIP program provide information that people can use to compare plans and approximate costs.