When a person is initially looking at their Medicare plan options, they may have many questions, ranging from choosing a plan to enrollment and more.
As with many insurance plans and policies, the Medicare landscape can seem complex.
Here, we will look at some important questions people may have and provide answers to help them navigate their Medicare journey.
Medicare’s first offering, and still a common plan today, is original Medicare. Original Medicare comprises Part A, which covers inpatient care, and Part B, which covers outpatient services.
Part C is also known as Medicare Advantage. Private insurance companies administer these popular plans.
Part D, also known as prescription drug plans (PDPs), cover most prescribed medications, and, like Part C, private insurance companies administer them. These plans work alongside original Medicare only.
According to the Kaiser Family Foundation (KFF), 89% of the Medicare Advantage plans available in 2021 will include coverage for prescription medications.
Unlike original Medicare, private insurance companies administer Medicare Advantage plans.
Most people do not pay a premium for Part A, as long as they or a qualifying family member has worked for 40 quarters over their lifetime.
The table below shows how original Medicare and Medicare Advantage differ.
| Original Medicare | Medicare Advantage |
| Original Medicare involves paying a monthly premium for Medicare Part B. | Medicare Advantage involves paying a monthly premium for Part B, plus paying a premium to the Medicare Advantage plan provider. However, some plans are premium-free. |
| A person can see any doctor or receive care at any hospital that accepts Medicare. | Medicare Advantage plans usually involve a network of set healthcare providers that a person can choose between. This can restrict a person’s choice. |
| There is no out-of-pocket limit for original Medicare. | Medicare Advantage plans do have an out-of-pocket limit. |
| Original Medicare does not include prescription drug coverage. | Most, but not all, Medicare Advantage plans include prescription drug coverage. |
When choosing a Medicare policy based on individual needs, a person may want to consider the following:
What is my current state of health?
If an individual enjoys an overall good state of health, they may not need extensive coverage, such as high-priced prescription drug plans.
In contrast, if a person has a chronic medical condition, they may require essential prescription medications or need to see multiple specialists. People with chronic conditions might find that a plan, such as a Medicare Advantage Special Needs Plan (SNP), could be beneficial, as Medicare tailor the policies to specific medical conditions.
Can I manage sudden, costly medical bills?
For some people, finding a balance between monthly payments and the potential risks that could come with a sudden health need, such as an injury or illness, can be tricky.
When choosing a plan, a person may consider the out-of-pocket costs if they experience an unexpected significant health expense and what proportion of the costs they could manage.
Medicare supplement policies, also known as Medigap, are available to help with the out-of-pocket costs associated with original Medicare. If a person should need additional financial assistance, programs like Medicaid can help.
Medicare costs can change each year and vary by plan. Additionally, expenses may depend on whether a person receives financial assistance from other organizations.
For 2021, the potential Medicare costs are as follows:
- Part A Premium: If a person worked and paid Medicare taxes for 40 quarters, they are not required to pay the Part A premium. In 2021, if they worked for 30 to 39 quarters, they will pay $259. If they worked less than 30 quarters, they would pay $471.
- Part B Premium: For 2021, the standard Part B premium is $148.50. A person pays this regardless of whether they have original Medicare or Medicare Advantage.
- Part C Premium: Premiums for these plans depend upon the plan provider and the plan a person chooses. Some companies offer plans that have $0 premiums.
- Part D Premium: The plan a person chooses will determine Part D premiums. In 2021, the minimum amount a person will pay is $33.06.
Out-of-pocket costs also vary based on whether a person has original Medicare or Medicare Advantage. These may include:
- Part A Deductible: In 2021, A person will pay $1,484 for each benefit period. A benefit period begins the day a person is admitted to the hospital and ends once they have not received any inpatient care for 60 consecutive days.
- Part A Copayment: When a person is in the hospital, they will pay a copayment. The amount of the copayment varies depending on the length of the admission:
- Days 1–60: $0
- Days 61–90: $371 per day
- Days 91 onwards: $742 per day
- Part B Deductible: In 2021, A person with original Medicare has a Part B deductible of $203.
- Part B Coinsurance: Once an individual has paid their deductible, Medicare will cover 80% of eligible costs. A person will be responsible for paying the remaining 20%.
- Part D Deductible: Part D plans have a deductible that varies depending on which plan a person chooses. In 2021, the maximum Part D deductible is $445.
Medicare requires all people ages 65 and older to have some form of creditable prescription drug coverage. This means a person must have coverage that provides at least as much as the basic Medicare PDP.
If a person has original Medicare, they can find plans available in their area by searching Medicare’s Plan Finder.
A person with Medicare Advantage may choose a plan that incorporates prescription drug coverage. If it does not, individuals can only purchase a separate PDP if they have one of the following Medicare health plans:
- a private fee-for-service (PFFS) plan
- a cost plan
- a Medical Savings Account (MSA)
- specified employee plans
What is a formulary?
A formulary is a list of covered medications that each PDP has. Formularies will differ depending on the plan provider.
Most insurers break their formularies up into tiers, which they determine according to the cost of the drugs. Lower tiers usually have the least expensive drug options, such as generic medicines. Higher tiers normally have more expensive medications, such as brand name or specialty drugs.
Medicare requires a PDP to cover at least two drugs that fall in the “most commonly prescribed” categories, such as antihypertensives.
Insulin
Beginning January 1, 2021, a person may be able to save money on their insulin prescriptions, with some plans charging no more than $35 for a 30-day supply.
Use Medicare’s online search tool to compare plans that may be offering these savings.
Medicare has specific enrolment periods during which a person can sign up for a policy. An individual is first eligible during their initial enrolment period (IEP), which is a 7-month period that runs:
- 3 months before a person turns age 65
- the month they turn age 65
- 3 months after a person turns age 65
If a person is already collecting Social Security benefits, Medicare will automatically enroll them. Otherwise, they will need to sign up to avoid having to pay penalties.
Just as there is a specific Medicare enrollment period, there are specific times to switch plans. These include:
- Open enrollment period (OEP): Between October 15 through December 7 each year, a person can join a Medicare Advantage plan, switch to a new Medicare Advantage plan, or drop their Medicare Advantage plan and return to original Medicare.
- Medicare Advantage open enrollment period: From January 1 through March 31 every year, a person that already has a Medicare Advantage plan can switch to a different Medicare Advantage plan or drop their current plan and return to original Medicare.
Under original Medicare, a person can see any doctor or go to any hospital that accepts Medicare anywhere within the United States.
If a person has Medicare Advantage, their coverage is usually region-specific, and their plan type will determine whether the cover extends out-of-state.
For example, a Health Maintenance Organization (HMO) plan requires a person to use specific healthcare providers. It does not usually cover out-of-network services, such as those located in another state.
However, a Preferred Provider Organization (PPO) plan may offer some coverage for out-of-state care.
A person should carefully read their plan documentation or contact their plan provider to determine coverage.
A person can contact Medicare using any of the following methods:
- Online: Medicare.gov
- Phone: 800-MEDICARE (800-633-4227), TTY/TTD (877-486-2048)
- By Mail:
Medicare Contact Center Operations
P.O. Box 1270
Lawrence, KS 66044
If a person has paid Medicare taxes via their employer for at least 40 quarters, they qualify for premium-free Medicare Part A and will not need to make a payment.
If a person receives Social Security benefits or Railroad Retirement Board benefits, Medicare automatically deducts the Part B premium from their benefit payments.
However, most people must pay the monthly premium for Medicare Part B, and Medicare sends a Part B bill every 3 months.
A person can pay this in the following ways:
- MyMedicare.gov: A person can log into their secure account and pay by credit or debit card.
- Online banking: A person can pay through a savings or checking account.
- Medicare EasyPay: Medicare automatically deducts premium payments from a person’s savings or checking account around the 20th of each month.
- Post: A person can mail payments by check, money order, credit, or debit card to:
Medicare Premium Collection Center
PO Box 790355
St. Louis, MO 63179-0355
If sending payment by post, a person must complete the coupon found at the bottom of their Medicare bill and return this with their payment. Failure to do so may result in a delay to the payments, which could affect coverage.
In most cases, healthcare providers will file a claim with Medicare directly.
Individuals whose healthcare provider has refused or cannot bill Medicare directly can use the “Patient’s Request for Medical Payment” form.
Those with Medicare Advantage plans should contact their plan provider rather than Medicare if they need to submit claims.
If a person has further questions regarding healthcare insurance, they can contact the State Health Insurance Assistance Program (SHIP).
The government funds this state program and offers free health insurance counseling to those eligible for Medicare.
Through this program, individuals can ask specific questions regarding Medicare, enrollment, and costs.