Anyone who is ready to sign up for Medicare has numerous decisions to make. But one decision that is important is whether one should opt for a Medicare Advantage (Part C) plan or buy Medigap to supplement Medicare Parts A and B.
Medicare Coverage
Budgeting for medical expenses during retirement is especially tough because there’s really no way of predicting if the expenses each year will be substantial or minimal. While traditional Medicare, which includes Parts A and B, provides sufficient coverage, it only pays around 80% of the approved costs. The 20% will have to be incurred by the beneficiary, and, unfortunately, there is no cap on this amount.
What’s more, some healthcare needs, like hearing aids, prescription drugs, eyeglasses, etc., are not covered by Original Medicare.
There are two ways for people to fill coverage gaps and lower the risk of expensive bills if they have a bad year:
– Medicare Advantage plans
– Original Medicare plus Medigap supplemental policies
Medicare Advantage
Available from private, Medicare-approved insurance firms, Medicare Advantage is available under names like Humana, Aetna, and Kaiser Foundation plans. They may have a more affordable premium and include prescription drug coverage. Medicare Advantage also covers doctors and hospitals that are not covered by Medicare.
Most Medicare Advantage Plans work similarly to private health insurance plans. Services like surgery, lab work, office visits, etc., are covered as long as one pays a small co-pay. Some Medicare Advantage plans have no premium; however, the coinsurance and co-pay costs may be on the higher side. While a Medicare Advantage plan may seem more affordable upfront, it’s important to check what benefits are covered.
Original Medicare Plus Medigap Plans
A majority of older Americans receive healthcare coverage via Original Medicare, i.e., Parts A and B. Many beneficiaries supplement their Original Medicare plans with Medigap, Medicaid, or even employer-sponsored plans. While this is a more expensive option, it has a few advantages.
Both Medicare and Medigap plans cover any doctor or hospital in the United States that accepts Medicare. Beneficiaries also don’t need prior authorization or referral from a primary care physician.
