With many plan options to navigate, shopping for a Medicare plan can seem complicated. From Original Medicare and Prescription Drug plans to Medicare Advantage and Supplement plans, many are unsure where to even begin. Taking the time to figure it all out can seem overwhelming and time-consuming, so let’s walk through the basics of Medicare shopping to help grow your understanding of your coverage options.
Understanding Your Medicare Options
Medicare coverage starts with Parts A and B, also known as Original Medicare.
Medicare Part A helps cover hospital services, like inpatient care, while Medicare Part B covers medically necessary services, like preventive care.
Medicare Part C—also known as Medicare Advantage—is an alternative to Original Medicare but may include additional routine benefits not included in Medicare Parts A and B. Medicare Part D is also known as Medicare Prescription Drug plans and helps cover the cost of medications. It can be purchased in addition to Medicare Part A, Part B, or a Medicare Supplement Insurance plan.
Let’s learn more about the different parts of Medicare.
Original Medicare Explained (Parts A & B)
Original Medicare consists of Medicare Parts A and B. Medicare Part A (hospital insurance) helps cover inpatient services like hospitalization, skilled nursing facility care, hospice care, and certain home health care services. Medicare Part B (medical insurance) covers medically necessary services like preventive care, outpatient care, and durable medical equipment. Original Medicare only covers 80% of Part B costs, but additional coverages are available to help bridge the gap.
How Medicare Advantage Plans Work (Part C)
Medicare Part C—also known as Medicare Advantage—is an alternative to Original Medicare. These plans are sold by private insurers approved by Medicare and must legally offer the same coverage as Medicare Parts A and B. However, they may include additional routine benefits.
Understanding Prescription Drug Coverage (Part D)
Medicare Part D, also known as Medicare Prescription Drug plans, can help cover the cost of prescription medications. It can be purchased in addition to Original Medicare. Some Medicare Advantage plans may include prescription drug coverage—these plans are known as Medicare Advantage Prescription Drug plans (or MAPD plans).
Should you consider a Medicare Supplement plan?
Medicare Supplement Insurance plans, also known as Medigap plans, are plans sold by private insurers that help cover costs not covered by Original Medicare, such as copayments, coinsurance, and deductibles. You must have Original Medicare to be eligible for a Medigap plan, and the benefits of these plans are standardized by letters (e.g., Plan G, Plan N) across most states, meaning a Plan G from one insurer offers the same benefits as a Plan G from another. This differs from Medicare Advantage plans, which are an alternative to Original Medicare and are not standardized.
Essential Tips for Shopping for Medicare Plans
Navigating the complexities of Medicare shopping can be overwhelming, but keeping a few tips in mind will help the process go more smoothly. Here’s what you need to know when preparing to shop for a Medicare plan.
Know Your Enrollment Periods
Whether it’s enrolling for the first time or changing your current plan, it’s important to know the different enrollment periods and which apply to you. You have Medicare eligibility if one or more of the following apply to you:
You’re 65 or Turning 65 Soon: Turning 65 is the standard age denoting your eligibility for Medicare. The seven-month period surrounding your 65th birthday is your Initial Enrollment Period.
You’ve Been Diagnosed With ESRD or ALS: For end-stage renal disease (ESRD), Medicare benefits begin as soon as the first day following three months of regular dialysis or a kidney transplant. Under certain conditions, Medicare coverage might be able to start in the first month of dialysis. For Amyotrophic Lateral Sclerosis (ALS), Medicare benefits can begin at the same time you start collecting Social Security Disability benefits.
You’re Younger Than 65, but Have a Qualifying Disability: If you’ve been receiving Social Security Disability for 24 months, you also qualify for Medicare coverage. You should receive a Medicare card in the mail when the required time period has passed.
You Qualify for a Special Enrollment Period (SEP): In some cases, you may qualify for a Special Enrollment Period, such as moving out of your plan’s service area or losing coverage.
Avoid Late Enrollment Penalties
You may face a late enrollment penalty if you don't sign up for Medicare Part B and/or Part D when you are first eligible, and you don't have other creditable coverage. The Part B penalty is calculated by adding 10% of the standard premium to your monthly premium for each full 12-month period you were eligible but didn't enroll.
For instance, if you wait two years, your Part B premium will be 20% higher. This penalty is permanent and will be added to your premium for as long as you have Part B. The Part D penalty is calculated by multiplying 1% of the national base beneficiary premium by the number of full months you went without creditable drug coverage. This amount is rounded to the nearest $0.10 and added to your monthly Part D premium for as long as you have the coverage. These penalties are designed to encourage timely enrollment and can significantly increase your out-of-pocket costs over time.
Evaluate Your Healthcare Needs
A thorough evaluation of your healthcare needs is an important first step when choosing a Medicare plan. Take stock of your current health status: Do you have chronic conditions? How often do you visit specialists or your primary care doctor? And what prescription medications do you regularly take? If you are relatively healthy and don't anticipate high medical costs, Original Medicare or a Medicare Advantage plan might be a good fit. However, these plans may have out-of-pocket costs like copays and coinsurance that could add up if you need frequent care. If you have chronic health issues or a serious condition, a Medicare Supplement (Medigap) plan, paired with Original Medicare, might be a more financially beneficial choice, as it helps cover the gaps in Original Medicare's coverage.
Verify Your Coverage With a Creditable Plan
When shopping for Medicare plans, you may come across the phrase “creditable coverage.” This refers to health insurance that is considered to be at least as good as Medicare's coverage. If you have creditable coverage through an employer or union, you can generally delay signing up for Medicare without facing a late enrollment penalty. However, it’s important to verify that your current plan is indeed creditable. Your employer or plan administrator is required to send you a notice each year, typically before October 15, that states whether your prescription drug coverage is creditable. If you have any doubts, contact your benefits administrator directly to confirm, as relying on non-creditable coverage can lead to lifelong penalties.
SelectQuote Can Make Understanding Your Medicare Options Simple
It pays off to familiarize yourself with Original Medicare, additional and alternative coverages, and enrollment periods. Luckily, SelectQuote’s licensed insurance agents are here to help. In just minutes, they can compare Medicare Advantage plan options available in your area to help you better understand your options—it’s free and there’s no obligation to enroll.
