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The maze of Medicare has a lot going on. With government and private companies offering different kinds of healthcare coverage, how are you supposed to know what to do? According to CNBC, 70 percent of soon-to-be retirees wish they had a better grasp of Medicare. Sadly, there is a lot of misunderstanding about what is covered by Medicare, what the program costs, and what other options are available to seniors. Hopefully, this quick guide can clear things up.
All of Medicare’s Parts
First, it's important to understand the difference between Medicare Parts A, B, C, and D. In general, Part A covers medically necessary hospital expenses, including lab tests and surgeries. Part B covers outpatient care, such as doctor’s visits and physical therapy. Part C, known as Medicare Advantage, is additional coverage offered by private companies. Finally, Part D covers prescription drugs and is also available through private insurance. For a more detailed explanation, check out this article from the Balance.
Your Additional Coverage Options
Due to all the confusion surrounding Medicare, many seniors don't look into their extra coverage options. Only one-third of eligible seniors are enrolled in a Medicare Advantage plan, but most people can benefit from the additional coverage. Though Medicare Advantage plans are offered by private companies, they are still regulated by the government and must provide the same coverage as the federal plans. However, they often include an array of additional coverage benefits. For example, Humana Medicare Advantage plans provide vision, dental, and prescription drug coverage, as well as free gym memberships through Silver Sneakers.
What You Have to Pay
Cost is another aspect of Medicare that is misunderstood. Many people are under the impression that the federal Medicare program (Part A and B) is free to seniors over the age of 65. While Part A is free for most Americans, everyone must pay a monthly premium for Part B. You will also have to pay out-of-pocket for about 20 percent of your medical expenses.
Where Medigap Comes In
Medigap, like Medicare Advantage, is a private insurance option for seniors who are eligible for Medicare. Medigap insurance covers the out-of-pocket expenses that come with Original Medicare, essentially filling the gaps in coverage. Many Medigap plans also pay for services that are not covered by Original Medicare, such as foreign travel insurance. However, Medicare Advantage usually eliminates the need for Medigap.
Choosing the Right Plan for Your Needs
You can’t have both Medicare Advantage and Medigap at the same time, so choosing a plan for your additional coverage can be tricky. Forbes recommends thinking of Medicare Advantage as an alternative form of Medicare that offers additional benefits on top of regular Medicare. Medigap is more like a coverage supplement, helping you pay your out-of-pocket expenses. Medicare Advantage plans replace Medicare, while Medigap plans are combined with Medicare.
Put careful thought into your Medicare decision because you can only switch your plan during the Medicare Open Enrollment Period near the end of each year. Consider what kinds of medical services you use. For example, if you require vision care, hearing aids, or prescription drugs, a Medicare Advantage plan might be your best option. Medicare Advantage plans tend to have lower premiums than Medigap plans, but you may be left paying more out-of-pocket for your services. Just make sure the plan you choose covers the doctors, clinics, pharmacies, and hospitals that you prefer. If you like to travel, you may also want to check that your plan will cover your medical costs in different states.
It will take some time to learn everything you need to know about Medicare. Don't rush the process. Consider your options carefully so you can take full advantage of this beneficial healthcare coverage. When you're covered properly, you'll be able to use all the health services you need to stay happy and healthy in retirement while minimizing your financial concerns.
*Written by Sharon Wagner