As you contemplate your Medicare health choices you may be inclined to choose original Medicare and Part D as your coverage option.
Each year a small percentage of people choose this option mostly prompted by the desire or the need to save money.
This article will address whether or not merely adding a Part D plan to original Medicare is the best way to save money while insuring that you have adequate coverage.
You have several options to choose from regarding how you insure yourself when on Medicare. Options include:
- Original Medicare only
- Original Medicare and Part D
- Medicare and a Medigap policy
- Medicare, Medigap and Part D
- Medicare Advantage Plan either with or without Part D coverage
Your choice will generally be influenced by your budget, health and what plans are available to you.
Original Medicare and Part D
Most people choose to either purchase a Medicare supplement or enroll in a Medicare Advantage plan because of the gaps in Medicare. Original Medicare is made up of Parts A and B. Both require out-of-pocket cost-sharing expenses.
Part A will afford you coverage should you require a hospital stay but will not cover 100% of the cost. Any stay from 1 to 60 days will require a deductible of $1316 (2017) and there are additional costs if you require an extended stay.
Part B is the medical insurance portion of Medicare and includes coverage for doctor visits and outpatient procedures but does not cover 100% of the charges. You will generally be responsible for 20% of Part B charges. There is no cap on out-of-pocket charges whether it’s 20% of $100 or 20% of $10,000.
Choosing this option can leave you dangerously exposed to high out-of-pocket costs should you require major medical services. Given the other options available you should ask yourself if choosing to add only Part D to Medicare is a smart choice. (independently wealthy people excepted!)
Medigap or Medicare Advantage – more prudent options
Given the likelihood of the increased need for medical attention as we age and the fact that there are generally affordable Medicare plan options available it would seem that choosing original Medicare and Part D only is influenced by a lack of information (or maybe stubbornness!)
Since Part D has the same standard benefit model either as a stand-alone plan or included in a Medicare Advantage plan due to its being regulated by the federal government we’ll direct our focus to Medigap and Medicare Advantage plans.
Medigap policies are standardized insurance plans offered by private insurance companies in return for a premium. All plans will pay the Part A deductible and out-of-pocket hospital charges and depending on the plan will generally cover the majority if not all of other Medicare covered expenses.
The only reason not to choose a Medigap policy when first becoming eligible for Medicare is not being able to afford the premium. Medigap policies are readily available in all States.
If you are going to buy a Medigap policy you should do so during the Open Enrollment Period.
Medicare Advantage plans are available from private insurance companies approved by CMS. Plans generally have much lower premiums that Medigap policies and many plans available include a $0 premium. Many plans include Part D coverage as well.
Choosing an Advantage plan can often save you money as out-of-pocket costs are low and plans are mandated to include an annual maximum out-of-pocket amount – $4950 for 2017 Medicare Advantage plans.
In addition plans often include extra benefits not included in original Medicare such as dental, vision, hearing, gym memberships and other health and wellness programs.
When you compare a Medicare Advantage plan to original Medicare you can see why more people are enrolled in an Advantage plan that original Medicare.
Unless you have deep pockets and like uncertainty choosing either a Medigap policy or a Medicare Advantage plan over original Medicare and Part D is generally a prudent course of action.