Many people do not realize that Medicare does not provide full health coverage. Part A covers inpatient hospital care, skilled nursing facility care, hospice and some home health care, but the coverage is subject to deductibles, coinsurance and other restrictions. Medicare Part B covers 80% of outpatient care and medically necessary supplies after you have met the deductible. For the 20% not covered by Medicare, you have options to purchase Medicare Supplement or Medigap (two different names for the same thing) insurance from a private company. This private insurance helps cover copayments, coinsurance and deductibles. Medigap policies are standardized and regulated to ensure they provide consistent coverage regardless of the insurer offering them.
For some people, electing something other than Medicare original can be a good choice.
Medicare Advantage Plans (Part C) are offered not by the federal government but by private insurance companies that are approved and regulated by Medicare. These plans may enter or leave the Medicare market yearly. If a company withdraws or if a plan is no longer available in your area, you’ll need to switch plans or return to Original Medicare during a special enrollment period.
Advantage plans combine Part A (hospital) and Part B (medical) coverage, often including additional benefits such as drug coverage (Part D), vision, hearing, or dental services. These plans consolidate coverage into a single plan and typically have lower premiums compared to Original Medicare combined with a separate Medigap plan. However, they may involve network restrictions and higher out-of-pocket costs for some services.
Some plans operate under rules similar to Advantage plans even though they are not Advantage plans. One example is Medicare cost plans, which are available only in specific regions or areas, typically where traditional Medicare Advantage plans are not widely offered or where certain needs are better served by cost plans. Cost plans allow you to use network providers at lower costs or providers that accept Medicare at the same cost as Original Medicare. You can join or leave a Medicare cost plan anytime without waiting for open enrollment. Some offer drug coverage, though it can also be added through a separate plan.
Health Care Prepayment Plans are another option. HPCCs are typically sponsored by employer or union group health plans to provide Medicare Part B coverage for their members. They leave Part A coverage under Original Medicare and typically don’t include drug coverage (Part D).
Medicare occasionally tests new approaches through its demonstrations and pilot programs. These projects last for a limited time in specific areas and focus on specific populations or conditions, such as dementia care, joint replacements, and chronic illnesses. Programs such as accountable care organizations aim to improve care quality and reduce costs. To learn about ongoing projects, call 1-800-MEDICARE (1-800-633-4227).
Program of All-Inclusive Care for the Elderly is a joint Medicare-Medicaid program providing comprehensive care for people aged 55 and older who require nursing home-level care but can live safely in the community. Coverage includes a wide range of services such as doctor visits, emergency care, physical therapy, meals, and transportation. If you have Medicaid, there’s no monthly premium for long-term care; otherwise, you’ll pay premiums for care and drugs. Joining a separate Medicare drug plan while enrolled in PACE will disenroll you from the program.
This is just a summary of a complex series of provisions. Not only should you review the variations on original Medicare carefully to be sure that you will get the benefits and coverage you need, but also getting professional advice to be sure you pick the right package for your situation and location will help avoid costly mistakes.