Medicare coverage is aimed at adults aged 65 and older, as well as younger disabled adults. While some senior-aged people are not insured by Medicare, it has enabled most adults aged 65+ in the US to acquire health insurance coverage. There are four distinct parts to this federal health insurance program administered by the Centers for Medicare and Medicaid Services (CMS), and these are Parts A, B, C, and D. Unlike Parts A and B, Medicare Advantage health insurance (Part C) is administered by private health insurance companies through CMS subcontracts. Meanwhile, Part D covers prescription medications (and is also offered by private insurers). For this reason, enrolling or switching coverage options can be extremely confusing for most adults.
Enrolling in Part A versus Part B
Original Medicare’s Part A covers primarily hospitalization, whereas Part B covers outpatient healthcare visits. At three months prior to becoming 65 years of age, a senior can enroll in Original Medicare (and coverage then becomes effective at age 65). Part A enrollment does not result in a monthly premium cost for most seniors, so it makes sense to enroll unless covered by some other health insurance. While Part B does have a premium cost linked to it, coverage via this part can make a huge financial difference since most seniors need outpatient medical care even more than younger adults. Since Parts A and B do not cover all healthcare costs, it is important to plan for future medical bills upon needing either inpatient or outpatient services. For example, both Parts A and B have annual deductibles that must be met before Medicare covers the rest of the billed dollar amount.
Understanding Part A costs for the hospitalized enrollee
The deductible for Part A is $1,600 per benefit period in 2023. Besides factoring in this cost as something that is the enrollee’s financial responsibility, it is crucial to realize that the enrollee’s cost is $0 through Day 60 of the hospitalization, but increases to $400 per day for Days 61-90 (with a maximum out-of-pocket cost that may be changed annually by the CMS). The average (mean) hospital stay in the US is 4.7 days, with a mean total cost of $11,700 per day. Thus, a lack of health insurance can quickly lead to a tremendous debt-load for an adult in the US.
Part B co-insurance and deductible costs
Part B costs more for enrollees above a specified annual income threshold. However, $164.90 was noted by the Medicare.gov website as the typical monthly deductible cost for 2023. Furthermore, Part B covers only around 80% of the billed amount for each outpatient visit or service, so 20% of the cost is the responsibility of the Medicare-enrolled senior. On the other hand, Part B does not require the enrollee to have a Primary Care Physician (PCP) and allows the enrollee to receive Medicare-covered care from any doctor that accepts Medicare.
Original Medicare versus Medicare Advantage
The Kaiser Family Foundation (KFF) in 2022 reported that enrollment in Medicare Advantage has continued to grow over the past 20 years, and around 48% of Medicare beneficiaries are now enrolled in a Medicare Advantage plan. Although most Medicare Advantage plans include prescription drug coverage, they also usually limit the choice of physicians and hospitals to those that are “in-network” (plus include selecting an “in-network” PCP). However, many Medicare Advantage plans include dental coverage (which is not an included benefit under Original Medicare). Yet others include reimbursement for taxi rides to physician appointments, optometry exams, and annual gym memberships. If choosing to enroll in a Medicare Advantage plan, the enrollee still needs to pay the monthly cost of Original Medicare’s Part B – even though those covered services are already included in the Medicare Advantage plan.
Comparing the cost of different Medicare Advantage Plans
Monthly premiums and annual deductible costs differ tremendously between Medicare Advantage plans. While there are plans with no monthly premiums at all, these often have higher annual deductibles. More than 4,000 Medicare Advantage plans nationwide were offered to seniors in 2023. Since the CMS rates Medicare Advantage plans for enrollee satisfaction on a scale of 1-5 (as well as Part D drug plans), checking the CMS “star” rating for a Medicare Advantage plan can help a senior to determine whether to enroll in that particular plan or a different one.
Supplemental (Medigap) Plans, Part D Plans, and Travel Health Insurance
Due to the diverse costs accruable to people enrolled in Original Medicare, many seniors enrolled in Medicare’s Parts A, B, and D choose to also buy supplemental (Medigap) insurance. This is offered by private insurance companies, and can cover the deductibles and co-insurance not normally covered by Original Medicare. The monthly cost of a Medigap plan varies, but generally depends upon how much of the uncovered costs will be paid by the Medigap plan. As of 2018, 34% of people covered by Original Medicare purchased supplemental (Medigap) insurance. (If enrolled in a Medicare Advantage plan, the CMS disallows simultaneous enrollment in a Medigap plan.)
Similar to the diversity of Medicare Advantage and Medigap plans, there are a huge number of Part D drug plans offered by private insurance companies to seniors. The determination of which is best depends upon the financial circumstances, usual daily medications, and pharmacy preferences of the senior. Monthly premiums and annual deductibles differ between Part D drug plans, and the cost of a monthly prescription of a specific drug can also differ widely between plans.
For a senior that lives for a few months each year somewhere other than the state of permanent residential address, Original Medicare may be preferable. On the other hand, a senior taking a three-week vacation overseas – especially if afflicted with a chronic health condition such as diabetes – may find that purchasing travel insurance (which is not included in Medicare coverage) may be a good idea.
Telehealth coverage and medicare
Consequent to the federal Covid-19 public health emergency declaration, telehealth “virtual” medical visits are covered by Medicare through December 31, 2024. Many Medicare Advantage plans have broader coverage for utilizing telehealth than Original Medicare. Additionally, an ever greater number of Medicare Advantage plans are covering the cost of digital devices and wearables for patient monitoring and telehealth visits. Since the CMS does not include language in its Original Medicare parameters that expressly covers digital health technology, a Health News article in 2023 concludes that such technology is more likely to be covered by Medicare Advantage plans than Original Medicare.
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