How Medicare Costs Affect your Lifestyle

One benefit of aging is becoming eligible for Medicare at age 65 when you think you no longer will have to worry about paying your medical bills. Unfortunately, it is not that simple. A few months before your 65^th birthday, Medicare sends you an inch-thick information booklet describing how it works. You learn about Medicare parts A to D and Medicare Gap programs available from A to N. There are Medicare Advantage programs you might want to check in to and what do you do about Medicare Part D which concerns your prescription drugs.

To add to your confusion, approximately one zillion private insurers send you information packets trying to sell you different or additional Medicare insurance. Ignoring the sales pitches and taking your chances with traditional Medicare is a risky and possibly costly route to take. Traditional Medicare only pays a portion of your medical bills, has deductibles before it pays anything at all and does not cover prescription drugs.

A Medicare plan finder can guide you through the process of choosing how to deal with Medicare, Medigap and Medicare Advantage insurance policies. Meanwhile, here is an overview about the differences in Medigap plans, also called supplements, and Medicare Advantage plans. You cannot have both. You must choose just one.

Medigap or Medicare Supplement Policies 

Medigap or Medicare Supplement policies are designed to pay for what Medicare does not pay under Medicare Parts A and B. You remain enrolled in Medicare and your Medicare premium continues to be deducted from your Social Security check. You pay an extra premium for the extra insurance coverage provided by the Medigap Plan.

You may choose a policy that pays the deductibles and copayments required by Medicare. You can also choose one that pays for eyeglasses, hearing aids and other non-covered Medicare health needs. You will still need a separate Medicare Part D plan to cover prescription drugs.

The types of gap coverage are labeled with letters from A to N. The government has guidelines insurers must follow. Each policy labeled “A” will have the same coverage.  Plan A may not provide very much additional coverage whereas plan “G” will cover almost all of your expenses not covered by Medicare. Your medical service provider bills Medicare first.  After Medicare pays your bill, the service provider bills your Medigap insurer.

Medigap premiums may be expensive. A policy that covers all expenses not covered by Medicare will of course be more expensive than one that only covers a percentage of expenses not covered by Medicare.

Medicare Advantage Plans

Medicare Advantage Plans are run by private insurers. You will no longer be enrolled in Medicare and you will not pay the government a premium for Medicare coverage.

Private insurers have to follow strict government guidelines and are required to provide the same coverage as Medicare Parts A and B for the samepremium the government would charge but they may offer extra benefits for an extra premium. Some offer more benefits for the same premium.  Just as when choosing private insurance, you can choose whether or not you want to add prescription benefits or dental or vision coverage.

Advantage plans commonly use HMOs or PPOs and the premiums are less than those for Medigap plans. The disadvantage is that not all providers accept Advantage Plans and you will have the same issues as with any private health insurance company.

Only you can decide which route is the best for you. You can find more information and assistance at the Medicare website. The site has a Medicare Plan Finder that will assist you in making your decision.