Original Medicare or Medicare Advantage: Which is right for you?
The Original Medicare program includes parts A, B and D. You are not bound to a specific network of providers, can see a provider anywhere in the country and do not need referrals — however, many Medicare providers are not currently accepting new Medicare patients.
The out-of-pocket costs might also be higher with Original Medicare but can be filled with a Medigap plan, Medicaid or coverage from your former employer.
Part A covers hospitalization/inpatient treatment. If you or your spouse have paid Medicare payroll taxes for at least 10 years, this coverage is free when you sign up for Medicare; otherwise, you may obtain it with a monthly premium. In addition to hospitalization coverage, Part A includes skilled nursing stays, hospice care, and home health care.
Part B represents outpatient coverage for things like doctor visits, preventative services, ambulance visits, mental health services and durable medical equipment; it will cost a monthly premium.
Part D is the prescription drug benefit, which will cost you a monthly premium that varies depending on which plan you choose.
Medigap insurance, identified by letters A through N, is private insurance to fill in coverage gaps for Original Medicare beneficiaries. Each letter plan has the same coverage benefits but may differ on price.
On the other hand, Medicare Advantage plans (or Medicare Part C) are offered by private insurance companies and bundle together Parts A and B and usually Part D.
Like a plan you might have had through your employer, you will have an in-network primary care physician who oversees your care and provides specialist referrals. The out-of-pocket costs tend to be lower with a Medicare Advantage plan, but you are limited to a network of providers.
When and how to sign up
If your 65th birthday is no more than three months away, you can sign up for Medicare at any time while you or your spouse are still working; after that, you have an eight-month window to sign up to avoid paying penalties.
Signing up for Parts A and B is done through Social Security (or the Railroad Retirement Board, if applicable), as they will determine your eligibility for Part A without a premium as well as manage requests to enroll in Part B.
Decide whether Original Medicare or Medicare Advantage better suits your needs, considering such factors as out-of-pocket costs and flexibility in access to doctors outside your region.
If opting for Original Medicare, you will need to decide whether to add Part D benefits; if also opting for Medigap, be sure to enroll within 6 months of A and B to avoid penalties or coverage denial. Both Part D and Medicare Advantage have designated enrollment periods.
While navigating health insurance in retirement can make your head spin, it is vital to ensure that your healthcare needs are met in your later years.
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