What Medicare Options Are Right for You?

If you qualify for Medicare, some of the choices you need to think about include:

  • If you want Original Medicare, a Medicare Advantage plan, or a Medicare Cost plan.
  • If you want Original Medicare: Which Part D prescription drug plan to sign up for (if any), whether to decline Part B because you or your spouse is still working and can get employer-sponsored coverage, and whether to sign up for a Medigap (Medicare Supplement) policy.
  • If you want a Medicare Advantage or Medicare Cost plan: Which plan to choose.

People make these choices when Medicare coverage starts, but can change their minds and their Medicare coverage at certain times.

Comparing Original Medicare, Medicare Advantage, and Medicare Cost Plans

To understand what Medicare options are right for you, it’s important to get a sense of how Original Medicare, Medicare Advantage, and Medicare Cost plans work.

Note: Medicare Advantage is sometimes called Medicare Part C. Medicare Cost plan are considered "Other Medicare plans."

With Original Medicare:
  • Part A helps pay for hospitalization. Most people do not pay a monthly premium for Part A.
  • Part B helps pay for outpatient medical care, like when you go to the doctor’s office. Most people pay a $135.50 premium for Part B (or a bit less, depending on their situation).
  • Private Part D plans help pay for prescription drugs for people with Original Medicare coverage. You have to pay an extra monthly premium for Part D and the amount depends on which Part D plan you get.
  • Private Medigap policies cover some expenses that Original Medicare does cover. You have to pay an extra monthly premium for these policies, also called Medicare Supplement Insurance.
  • You can visit any doctor or hospital who accepts Medicare payments.
With Medicare Advantage:
  • A private company offers a policy that combines the benefits offered by Part A, Part B, and Part D into a single plan.
  • There are many plans to choose from in most counties.
  • The exact benefits and the cost of those benefits depend on the plan you choose.
  • You may be restricted to certain hospitals or networks of doctors.
  • There is a $6,700 out-of-pocket maximum in 2019 for expenses besides the premium and prescription drugs.
With Medicare Cost Plans:
  • A private company offers a plan that is similar to a Medicare Advantage plan: It combines Part A, Part B, and Part D, while having a provider network with specific hospitals and doctors.
  • But you can also use providers who are not part of the network. If you do this, Original Medicare pays for the services and you have to pay Original Medicare coinsurance and deductible fees.
  • Important: Medicare Cost plans are not an option in most counties and are being phased out. If you have any questions about this, call the Senior LinkAge Line® at 1-800-333-2433.
Summary of Differences

Original Medicare

Medicare Advantage

Medicare Cost Plans

Run by

The federal government

Private companies

Private Companies

Medical providers

Any who accept Medicare

May be a limited provider network

May be a limited provider network, but you can use Original Medicare to see out-of-network providers

Costs

Based on Medicare’s rules

Depends on the plan; has a $6,700 annual out-of-pocket maximum in 2019

Depends on the plan

Services covered

Everything Part A and Part B cover

At least everything Original Medicare covers

At least everything Original Medicare covers

Additional Benefits

Not included

May be included with plan

May be included with plan

Drug Coverage

With a separate Part D policy

May be included with plan or through a separate Part D policy

May be included with plan or through a separate Part D policy

Advantages

More service providers to choose from

Usually lower cost

Can get coverage through the provider network or through out-of-network providers

The bottom line: Original Medicare and Medicare Advantage are both good ways to get Medicare benefits. In Minnesota, 57% of Medicare beneficiaries choose Original Medicare and 43% choose Medicare Advantage or Medicare Cost plans.

How Other Coverage Can Affect Your Medicare Choices

Having another form of health coverage, such as employer-sponsored coverage or Medical Assistance (MA), is one of the biggest factors that can affect how you should get Medicare. Answer these questions to see how they might affect your Medicare choices.

If you need to talk with someone about these questions, call the Senior LinkAge Line® at 1-800-333-2433.

Do You Have Private Coverage That Covers What Parts B and D Cover?

If you or your spouse are working and get employer-sponsored coverage that covers what Medicare Parts B and D cover, you may want to opt out of Parts B and D, so that you don’t have to pay their premiums. (You still have Part A coverage, which usually has no premium.)

However, you might have to pay monthly penalties if you opt out and want Parts B and D later:

  • For Medicare Part B, you can only opt out without paying penalties later if you have an employer-sponsored insurance policy through your employer or your spouse's employer (retiree plans don't count). If you do, make sure to check with your employer or insurer whether it's safe for you to opt out of Part B.
  • If Medicare Part D says the other coverage you have is “creditable,” which means it meets certain standards, you can opt out of Parts D and you don’t have to pay a penalty if you decide to sign up for it later, within certain time limits. For Part D, creditable coverage can be an employer-sponsored plan or a retiree plan.
  • If you opt out of Parts B and D and your coverage doesn't meet these standards, you may have to pay monthly penalties if you want Parts B and D later. The longer you go without coverage, the higher the penalties might be.

Note: If your income is below certain levels, you may qualify for a Medicare Savings Program (MSP), which would help pay your Part B premium, and the Low Income Subsidy (LIS), which would help pay your Part D premium. Look into these before you opt out of any parts of Medicare.

The bottom line: Don’t opt out of any Medicare coverage without carefully researching your options. Also, if you decline Part B, you cannot sign up for a Medicare Advantage plan. If you have any questions, contact the Senior LinkAge Line®.

Do You Also Have MA Coverage?

People who qualify for both Medicare and MA coverage are called “dual eligibles.” Most dual eligibles do not have to pay Medicare premiums, because either MA pays them or because the person also qualifies for a Medicare Savings Program (MSP). MA, including Medical Assistance for Employed Persons with Disabilities (MA-EPD), may also help pay for Medicare co-insurance and deductibles, as well as some services Medicare doesn’t cover. That’s why you shouldn’t decline Medicare Parts B or D if you also qualify for MA.

If you qualify for both Medicare and MA, there are different ways to get your medical coverage:

  • You can have separate Original Medicare and MA coverage. This gives you more flexibility to choose your medical providers, but some may not accept MA or Medicare as payment, which could mean you have to pay more.
    • Do not decline Part B or Part D coverage. If you decline them, MA (or MA-EPD) won't pay for what they would have covered.
  • You can have a Medicare Advantage plan with separate MA coverage. This can be a problem if you have a MA managed care plan with a different provider network than your Medicare Advantage network.
  • You can have a Medicare Advantage plan that is integrated with MA coverage. These plans include all the coverage that Medicare Parts A, B, and D offer plus what MA covers. They are called Special Needs Plans (SNP) plans if you are 18 – 64 years old; Minnesota Senior Health Options (MSHO) if you are 65 or older. With these plans, there’s less paperwork (you only have one insurance card) and you don’t have to worry so much about which of your benefits pays for which medical services. They also offer care coordination as a core part of the plan.

The bottom line: An SNP or MSHO plan could make it easier for you to deal with your combined MA and Medicare health coverage and may let you get more benefits than Medicare usually offers, such as dental, vision, and hearing aid coverage. However, if you want more flexibility than a managed care program, look into Original Medicare.

If you have Medicare and another insurance at the same time

If you have more than one type of coverage, including MA, employer-sponsored coverage, Veterans (VA) health benefits, military (TRICARE) benefits, or any other health coverage, one coverage may pay for costs that your other coverage doesn't pay for, meaning you have to pay less out of your own pocket. If you are in this situation, make sure you understand how Medicare interacts with other types of coverage.

Is Medicare Your Only Health Coverage?

If you do not have any private health insurance, don’t qualify for MA, and don’t have any other medical coverage besides Medicare, then you need to make sure that your Medicare coverage is good enough for all of your health needs.

If Medicare is your only health coverage:

  • Do not decline Parts B and D. They provide coverage you need, since you don’t have any other insurance that will pay for those medical expenses. Furthermore, if you turn them down, you have to pay premium penalties if you want them later.
  • See whether you would prefer a Medicare Advantage plan. Medicare Advantage plans have to offer at least the basic benefits that Original Medicare offers, but some Medicare Advantage plans might also offer coverage for things that Original Medicare doesn’t cover. Use the Medicare Plan Finder to see if there’s a Medicare Advantage plan that meets your needs.
  • If you don’t want Medicare Advantage, think about a Medigap policy (Medicare Supplement Insurance). If you get Original Medicare, you can pay an extra monthly premium to get a private Medigap policy that covers some of the expenses that Medicare Parts A and B won’t cover, such as co-insurance, copayments, and deductibles. Medigap policies do not cover prescription drugs (you need Part D for that). Learn more about Medigap policies or find one in your area.

The bottom line: If you don’t have other coverage, make sure that your Medicare coverage meets your needs.