How to Compare Medicare Plans
Comparing Medicare plans comes down to two crucial things:
Knowing yourself: your healthcare needs, your preferences, and your budget.
Knowing the product: understanding the differences between your plan options. Plus, the risks and benefits of these options.
Becoming an expert in Medicare doesn’t happen overnight. And it certainly isn’t set-it-and-forget-it. Every year, the Centers for Medicare & Medicaid Services (CMS) tweaks Medicare rules. These changes can be related to cost, coverage, or something else.
You’ll get a disclosure of these changes every year to help you stay on top of things. Having a firm foundation of Medicare knowledge will make reviewing plan changes easier.
How Many Medicare Plans Are There?
There is only one type of Original Medicare plan, but there are 10 types of Medigap plans. Medicare Advantage plans must meet basic requirements but vary from company to company. Prescription drug plans also vary depending on the company.
Your Medicare plan will come in one of two forms:
Original Medicare (Parts A and B), with or without a Medigap plan and a prescription drug plan
Medicare Advantage with or without a prescription drug plan
Medicare Advantage plans may include coverage for vision, dental, or hearing. That’s something you won’t find if you choose Original Medicare. But, you can add stand-alone vision, dental, or hearing plan(s) to Original Medicare. You can also add them to a Medicare Advantage plan so long as it doesn’t already offer that coverage.
With just these two plan options, you have access to many combinations. Making things a little more complicated, private health insurance companies fulfill Medigap. They also fulfill Medicare Advantage and Medicare prescription drug plans.
Each private insurance company may even have multiple options for the same type of plan. For example, one company may offer options like “basic,” “intermediate,” and “comprehensive” plans.
Learn More: Best & Worst Medicare Advantage Plans
Types of Medicare Side by Side
Plan Option | What It Covers | Pros | Cons |
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Original Medicare | Inpatient and outpatient health services, as outlined in the CMS | Extensive network of healthcare providers, administered by the government so you won’t have to change companies ever | No vision, dental, hearing, or prescription coverage. Only covers a maximum of 80 percent of costs (after deductible) if you don’t purchase Medigap |
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Medigap | High coinsurance and deductibles found in Original Medicare plans | Makes Original Medicare affordable, protects you from large financial losses; Out-of- pocket cost limits | Plan options come and go—if you have a plan that is no longer available to new enrollees, switching out means you can’t switch back |
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Medicare Advantage | Everything that Original Medicare covers; MA plans are alternatives to Original Medicare; comes in the form of a PPO, HMO, or PFFS | May offer additional coverage options not available to Original Medicare enrollees; out-of- pocket cost limits; often has lower deductible amounts | Insurance company administering the plan could lose its contract or decide not to offer Medicare products; may have excess charges; coverage limited to one service area |
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Prescription Drug | Specific medications as laid out in the plan’s formulary | Helps cover the cost of medications, which saves seniors lots of money; many low-cost options available | Not as valuable to people who don’t take medications; formularies can change or drop a medication you take |
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