If you are one of the 63 million Americans sixty-five or older who is eligible for Medicare, you have probably been deluged for months with TV commercials and direct mail extolling the virtues of Medicare Part C or “Advantage plans.” Sometimes, the pitches are made by such celebrities as Joe Nameth, William Shatner, or Jimmie Walker; at other times, they are actors playing regular folks, who have called to get the important information described in the commercials. (We are led to believe they are calling Medicare, but in fact, they are contacting private insurance agents.)
These commercials are very effective. According to the Kaiser Family Foundation, 42 percent of Medicare beneficiaries are enrolled in Advantage plans, up from 31 percent in 2016. But, before you join their ranks, be aware that what these commercials are telling you can be misleading or downright duplicitous. The red, white, and blue graphics give the impression that these ads are sponsored by Medicare. They are not! And, while the plans themselves are perfectly legal and may be fine for many of the Americans enrolled in them, they often don’t deliver everything those sales pitches promise. Plus, the pitches don’t tell the full story of the benefits, many of which aren’t even offered in some areas.
On the other hand, it’s easy to see the appeal of Advantage plans. Original Medicare doesn’t cover all your medical expenses, while Advantage plans have cost-sharing requirements but then cap your out-of-pocket costs. Plus, they have low premiums and the simplicity of all-in-one coverage. But there can be hidden risks to Advantage plans, especially for those with major health issues. “Some people in Medicare Advantage end up paying unexpectedly high costs when they become ill or find their network lacks the providers they need,” says Tricia Neuman, senior vice president at Kaiser.
It can all sound quite confusing, so here is a look at what Medicare does and doesn’t cover. Medicare has four parts, Parts: A, B, C, and D. Original Medicare includes coverage for hospitalization (Part A), medical visits and procedures (Part B), and at additional cost, prescription drugs (Part D). Original Medicare has no annual out-of-pocket limit.
Part A covers inpatient hospital care, and skilled nursing. There’s no premium if you or your spouse have earned at least 40 Social Security credits (Social Security credits are used to determine eligibility and benefit amounts for retirement and disability benefits. A minimum of 40 credits is required to be eligible for retirement benefits, which takes a minimum of 10 years to earn).
Medicare Part B covers doctor services and outpatient hospital care. You have to pay a monthly premium for this coverage, which will be $170.10 in 2022, with a deductible of $233. High earners pay more. For Part B services, you will pay 20 percent of the costs after the deductible.
The other parts of Medicare—Part C or Medicare Advantage, and Part D, prescription drug coverage—are optional and offered by private insurers.
Medicare Advantage is the all-in-one alternative to original Medicare health insurance. It is a managed-care plan, typically an HMO or PPO. Advantage plans provide the benefits of Part A and B, and most also include Part D, or prescription drug coverage. Some offer extra benefits not available through Original Medicare, such as fitness classes or vision and dental care.
But, while the dental and vision coverage of Medicare Advantage plans sounds great, some plans may only include routine visits, not more expensive items like dental implants and eyeglasses. Plus, the average yearly coverage limit of Advantage dental plans ranges from about $1,000 to $1,300, according to the Kaiser Family Foundation. The dentists and eye doctors you visit must also be in the plan’s networks, meaning your eye doctor or dentist may not accept your plan.
If you opt for Medicare Advantage, you typically continue to pay your Part B premium as usual, but you will pay little or no additional premiums for your coverage. To keep premiums low, Advantage plans generally require you to get your care from a network of doctors, hospitals, and other providers, and you typically need pre-authorization for specialized care. Before you enroll in Advantage plans, you must have original Medicare, and you still must pay the Part B premium of $148.50 (in 2021).
If instead of Medicare Part C, you choose Original Medicare and add a supplemental, or Medigap plan that covers your out-of-pocket costs, you will have a wider choice of providers, since the coverage is accepted by any doctor or medical service that takes Medicare—the vast majority do. In most states, you are only guaranteed access to a Medigap plan when you first enroll in Medicare. You will pay additional monthly premiums for a Medigap policy, and you could be denied Medigap coverage due to a preexisting condition.
Most people in Original Medicare purchase a stand-alone Medicare Part D prescription drug plan as well. A Part D plan is voluntary prescription drug coverage offered by private insurers and approved by Medicare. Medicare Part D plans help pay for your prescription drugs and protect you from high prescription drug costs. If you are eligible for Medicare Parts A or B, you are generally also eligible for Medicare Part D.
Medicare seems to have a lot of moving parts, but it’s really, pretty straightforward. Each part covers specific services and has certain charges. Only parts A, B, and D are associated with Medicare; Part C is a separate entity, although advertising makes that difficult to determine. When in doubt, go to Medicare’s website https://www.medicare.gov/talk-to-someone or call 1-800-MEDICARE (1-800-633-4227) for clarification.