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Private Health Insurance Versus Medicare

Are you newly qualified for Medicare? You may have been insured by private insurance your whole life, so you might be wondering what to do. If you are skeptical about the quality of Medicare vs. private insurance, you might like to know that you can actually have both.

Types of Medicare Coverage That Are Offered by Private Insurance Carriers

Medicare works with private insurance companies to offer Medicare benefits.

Medicare works with private insurance companies to offer Medicare benefits. The types of Medicare coverage you can get from Medicare-approved private insurance companies consist of:

• Medicare Part D prescription drug coverage
• Medicare Supplement (Medigap) insurance to aid cover out-of-pocket Medicare costs, such as deductibles, copayments, and coinsurance
• Medicare Advantage plans, which comprise your Part A (hospital) and Part B (medical) insurance in one convenient plan. Medicare Advantage plans also might include added benefits, such as prescription drugs, routine vision, routine hearing, and routine dental coverage.

Irrespective of which coverage option you may choose, you are still in the Medicare program. You still have to stay enrolled in Medicare Part A and Part B to qualify for Medicare Advantage or Medicare Supplement. If you sign up for a stand-alone Medicare Part D prescription drug plan, you need to have either Medicare Part A or Part B (both are okay).

Does Medicare Coverage from Private Health Insurers Cost More?

Medicare coverage from Medicare-approved private insurance companies may cost you an additional monthly premium but might also save you money over time.

You might be astonished that Original Medicare (Part A and Part B) has no out-of-pocket maximum. This means that if you want extensive medical care, you could face enormous bills. Two Medicare Supplement health insurance plans, Medicare Supplement Plan K and Plan L, have out-of-pocket limits. Other Medicare Supplement plans may still assist you to cover Medicare’s out-of-pocket costs.

All Medicare Advantage plans are required to have an out-of-pocket limit, protecting you from overwhelming financial responsibility if you have a serious health condition. Limits may differ among plans.

Medicare Versus Private Insurance: Premiums and Costs

Most individuals with Medicare do pay a premium for medical insurance.

Generally, private insurance companies can raise your premium depending on three things that do not affect your Original Medicare premiums.

• Age: private insurance companies can charge premiums for older persons up to three times higher than premiums for younger individuals, according to Healthcare.gov.

On the other hand, most people who qualify for Medicare do not pay a premium for hospital insurance (Part A). Most people with Medicare do pay a premium for medical insurance (Part B), but this premium doesn’t go up or down depending on your age.

• Location: According to Healthcare.gov, where you live has a significant impact on your premiums from private insurance companies. Medicare Part A and Medicare Part B premiums are the same irrespective of your location in the United States.

If you get any Medicare coverage from a private insurance company, like Medicare prescription drug coverage, a Medicare Supplement plan, or a Medicare Advantage plan, these premiums may differ from location to location. Premiums and other costs may also be different among insurance carriers.

• Tobacco use: Cigarette consumption will not increase your Original Medicare (Part A and Part B) premiums. Nevertheless, according to Medicare.gov, Medicare Supplement plans may offer discounts to non-smokers.

Medicare Versus Private Insurance: Dependents

Private health insurance usually allows you to extend coverage to dependents, like your spouse and children, while Medicare is individual insurance. Most individuals with Medicare coverage have to qualify on their own through age or disability. But in some situations, your spouse might help you be eligible for certain coverage.

Medicare Versus Private Insurance: Benefits

Original Medicare has some significant gaps in coverage for things that private insurance usually covers, such as prescription drugs. Original Medicare may cover prescription drugs you receive in the hospital or certain medications (like injections or infusions) you receive in a doctor’s office but generally does not cover most prescription drugs you take at home.

The only way to get Medicare prescription drug coverage for most medicines you take at home is through a Medicare-approved private insurance company. You can choose a stand-alone Medicare Part D prescription drug plan alongside Original Medicare or a Medicare Advantage prescription drug plan.

References and Resources

• Medicare Part A and Medicare Part B Premiums
• Original Medicare