If you approaching Medicare eligibility, you will have choices to make. Health insurance can play a pivotal role in your health and wellness, but it can have an equally significant impact on your financial security. Medicare recipients can be especially vulnerable to unexpected medical expenses, and it’s crucial that you have insurance that will protect you from devastating medical bills. Medicare can help if you are eligible due to age or disability.

Medicare is insurance for individuals 65 years of age or older, or some people under the age of 65 with certain disabilities. When you are eligible, you’ll be able to choose how to receive your Medicare benefits. You can choose to get your Part A and Part B benefits from Original Medicare or Medicare Advantage.

Original Medicare

Original Medicare is the program administered by the federal government. It includes Part A (hospital insurance) and Part B (medical insurance). Most people get Part A premium free due to taxes paid while working for 40 quarters. You will be responsible for a Part B premium when you choose to enroll. If you do not enroll in Part B when you are first eligible, you may be subject to a late enrollment penalty when you decide to sign up later on. You will be responsible for annual deductibles, coinsurance, and copayments. It’s important to note that Original Medicare does not provide an annual out-of-pocket maximum limit.

Medicare Supplement

Medigap, or Medicare Supplement, policies can help lower your out-of-pocket costs with Original Medicare. These policies are sold by private insurance companies and the plans are regulated by the federal government. You have a guaranteed issue right to purchase any plan sold in your state during your initial Medigap enrollment period. This period starts when you turn 65 years of age and are enrolled in Part B. During this time, you can’t be turned down for coverage or charged more for any pre-existing conditions.

A Medicare Supplement policy can help cover some of the costs that Part A and Part B do not, such as deductibles, coinsurance, copayments, and more.

Prescription Drug Plans (PDPs)

Original Medicare and Medigap do NOT include coverage for prescription drugs, so many Medicare recipients choose to enroll in a Prescription Drug Plan when they are first eligible to avoid late enrollment penalties. PDPs are sold by private insurance companies, and plans can vary in cost and coverage. Each plan can have its own formulary, or list of covered drugs, and different tiers of pricing.

Medicare Advantage

Medicare Advantage plans, also referred to as Medicare Part C, are offered by private insurance companies who contract with Medicare to provide your Part A and Part B benefits. Medicare Advantage plans are required to provide at least the same benefits as Original Medicare, but many plans offer additional benefits. Additional benefits may include:

  • Prescription drug coverage
  • Vision and dental care
  • Hearing exams and hearing aids
  • Fitness club memberships
  • Over-the-counter allowances
  • And more

Medicare Part C plans vary in costs and coverage, but they will set an annual out-of-pocket maximum limit to help protect you in the case of costly medical procedures. Medicare Advantage plans can vary in costs and coverage, so comparing plans available in your area before enrolling is important. Some MA plans will require you to visit providers and hospitals within the plan’s network, like Health Maintenance Organizations (HMOs) while others will allow you to go out of network for a higher cost, like Preferred Provider Organizations (PPOs).

If you are approaching your 65th birthday, or nearing 24 months on disability, you may want to start comparing the coverage options in your area.