Why Original Medicare Alone May Not Be the Right Solution
If you’re approaching your 65th birthday, you’ve probably begun contemplating your options for enrolling in Medicare. After all, if you don’t sign up for Original Medicare (Part A and Part B) around the time you turn 65, you might incur late enrollment penalties. What many seniors don’t realize is that enrolling in Original Medicare alone might not be the best option for them — in fact, it could be costly.
There are other coverage options beyond Medicare Parts A and B that can provide you the benefits you need and deserve. Understanding all of your options can help you make the right choice when it comes to protecting your health and your finances.
What is Original Medicare?
Original Medicare is the most basic form of Medicare coverage. Generally, you’re eligible for it when you turn 65. It includes Medicare Part A, which covers hospital stays, and Medicare Part B, which covers outpatient doctor and medical services.
Understanding what Original Medicare covers is important for many reasons. A big one is so that you know what gaps in coverage you might encounter. For example, Original Medicare doesn’t include prescription drug coverage. You’ll need to enroll in a separate Medicare Part D plan to get coverage for prescribed medications you take.
Here’s a more thorough breakdown of Original Medicare and its costs.
Medicare Part A
Medicare Part A covers hospital stays, skilled nursing, hospice and some home health services. This part of Medicare is premium-free for most seniors. If you paid Medicare taxes for 10 or more years in the United States, you do not have to pay a monthly premium for Part A.
However, this does not mean that Medicare Part A covers all your expenses for you. There are still deductibles, coinsurance and copayments required. These are incurred within a “benefit period,” which begins the day you are admitted to the hospital or a skilled nursing facility. The benefit period ends when you have not been in the hospital or skilled nursing facility for 60 days in a row.
In 2024, the deductible for each benefit period is $1,632. If you are admitted to the hospital, Medicare Part A covers the costs for the first 60 days you are inpatient. If you are in the hospital for longer than 60 days, you must pay coinsurance of $408 per day, up to your 90th day.
After 90 days, you can use up to 60 “lifetime reserve days” and pay coinsurance of $816 per day. If you’re in the hospital for longer than 150 days, you are responsible for 100 percent of the medical costs until you are discharged.
If 60 days pass, and you are admitted into the hospital again, the entire process starts over. You’ll owe the deductible again, as well as coinsurance for days 61-90 in the hospital.
Medicare Part B
Medicare Part B covers your outpatient medical or doctor’s visits, including preventive care, outpatient procedures, mental health services and some medical equipment.
Part B is not premium free. As soon as your Part B coverage begins, you’ll owe a standard monthly premium. For 2024, the standard premium is $174.70, but the amount you pay might be higher based on your income.
On top of the monthly premium, you will also be responsible for a yearly deductible, coinsurance and copayments. The annual deductible for 2024 is $240. After your deductible is met, you’ll typically pay 20 percent for Medicare-approved services.
There is no out-of-pocket maximum for Medicare Part B. You will have to continue to pay 20 percent for all covered medical services every year.
Original Medicare does not cover everything
As you can see, Original Medicare offers some coverage for hospital and medical services. However, the cost sharing element of Original Medicare has the potential to be high. If you are hospitalized for more than 60 days in a single benefit period, you could receive a bill for tens of thousands of dollars — even after Medicare Part A pays for its share of the coverage.
Additionally, paying 20 percent coinsurance for care covered by Medicare Part B might not seem like a lot at first. But those costs can add up significantly over time — especially if you need diagnostics and treatment for a severe or chronic condition.
These costs have the potential to be a burden financially for seniors covered by Original Medicare alone. Think about how much you can afford to pay in a given year. Even if you can afford a single expensive medical bill, it may affect your financial stability in the long term.
On top of the potentially troublesome cost sharing that comes with Original Medicare, signing up for Parts A and B alone can also leave you without benefits you’re expecting or accustomed to. Original Medicare does not cover many services you might need, including dental care, vision services, glasses and hearing aids. The costs for these services and devices can be in the thousands. Paying for them out of pocket can quickly add up.
Options beyond Original Medicare
It’s clear that Original Medicare may leave gaps, both in terms of cost sharing and benefits, in the average senior’s healthcare coverage. Fortunately, today’s seniors have numerous options for bridging those gaps and expanding their coverage. The two main options for supplementing your Medicare plan are enrolling in Medicare Part C, also known as a Medicare Advantage plan, or enrolling in a Medicare Supplement, or Medigap plan.
Medicare Advantage
Medicare Advantage plans are offered by private insurance companies that have contracts with the federal government. These plans offer all benefits under Medicare Parts A and B plus some additional benefits and often includes prescription drug coverage — all together in one plan. The benefits you receive will vary based on the plan you choose.
By using a more traditional health insurance model, such as a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO), Medicare Advantage plans offer you traditionally low monthly premiums (in addition to your Part B premium) and expanded benefits. You’ll still be responsible for a plan deductible, copayments and coinsurance, but your plan will have an annual out-of-pocket maximum that reduces your financial exposure if you get sick.
Medigap
Medigap plans are insurance policies offered by private insurance companies that work in tandem with your Medicare Part A and Part B benefits. These plans are designed to fill the cost sharing gaps of Original Medicare, but typically don’t offer additional health and wellness benefits. If you need prescription drug coverage, you’ll need to purchase a separate Part D plan. Your Medigap plan will charge a monthly premium in addition to your Part B premium.
Depending on which of the 10 available Medigap plans you select, your plan will cover some or all of your Medicare Part A and Part B deductibles, coinsurance and copayments. This coverage may help to reduce your out-of-pocket costs and financial exposure.
Why choose more than Original Medicare?
If you’re only covered by Medicare Parts A and B, you may be putting your finances at risk if you develop severe medical needs. The bottom line is this: If you’re not sure you can afford potentially unlimited out-of-pocket costs, then Original Medicare alone might not be the right choice for you.
Choosing to add a Medigap plan to Original Medicare or enroll in a Medicare Advantage plan may help minimize your financial exposure. These options may help you retain greater control over your monthly premiums and annual out-of-pocket expenses and provide you with predictable costs. All while potentially offering you more healthcare benefits.
Interested in exploring your Medicare options beyond Original Medicare? PlanEnroll is here to help. We offer a wide range of options to expand your coverage and provide you with peace of mind. To learn more, reach out today so one of our licensed insurance agents can assist you.
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