What is original Medicare?
Medicare is a fee-for-service plan offered from the federal government and is available anywhere in the country. When you enroll in Medicare, you’re automatically in Original Medicare unless you join a Medicare Advantage plan. Premiums, deductibles and copayments apply.
What’s covered: Part A, known as hospital insurance, helps pay expenses for hospital stays, skilled nursing facilities, home healthcare, hospice care and medicines administered to inpatients. Premiums do not apply if you’re eligible for Social Security retirement benefits. Part B, which offers medical insurance, covers outpatient hospital care, doctors’ services, physical therapy, rehab therapy, lab tests, medical equipment, some home health services, preventive services and personalized prevention plans. Costs for prescription drugs, hearing, dental, vision and long-term care are not covered under Parts A and B.
What is a Medicare Advantage plan?
Medicare Advantage plans, sometimes referred to as Part C, offer an alternative to Parts A and B. They are provided by private companies and cover all Part A and B services, except hospice. These plans have more limited networks but may have lower out-of-pocket costs than Original Medicare and may cover additional services. But it’s a good idea to compare the two to determine which is a better fit for you, and do so again each year.
Planning Tip: To join a Medicare Advantage plan, you must:
- Already be enrolled in Parts A and B
- Continue to pay the Part B premium
- Live in the plan’s service area
Medicare Advantage coverage is available in several forms, including managed care plans, such as HMOs and PPOs, and private fee-for-service plans. Each plan has different out-of-pocket costs, and features vary depending on where you live. So it pays to shop around. Generally, you’ll pay your Medicare Advantage monthly premium in addition to your Part B premium. However, these plans can’t charge you more than Original Medicare would for certain services. Medicare Advantage plans also have an annual cap on how much you’ll pay for services covered under Parts A and B, but that can differ among various plans. Again, be sure to shop around.
To learn more about making this important decision, please visit Medicare.gov or call 800.633.4227. Your financial advisor is also available to help you determine how healthcare costs fit into your overall retirement income plan.
Sources: Comparing Your Medicare Coverage Options
Material prepared by Raymond James for use by advisors