When making your Medicare selections, you have what sometimes seems like a dizzying array of choices.
Different types of Medicare plans help pay for your inpatient hospital care, doctor visits, outpatient services, home health care, prescription drugs, some care in a skilled nursing facility and much more, depending on the plan or plans you choose.
But as complicated as all that sounds, there’s a single key choice at the core of all your decision-making: Will you go with the Original Medicare plan, which is run by the federal government and consists of Parts A and B, or a Medicare Advantage plan (also called Part C) that is offered by a private insurer and approved by Medicare?
Medicare Part A — Your Hospital Coverage
When you apply to Medicare, you are automatically enrolled in the Part A plan. Part A is your hospital insurance plan. It covers nursing care and hospital stays, although not doctors’ fees. Part A also covers some home health services, skilled nursing care after a hospital stay and hospice care.
You likely won’t have to pay a monthly premium for Medicare Part A, thanks in part to all the payroll taxes you paid while you were employed. You must, however, pay a yearly deductible before Medicare will cover any hospitalization costs. For 2011, the Part A deductible is $1,132.
Part A pays about 80 percent of your Medicare-approved, inpatient costs for the first 60 days you are hospitalized. If you have a longer hospital stay, you will have to pay a larger share of the costs. (That’s where it helps to have supplemental insurance.)
If you are a U.S. citizen or permanent resident and have not worked long enough to qualify for Medicare, and can't qualify through a spouse, you may be able to buy Part A coverage.
Medicare Part B — Your Medical Coverage
Part B pays for a portion of your doctor visits, some home health care, medical equipment, outpatient procedures, rehabilitation therapy, laboratory tests, X-rays, mental health services, ambulance services and blood.
Part B is optional, and you may want to opt out of Part B if you still have health insurance through an employer, union, your spouse, etc. Part B requires that you pay a monthly premium to Medicare (the standard rate for 2011 is $115.40), and there is a small deductible ($162 in 2011) that must be reached before Part B begins paying for services. People with higher incomes — above $85,000 annually for an individual or $170,000 for a couple — pay higher rates.
A warning about delayed enrollment: If you opt out of Part B when you initially enroll in Medicare but later decide that you want the coverage, you may have to pay a higher premium.
It's important to weigh carefully the health care resources you’ll have — not just in the next year or so, but also several years down the road. Individuals who will have strong retiree benefits from, say, a union or public service career may choose to opt out of Part B, while those who are still working but don’t expect to receive retiree health benefits often opt to switch over to Part B before leaving the work force.
Medicare Part C — Your Private Insurance Option
Part C plans are offered through private insurance companies and approved by Medicare. They are also known as Medicare Advantage or Medicare Health plans.
Before enrolling in a Part C plan, you must first enroll in Original Medicare — both Part A and Part B. If you decide to use Medicare Advantage, you choose the plan yourself and sign up directly with the private insurer.
By law, Part C plans must pay for at least the same health care services as Original Medicare. But they sometimes pay for things that are not covered by Original Medicare, such as vision and dental care. Most, but not all, Medicare Advantage plans also provide some prescription drug coverage.
Medicare Advantage plans are generally organized as health maintenance organizations (HMOs) or preferred provider organizations (PPOs). Typically, in these types of plans you choose one doctor as your primary care provider, and your choice of doctors, hospitals and other health care providers is restricted. If you see providers outside of the plan’s network, you likely will pay more, or these providers’ care might not be covered at all.
Private fee-for-service Medicare Advantage plans, which allow for the regular use of out-of-network providers, are available in some areas.
You can check with Medicare for availability near you. For more detailed information, see the Medicare publication Your Guide to Medicare Private Fee-for-Service Plans.
Medicare Part D — Your Prescription Drug Plan
The newest addition to the Medicare alphabet, Part D, helps you pay for prescription drugs.
Part D is optional and available to people who are enrolled in Original Medicare (Parts A and B) and most Medicare Advantage plans.
Part D plans are offered by private insurance companies that are approved by Medicare. You sign up for them directly with the private insurer.
If you are enrolled in a Part D plan, you will pay a monthly premium and sometimes a deductible, as well as copayments for your drugs.
Each plan varies in the cost of premiums, the price of drugs and its list of covered drugs or "formulary" under the plan.
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