Section 1: Medicare Essentials
Top 10 Questions About Medicare
What you need to know about coverage, costs and enrollment
ESTIMATED READ TIME: 5 MINUTES
IN THIS ARTICLE
• What does Medicare cover?
• How does Medicare compare to insurance I had before?
• Does Medicare give me fewer choices?
• Do my health problems work against me?
• Is Medicare less expensive than what I have now?
• Will I pay a large deductible?
• Are my out-of-pocket expenses capped?
• Do I have to sign up every year?
• Can I make changes later?
• Will I be cut off when I’m old?
Some new terms you’ll encounter in this article:
1. WHAT DOES MEDICARE COVER?
Medicare covers most of your health care costs after you turn 65 — and some before you turn 65 if you receive Social Security Disability Insurance (SSDI) benefits — but you are responsible for a share of the costs.
Original Medicare doesn’t cover routine dental, hearing and vision care. It also excludes long-term care at a nursing home or assisted-living center. It usually doesn’t cover medical services outside of the United States, and it doesn’t pay for most prescription drugs unless you buy Part D coverage.
2. HOW DOES MEDICARE COMPARE TO INSURANCE I HAD BEFORE?
Depending on the coverage you choose, you may find that Medicare is less expensive than what you had from your employer. In 2022, individual workers paid, on average, about $110 a month for their share of health insurance and had an average annual deductible of $1,763, according to a Kaiser Family Foundation study. Employers spent about $549 a month as their part of that one-person coverage.
Medicare Part A hospitalization is free to workers who have paid Medicare taxes for 40 quarters or who are eligible through their spouse. You pay a $1,600 Part A deductible in 2023 only if you're hospitalized as an inpatient.
Part B coverage for doctor and outpatient services costs $164.90 a month in 2023 for most people and has an annual deductible of $226.
Part D provides prescription drug coverage. In 2023, a plan costs $6 to $111 per month. The average plan costs about $31.50 per month.
Medigap plans, whose prices vary widely depending on the insurer, policy type and pricing method, will pay Part A deductibles. Plus, they often cover other charges and generally are less expensive for people enrolling in Medicare at age 65 than for older enrollees. You get the best deal when you buy a plan during the six months after you enroll in Part B at 65 or older because you can't be rejected or charged more for existing health problems.
But like at work, you may find that you also need to pay for separate dental and vision plans and consider other coverage that you probably didn’t have previously: hearing and long-term care.
Medicare Advantage plans typically operate like health maintenance organizations (HMOs) and preferred provider organizations (PPOs) common with employer-based insurance. The number of Medicare Advantage plans you'll be able to choose from depends on where you live.
To select one, you must be enrolled in Medicare parts A and B. You may pay nothing more or an additional premium that can be $100 or more a month. Plans often include coverage such as dental, hearing, prescription drugs and vision. Some cover other services, such as fitness center memberships or transportation to medical appointments.
What’s more, all of Medicare was designed to make sure medical needs that likely will increase as you age are covered — the reason it was created in 1965. As with any health insurance, you’ll have to decide what features are most important and what limitations you’re willing to live with.
3. DOES MEDICARE GIVE ME FEWER CHOICES THAN I HAVE NOW?
No. The reverse may be true.
If you’ve had health insurance from a private employer, you’ve probably had just two or three plans to choose from. But if you have original Medicare, which covers hospitalization, doctor visits and outpatient services, you can use any doctor or hospital that accepts Medicare payments. You also may have many plans to choose from to cover prescription drugs and fill in other gaps in coverage.
Another alternative is to buy a Medicare Advantage plan from a private insurer, which can provide both medical and drug coverage. You may have more than 50 different Medicare Advantage plan choices in your area, all with different types of coverage and costs. (In 2023, the average Medicare beneficiary has access to 43 Medicare Advantage plans.) The number of options may be overwhelming, so we can help you prepare for enrollment to make the choice that’s right for you.
4. DO MY HEALTH PROBLEMS AND PRE-EXISTING MEDICAL CONDITIONS WORK AGAINST ME?
No. Current or past health problems don’t bar anyone from Medicare coverage or result in higher premiums or copays. That kind of discrimination, which used to be typical among private health insurers, never existed in Medicare.
5. IS MEDICARE LESS EXPENSIVE THAN THE INSURANCE I HAVE NOW?
Medicare isn’t free. Like other types of health insurance, it has monthly premiums, deductibles and copays unless you qualify for a low-income program or have extra insurance that covers some or all of these costs.
But the premiums may be lower than the ones you pay for employer-based health insurance — and significantly lower than the premiums for individual plans. Most people don’t have to pay for Part A, which covers hospitalization, because they’ve had Social Security taxes deducted from their paychecks for at least 40 quarters, representing 10 years of work. And the majority pays $164.90 a month for Part B, which covers doctor visits and outpatient services.
6. WILL I PAY A LARGE DEDUCTIBLE BEFORE GETTING MEDICARE COVERAGE?
Medicare does have deductibles, but they are typically less expensive than the ones many people pay in individual or employer-sponsored plans. For example, the Part A deductible in 2023 is $1,600 for each benefit period, and the Part B deductible is $226 per year. You have to pay these deductibles before Medicare starts to pay out unless you have supplemental coverage.
7. ARE MY OUT-OF-POCKET EXPENSES CAPPED IN MEDICARE?
Not necessarily. Original Medicare doesn’t set a limit on the costs you pay out of pocket during a year although you may buy Medigap insurance to cover many of these costs.
If you choose a private Medicare Advantage plan, your out-of-pocket costs — including your deductibles, copayments and coinsurance — will be capped. Medicare Advantage plans are required by law to cap out-of-pocket expenses at $8,300 or less for care in your plan’s network in 2023. Some plans have lower limits.
8. DO I HAVE TO SIGN UP FOR MEDICARE AGAIN EVERY YEAR?
No. Your coverage rolls over from year to year unless you decide to change it.
9. WHAT IF I DON’T LIKE MY PLAN SELECTION? CAN I MAKE CHANGES?
You have the opportunity to change your coverage during Medicare’s open enrollment period, which runs from Oct. 15 to Dec. 7 each year. During this time, you can switch from original Medicare to a Medicare Advantage plan or vice versa, from one Medicare Advantage plan to another, or from one Part D prescription drug plan to another.
Medicare Advantage participants have another open enrollment period, from Jan. 1 to March 31 every year, to switch to a different Medicare Advantage plan or to original Medicare and a separate Part D drug plan. (Medigap enrollment is available all year.) One potential hitch you'll find if you switch from Medicare Advantage back to original Medicare: You might not be able to get a Medigap policy or one that will cover your existing health problems.
10. WILL MEDICARE COVERAGE BE CUT OFF WHEN I GROW OLD?
No! Medicare coverage is based on medical necessity, not age. It can limit specific services. But if you need a hip replacement when you are in your 90s or even older than 100, Medicare picks up most of the cost.
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