Making health insurance coverage decisions can be difficult. If you are used to your employer-offered insurance, you may be hesitant to make the jump to Medicare.
You may be wondering, “What is better for me – Medicare or work insurance?”
Here is what you need to consider.
What does Medicare cover?
Medicare coverage is segmented into different parts that each cover something different.
Part A covers inpatient hospital care and Part B covers outpatient care like doctor visits, vaccines, preventive screenings, and durable medical equipment. Together Parts A and B are considered “Original Medicare” and are provided directly through The Center for Medicare and Medicaid Services.
Part D is the Prescription Drug component of Medicare and covers a variety of prescribed medications based on the plan.
But what about Part C?
Part C is referred to as a Medicare Advantage Plan. Medicare Advantage Plans typically combine the benefits of Parts A and B, as well as Part D and other additional benefits. Both Medicare Advantage Plans and Part D are sold through private insurance companies.
What are Medicare Supplement or Medigap plans?
Medicare Supplement Plans, also known as Medigap, are an alternative to Part C and are also offered by private insurance carriers. These plans help fill “gaps” in Original Medicare coverage. Medicare Supplements do not cover medications, so a Part D plan would need to be purchased separately.
How Does The Coverage Compare?
There are many variables to look at when evaluating what you have on your employer plan versus what you can have on a Medicare plan. Employer plans may offer more coverage for expensive brand name medications than Medicare plans, but if you’re only taking generic medications, Medicare plans may offer you more value.
Employer plans often will cover the spouse or other dependents, where as Medicare is an individual plan only. If you have dependents on your current employer plan, you will need to consider what happens to their coverage should you exit the employer plan for Medicare.
Most employer plans have deductibles. Many Medicare plan options do not have deductibles. There are many other differences to consider that will vary depending on your personal situation, so we highly recommend speaking with a knowledgeable Licensed Insurance Consultant for guidance.
What About Price?
Most people who are eligible for Medicare will receive Part A premium free because of the amount of time they worked. However, Part B does have a monthly premium that is based on income. In comparison, work insurance plans have set premium pricing based on the coverage you want to receive.
Original Medicare does lack a cost benefit that the majority of private insurance plans offer. With Original Medicare, there is no out-of-pocket maximum. What does that mean? It means that there is no limit to your out-of-pocket expenses. Private insurance plans typically limit the amount they require their beneficiaries to pay out-of-pocket before they cover 100% of the remaining costs for the year. This is why we educate our clients about enrolling in either a Medicare Advantage Plan or a Medicare Supplement Plan. These plans are offered by private insurance carriers and include limits on out of pocket expenses. Part C plans can also include Part D. Medicare Supplement Plans and Part D Prescription Drug Plans are purchased separately but these premiums, combined with Part B premiums, are still often lower and may offer more value than employer plans.
Employer plans also limit out of pocket expenses, but these limits are often high and there are often also high deductibles that have to be met before the plan pays for certain services.
It’s important to look at all your options once you become eligible for Medicare to ensure you’re getting the most value for your dollars. The coverage that makes the most sense for your personal situation will vary according to what your employer offers and what Medicare plan options are available in your area. There is no one size fits all solution.
So How Do You Decide?
It is difficult to compare Medicare and work insurance plans because they can both offer a variety of options. The best way to know if Medicare or your work insurance plan is better for you is by scheduling an appointment with one of our Licensed Insurance Consultants. Our approach allows us to take the time to understand your needs and goals and help you enroll in a plan that is appropriate for your needs. There are never any fees for any of our services.