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How to Choose the Best Medicare Plan: 7 Tips You Need to Know

How to choose the best Medicare plan? Consider your monthly income, how often do you travel or if you use prescription drugs.

7 mins read
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If you are one of the 10,000 people in the U.S. turning 65 every day, deciding how to choose the best Medicare plan for you will be one of the most significant decisions you will need to make.  There are two main ways to get your Medicare coverage – Original Medicare and Medicare Advantage.  Although most people are automatically eligible for Original Medicare, this coverage provides only basic coverage for Hospital (Part A) and Medical expenses (Part B). It does not cover prescription drugs (Part D).  As you enter retirement, it is necessary to consider additional Medicare coverage options to address your future medical needs.

However, choosing a Medicare plan is not a simple decision. First, you need to familiarize yourself with the benefits. Second, you need to take align these benefits to your financial and personal goals. Lastly, you will need to pick between staying in Original Medicare and supplementing it with a Medicare Supplement (also known as Medigap) and/or Prescription Drug Plan (PDP) or choosing a Medicare Advantage plan, which is an all-in-one “bundled” alternative to Original Medicare.

In this article, we will be discussing seven tips on how to choose the best Medicare plan.  Your answers to these questions will lead you towards a better and more customized Medicare plan that works for you.

#1: Do You Want to Choose Your Doctor?

Not surprisingly, most people have personal preferences when it comes to their choice of doctors.  Besides medical expertise, patients prefer sharing their health concerns with someone they have consulted for many years.

Therefore, when evaluating a Medicare plan, here are some considerations that will affect your choice of doctors:

  • Under Original Medicare, you can visit any doctor who accepts patients that are on Medicare. This option gives you the flexibility to pick and choose the doctors you want to see over time, as long as they accept Medicare and take new patients.  However, as the doctors you prefer may not all be in the same plan network, you may lose the benefit of doctors easily coordinating and sharing information about your care.  This situation leaves you to do more of the work to manage your health.  Also, Original Medicare does not limit how much you pay for covered medical care each year.
  • With Medicare Advantage, you are often required to see doctors in a plan’s network (or some plans also allow you to see doctors outside of a plan’s network but for a higher price). Many national insurance carriers have comprehensive networks and continue to improve network coverage.  As you age, you will need to consult with new doctors, most of whom are specialists.  When you work with a team of doctors under the same network, your doctors will find it easier to consult each other and coordinate your care.  Besides, in most cases, consulting doctors under Medicare Advantage plans follow the copay structure (fixed dollar amount per visit), so you will always know what your costs are upfront.

#2:  Do You Frequently Travel?

If yes, you may want to consider a Medicare plan that can help provide more flexibility on doctor networks and international travel protection.

If you often travel domestically (or live in two areas), you have two options when it comes to selecting a Medicare plan:

  • As mentioned above, Original Medicare is a national plan that allows you to see any doctor in the country as long as they accept Medicare. For instance, if you live six months of the year in New York and the other six in Florida, you can see doctors in both locations.
  • You may also want to consider Medicare Advantage PPO plans (Preferred Provider Organization) that allow you to seek doctors’ expertise outside the plan’s network. These plans will require higher co-payments and other out-of-pocket costs but give you the added benefit of network flexibility.

Take note that consulting doctors outside the network are not covered under HMO plans (Health Maintenance Organizations). Therefore, plan for adequate coverage if you plan to travel frequently.

For international travelers, Original Medicare does not cover any medical treatments performed outside the United States.  However, some Medicare Supplement insurance (Medigap) may cover medical services or supplies that you get outside the U.S. if you receive care within the first 60 days of your trip.

#3: Are You a Heavy User of Prescription Drugs?

In response to the Medicare Modernization Act of 2003, Medicare Part D was created to provide prescription drug coverage. Original Medicare by itself does not cover prescription drug costs; therefore, if you have a medical condition which requires you to purchase prescription drugs, it makes sense to get Part D coverage.

When shopping for drug plans, each plan will have its own ‘formulary’ (drug list) that it covers. This list is typically split into 3-4 different tiers depending on whether the drug is branded or generic, with higher tiers costing more than lower tiers.

If you are in Original Medicare, you’ll need to add a separate standalone Prescription Drug Plan (PDP).  However, you should be aware that the lowest premiums may turn out to be more costly because of higher co-payments.  These co-payments depend on the kind of drug and the pharmacy where it is purchased.

However, if you’d rather have just one combined Medicare plan, you can buy a Medicare Advantage plan that bundles in prescription drug benefits (also called MA-PD plans).  According to the Kaiser Family Foundation (KFF), 89% of Medicare Advantage plans will include prescription drug coverage in 2023.

Another tip on how to choose the best Medicare plan is to look out for any changes in Medicare prescription drug formularies each year.  Drugs could jump from preferred to the non-preferred tier, resulting in higher co-payments, or potentially even be removed from a plan providers list or replaced with a similar drug.   In some cases, if a plan does not cover one of your medications, your doctor can request an exception from the plan to add it to the list.  If granted the exception, you’ll generally pay the highest pricing tier.

#4: Will You Need Additional Coverage for Vision, Dental, and Hearing?

If you’re 65 or older, it’s essential to maintain regular vision and dental care and keep track of any changes in your hearing to ensure you can treat conditions that become more common with age (such as cataracts or gum disease).

  • It’s important to understand that Original Medicare does not provide coverage for regular vision, dental or hearing coverage. If you are on Original Medicare, you’ll have to pay for those services in full or purchase a separate plan to cover them.
  • Medicare Advantage plans, on the other hand, often include vision, dental and hearing coverage. In 2023, the KFF notes that 97% or more individual plans offer some vision, fitness, telehealth, hearing or dental benefits.  Coverage and costs can vary by plan, so you will need to assess whether you only require routine care (such as cleanings and screenings) or coverage for procedures and supplies (like dental implants and contact lenses).

#5: How Much Do You Have for Out-of-Pocket Expenses?

The cost of premiums and out-of-pocket expenses changes yearly.  Whether you are on Original Medicare or Medicare Advantage, you will always need to pay the standard Part B premium. 

Besides, Original Medicare is not completely free:

  • Under Medicare Part A, which covers inpatient hospital stay and skilled nursing facilities, the premiums are free. However, you are expected to pay deductibles and co-insurance depending on your length of stay and nursing needs.
  • Medicare Part B, covering outpatient medical services, is not free. There is also a yearly deductible, and co-sharing costs for your expenses once exceed the annual deductible of 20%.

Suppose you want to manage the risk of out-of-pocket costs under Original Medicare.  In that case, you can purchase a Medicare Supplement (Medigap) plan designed to help pay for the out-of-pocket health care costs (or ‘gaps’) that Original Medicare does not cover in return for a monthly premium.

With Medicare Advantage (MA), your out-of-pocket expenses (deductibles, co-payments, co-insurance) will depend on the plan you choose. The good news is that there is a capped maximum out-of-pocket amount mandated by law.  Besides, regular doctor and specialist visits are typically charged on a copay or fixed dollar amount basis (versus 20% for Original Medicare), so you always know your cost upfront.

Under a standalone Medicare Part D Prescription Drug Plan (PDP), you will also have premium, deductible, and co-payment obligations.  Co-payments may vary between plans. So, study this closely when you renew your Medicare plan coverage. Your choice of pharmacy also affects the total cost.

#6: Do You Want to Pay Premiums Now or Pay Extra Later?

Not many people are willing to spend on an event that may not happen.  Are you someone who is more comfortable having a lower premium and paying for services as you go, or does the uncertainty of unexpected expenses keep you up at night?

If you are the former, you might be a good candidate for a Medicare Advantage plan which tends to have lower premiums – in fact, 66% of Medicare Advantage plans have zero premium (you still have to pay the standard Part B premium).

If you are the latter, a Medicare Supplement plan alongside Original Medicare can give you the peace of mind of knowing exactly your costs regardless of your health by paying premiums each year, in return for the plan covering your out-of-pocket costs.

Your decision will ultimately depend on your risk tolerance and budget, and it is advisable to plan wisely and educate yourself on various Medicare plan benefits.

Every year, you are allowed to decide on medical coverage that is more suitable for your health requirements, so it is also recommended that you check your options each year.

#7: Do You Want to Manage Multiple Medicare Plans?

Medicare Advantage plans are bundled all-in-one alternatives to Original Medicare that combine your hospital coverage (Part A) with medical coverage (Part B).  As mentioned earlier, most plans include prescription drug coverage and coordination of care through their plan networks.

In contrast, if you are on Original Medicare, you will likely have to deal with a few different parties. You may purchase a Medicare Supplement and Prescription Drug Plan from different insurance companies.

Final Words

These seven tips are an essential guide on how to choose the best Medicare plan.  Although the process might be tedious, planning for your future health needs is a priority.  Before you reach the age of 65, try to learn as much as you can about Medicare basics.

At CoverRight, we’re here to help you find the right coverage that you deserve. Reach out today and start finding the right Medicare plan for you.

Josef Katz

Josef is a digital marketing expert, is a podcast host of PrimeLife and formerly a licensed insurance agent. Josef has had an extensive career across the education, healthcare, insurance and financial services sectors and is passionate about educating consumers.

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