Considerations for Picking a Medicare Plan
Finding the right Medicare plan can feel overwhelming. There are generally 2 lanes to choose from:
- Original Medicare with Parts A and B, plus you can choose a Part D plan, and you can choose a Medigap plan.
- Medicare Advantage plan that includes the benefits of Parts A and B, and usually Part D. If the Advantage plan does not include Part D, then you can also choose a Part D plan.
There are a few key things to consider when picking a Medicare plan:
- What will the Medicare plan actually cost me?
- Do my health care providers and facilities take
- Medicare, and if I choose a Medicare
- Advantage plan, are they in the plan’s network of providers?
- Does the Part C or Part D plan cover my prescription drugs and pharmacies I use?
When comparing plans, it can be tempting to just choose the one with the lowest monthly premium. But, to figure out the total cost for the year, including your out-of-pocket expenses, you have to do some math:
(Plan’s monthly premium x 12 months) + Plan’s out-of-pocket maximum = Total annual cost
Picking a Plan Example
Jamie: Jamie is nearly 65 years old and is about to begin 1 year of IV chemotherapy treatments, which will cost $10,000 a month. Because the IV treatment will be provided in the doctor’s office, it will be covered under Medicare Part B. What would be her out-of-pocket costs?
Option 1: Original Medicare
- Part B monthly premium = $174.70 per month x 12 = $2,096.40
- Part B deductible = $240
- Part B co-insurance (just for her chemo) = ($10,000 x 20% = $2,000) x 12 months = $24,000
- Total for Part B and chemo cost-share = $26,336.40
Option 2: Original Medicare + Medigap Plan G (costs $300/month based on her age and where she lives)
- Part B monthly premium = $174.70 per month x 12 = $2,096.40
- Part B deductible = $240
- Part B co-insurance (just for her chemo) = $0 (paid for by Medigap plan)
- Medigap plan G monthly premium = $300 x 12 months = $3,600
- Total for Part B + Medigap Plan G = $5,936.40. Although there’s an additional monthly cost to buy a Medigap plan, it can save someone with an expensive medical condition thousands of dollars each year.
Option 3: Medicare Advantage plan with drug coverage (costs $83/month based on where she lives). This plan has an out-of-pocket maximum of $4,758.
- Part B monthly premium = $174.70 per month x 12 = $2,096.40
- Medicare Advantage monthly premium = $83 per month x 12 = $996
- Medicare Advantage co-insurance (just for her chemo) = ($10,000 x 20% = $2,000) x 12 months = $24,000 (but she only has to pay up to her out-of-pocket maximum of $4,758)
- Total Medicare Advantage (MA) Plan and chemo cost-share = $7,850.04. Although the MA plan is less expensive than Original Medicare (Option 1), Jamie is limited to only going to in-network providers.
For more information on how to pick your Medicare plans, including Part C, Part D, and Medigap plans, visit: Medicare.gov/plan-compare