New to Medicare

Choosing the Right Coverage for You

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If you are new to Medicare and not sure where to start, you’re not alone. Most people just starting out often find Medicare to be a bit confusing. The good news is, what makes Medicare confusing also makes it great. You have a lot of coverage options to choose from, and you get to pick the one that works best for you. To pick the perfect plan, it’s best to start by learning about the basics of Medicare, and end with taking a closer look at which options really protect your health — and your pocketbook.

Enrolling in Medicare

When you first become eligible for Medicare, you have a seven month window to enroll that starts three months before your 65th birthday and ends three months after. In the Medicare world, this is called your Initial Enrollment Period, or IEP. During your IEP, you can enroll in Parts A and B and sign up for a Part D plan or a Medicare Advantage Plan.

Medicare enrollment timeline

Option 1: Original Medicare

To start off, let’s take a look at Original Medicare, or Parts A and B. Part A is known as hospital insurance, and Part B is known as medical insurance. Together, Parts A and B cover around 80 percent of your medical costs. This leaves you responsible for the remaining 20 percent, and 100 percent of the cost of prescription drugs. You are also 100 percent responsible for extra benefits like dental and vision. That’s why most people who enroll in Medicare also choose to add additional coverage to help cover what Original Medicare does not. There are three common coverage options that we will explain below.

Option 2: Add a Part D Prescription Plan to Original Medicare

To pick up where Original Medicare leaves off, one option is to purchase a private stand-alone Part D prescription drug plan. These plans are offered by private insurance companies and the monthly premium for these plans can vary based on how much they cover. Though this option will help cover some of the cost of prescriptions, it still leaves you responsible for the 20 percent of medical costs that Original Medicare doesn’t cover.

Option 3: Join a Medicare Advantage Plan

For an “all-in-one” plan that offers comprehensive coverage, many choose a Medicare Advantage plan. These plans cover everything Original Medicare covers, plus the 20 percent of medical costs that it doesn’t. In addition, many Medicare Advantage plans include Part D prescription drug coverage and valuable extras like dental and vision benefits at no extra cost. Also, some Medicare Advantage plans, like CoxHealth MedicarePlus, offer $0 premiums and low copays. They also include a built-in “safety net” that limits the amount you will have to pay out of your own pocket each year for covered medical expenses.

Option 4: Add a Part D Prescription Plan and a Supplement to Original Medicare

To cover that 20 percent of medical costs that Original Medicare doesn’t cover, as well as prescription drugs, some people purchase a Part D plan and a Medicare supplement. Supplements can be expensive though, and you will be paying multiple premiums to multiple companies each month.

Protecting Your Savings

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The Medicare coverage option you choose directly impacts the amount you pay out of your own pocket and when you have to pay it. To explain this, many use a “pay now” vs. “pay as you go” analogy. The option you choose also plays a big part in your overall financial risk, because certain options protect your savings more than others.