How Do I Compare Medicare Plans?
Fact checked Contributing expert: Kelly Blackwell, Certified Senior Advisor - Published: March 26, 2021
Medicare beneficiaries have more plan options than ever before. In 2021 there were 3,550 Medicare Advantage plans available nationwide, 13% more than were offered in 2020, according to Kaiser Family Foundation research. The average beneficiary had access to 33 Medicare Advantage plans to choose from, the most options available in the past decade. While more choice is generally good news for consumers, it can also present a challenge: How do you compare all the medicare plan options available?
What you should know
- 1 Medicare plans can offer different benefits and cost structures.
- 2 You can compare Medicare drug or Medicare Advantage plans using Medicare.gov’s Plan Finder tool.
- 3 When comparing Medicare plans, consider elements such as cost, provider choice and benefits.
- 4 Costs vary greatly among Medicare plans, both in how much you pay and when you pay.
While all Medicare plans offer the same basic coverage, they can come with different costs and additional benefits. When you don’t know what to look for, you can end up paying more or facing more restrictive services.
Gail (Yael) Amyer, a licensed broker based in California who works with clients all over the country, recently helped a beneficiary sort through the 23 different plan options available to him. By plugging in the medications he uses, they found that plan costs could range from $3,500 per year to $15,000 per year solely based on those medications.
This type of situation happens all the time, Amyer says, which is why you need to compare Medicare plans to ensure you find the best plan for your situation. You can compare plans yourself using Medicare.gov’s Plan Finder Tool, or you can call a Medicare consultant like Amyer.
Why should I compare Medicare plans?
There are many different types of Medicare plans that come with differing benefits and costs.
“It’s important to consider the different types of Medicare plans to choose the one that is best for you,” says Dr. Sachin Nagrani, M.D. and Medical Director of Heal, an at home primary care and telehealth company. Each plan can have contracts with different doctors and provide different benefits. They can also use differing cost structures that will affect how much you pay for medical care and prescription drugs.
“There are different types of Medicare plans that are important to learn about before selecting an individual plan,” Nagrani says. For instance, the first important decision to make is if you should use Original Medicare or a Medicare Advantage Plan. Original Medicare includes Part A hospital insurance and Part B medical insurance and can be used at any doctor or hospital that accepts Medicare. With a Medigap policy or a Medicare Advantage plan offered through private insurance companies, you can get coverage for costs not covered by Original Medicare like vision and dental.
Once you’ve chosen how you’ll get Medicare coverage, the challenge becomes choosing which plan or combination of plans is right for you.
What should I consider when comparing Medicare plans?
There are many important elements to consider when comparing Medicare plans, from cost and benefits to a company’s reputability.
Consider the following when comparing Medicare plans:
- Total anticipated out-of-pocket costs, including premiums, deductibles, copayments, coinsurance, drug costs and the out-of-pocket maximums.
- Provider choice.
- Benefits, such as prescription drugs, vision, dental and hearing coverage.
- The insurance company’s rating.
The monthly cost, or premiums, and what is covered by the plan are what matter when choosing an insurance policy, Nagrani says. You should ultimately consider your total out-of-pocket costs, which includes premiums, deductibles, copayments, coinsurance, drug costs and the out-of-pocket maximum.
Cost is about more than just total out-of-pocket expenses, however. You should also understand how you’ll pay. For instance, with a Medigap plan you pay a higher premium up front and less on the backend, while with Medicare Advantage, you pay less on the front end and then more on the backend, Amyer says. You may pay the same overall, but the plan you choose in essence determines if you pay now or pay later.
Sometimes people are eligible for different state and federal programs that can help with copays or the cost of prescription drugs, too, Amyer says. These programs – of which there are many, she says – are often income-based.
Similarly, there are Medicare plans designed specifically for people who get benefits from the Veterans’ Administration or Tricare, she says.
The benefits you want to consider will depend on your healthcare needs. For instance, if you may need hearing or vision coverage or want to go to a chiropractor. Some Medicare plans provide better travel coverage. You should look at what benefits are included in the plan based on your usage, Amyer says. You can find out more about a plan’s benefits offering in the Summary of Benefits section.
Some Medicare plans use a provider network similar to how employer-sponsored health plans work. If you already have a certain doctor, health care facility or pharmacy you prefer to use, you may want to check if that person or facility is in the plan’s network. At the very least, verify that the plan you’re considering has providers that are convenient to you.
You also want to ensure you’re dealing with a reputable insurance company, Amyer says. Even though all of the insurance companies offering Medicare coverage must be approved by the Centers for Medicare and Medicaid Services (CMS) to offer the plans, companies with poor financial ratings could lead to problems down the road.
Medicare.gov’s Medicare Plan Finder uses a star rating system to designate a plan’s quality and performance. Each plan can rate between one (lowest) and five (highest) stars based on the plan, member satisfaction surveys and health care providers. There is even a special 5-Star Special Enrollment Period which allows you to switch from your current Medicare plan to a new 5-star plan once between December 8 and November 30.
How do costs vary among Medicare plans?
Costs vary greatly among Medicare plans, both in how much you pay and when you pay.
Total out-of-pocket costs are one of the most important considerations when comparing Medicare plans. Costs can vary greatly among Medicare plans, Amyer says. They can have different copays for hospital and doctor visits, monthly premiums and out-of-pocket maxes.
For instance, Medicare Advantage plans have lower monthly costs but require you to use in-network providers whereas for a higher monthly cost through Original Medicare, you can use any doctor or hospital that accepts Medicare, Nagrani says. “With this type of plan, you also have the option of purchasing Medigap or Medicare supplemental insurance which covers the part of your medical bill that is not covered by the Medicare plan itself.”
For Medigap policies, each insurance company decides the premium it will charge. These policies can be priced in one of three ways:
- Community-rated, also called no age-rated, policies generally charge the same monthly premium to everyone, regardless of age, so your premium won’t go up as you age.
- Issue-age-rated, also called entry age-rated, policies base the premium on how old you are when you buy the policy, so premiums are lower for younger purchasers but will only increase due to inflation or other non-age-related factors.
- Attained-age-rated policies use your current age to determine your premium, so younger buyers will receive a lower premium. Premiums also increase as you age in addition to potentially rising due to inflation or other non-age-related factors. These policies may start out the least expensive but can become more expensive than other Medigap pricing structures.
The costs of Medigap policies can also depend on other factors, such as discounts offered by the insurance company, the type of medical underwriting used and if it’s a high-deductible or Medicare SELECT plan.
These experts were consulted for insight into Medicare.
Dr. Sachin Nagrani, M.D. and Medical Director of Heal
Gail (Yael) Amyer, a licensed broker
- Featured Sources [-]
Kaiser Family Foundation: Medicare Advantage 2021 Spotlight: First Look Last accessed April 2021
Medicare.gov: Find a Plan Last accessed April 2021
Medicare.gov: Your Medicare coverage choices Last accessed April 2021
Medicare.gov: Medicare Advantage Plans cover all Medicare services Last accessed April 2021
Medicare.gov: 4 things to consider when comparing Medicare plans Last accessed April 2021
Tricare: Becoming Medicare Eligible Last accessed April 2021
AM Best Last accessed April 2021
S&P Global Ratings Last accessed April 2021
Medicare.gov: 5-star special enrollment period Last accessed April 2021
Medicare.gov: Costs of Medigap policies Last accessed April 2021
Kelly Blackwell, Certified Senior Advisor (CSA)
Kelly Blackwell is a Certified Senior Advisor (CSA)®. She has been a healthcare professional for over 30 years, with experience working as a bedside nurse and as a Clinical Manager. She has a passion for educating, assisting and advising seniors throughout the healthcare process.