Medicare can be confusing to navigate and to make maters worse sometimes the rules change. Here we look at the important parts of Medicare this year.
Since Medicare was first introduced in 1965, the landscape has continued to evolve and adapt for its beneficiaries across the U.S. each year. Understanding how Medicare works in 2024 is important for beneficiaries, especially when deciding whether to receive their care from Original Medicare or through a Medicare Advantage plan. Medicare enrollees can visit Boomer Benefits- Original Medicare vs Medicare Advantage to get more information on their plan options.
Understanding the parts of Original Medicare
Medicare Part A, inpatient insurance, covers hospital stays, skilled nursing and hospice care, and some home health care. Most people don’t pay a Part A premium if they or their spouse paid FICA taxes for at least ten working quarters.
Part B, outpatient insurance, covers certain doctor’s services, outpatient surgery and procedures, durable medical equipment, and preventive services. Unlike Part A, Part B requires a monthly premium, which can change yearly. Higher earners may be required to pay more, depending on their income from 2 years prior. Parts A and B form what is known as Original Medicare.
Navigating Medicare, Medigap, and Advantage plans
Original Medicare operates on a fee-for-service basis, meaning beneficiaries can visit any doctor or healthcare provider in the U.S. that accepts Medicare. This flexibility is one of the significant advantages of Original Medicare. However, beneficiaries will be responsible for copays, deductibles, and the remaining 20% of Part B services. To mitigate the potential for un-capped costs, many beneficiaries purchase Medicare supplemental insurance, often called Medigaps, to cover the costs that Original Medicare does not, such as copayments, coinsurance, and deductibles, or they choose to enroll in Medicare Advantage plans.
Medigap plans are standardized and regulated, offering peace of mind with predictable costs. In comparison, Medicare Advantage (Part C) plans are offered by private insurance companies that Medicare approves. These plans bundle a beneficiary’s Part A, Part B, and Part D prescription drug coverage. They typically include additional benefits like dental, vision, and hearing services.
Medicare Advantage plans usually operate as Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs), meaning beneficiaries may need to use a network of doctors and hospitals to get the lowest costs. One of the standout features of Medicare Advantage is the guarantee of capped out-of-pocket expenses, which can provide a financial safety net for enrollees. However, the trade-off for these additional benefits and cost protections is less flexibility in choosing healthcare providers, the potential for required referrals for specialist visits, and prior authorizations for certain services.
Choosing between Medigap and Medicare Advantage
In 2024, a beneficiary’s choice between Original Medicare and Medicare Advantage depends on their health needs, financial situation, and personal preferences. Choosing to receive their benefits from Original Medicare, beneficiaries will have the freedom to choose to visit any healthcare provider in the U.S. that accepts Medicare, which can be the winning choice for those who see multiple specialists or prefer having control over their healthcare decisions. The option of Original Medicare, combined with a Medigap policy, can offer comprehensive coverage and predictability in costs, albeit usually at a higher overall expense due to the higher monthly premiums for Medigaps.
On the other hand, Medicare Advantage plans can be more cost-effective, especially for those who may not have the budget for or want the higher Medigap premiums. The all-in-one nature of Advantage plans can streamline the management of healthcare benefits with a single monthly premium. Additionally, many Medicare Advantage plans can offer wellness programs and incentives for healthy behaviors, which can be appealing for proactive health management.
Changes to Part D in 2024
Medicare Part D is another vital component to consider in 2024 due to the Inflation Reduction Act. There have been and will be various changes to how seniors get their prescription coverage. For those with Original Medicare, Part D plans are purchased separately from private insurers. These plans vary in terms of the drugs covered, the cost of prescriptions, and the pharmacies included in the plan’s network. Medicare Advantage plans often include Part D coverage.
With both Original Medicare and Advantage plans- Part D looks slightly different in 2024 than last year. In 2024, the typical catastrophic cost-sharing has been eliminated. That means that once beneficiaries have exited the Coverage Gap stage, they won’t have any more out-of-pocket costs to worry about for the remainder of the year.
Staying informed in 2024
Due to Medicare’s often-changing nature, it is important to keep track of its various parts and take a thoughtful approach, weighing the pros and cons of Original Medicare versus Medicare Advantage. By understanding the differences in their plan options in 2024, Medicare beneficiaries can ensure they have the right coverage for their lifestyle and health.
