Are you about to turn 65? If so, you’ve likely been inundated with information about Medicare — from commercials and radio ads to brochures and letters. We get it — Medicare is a topic that can be confusing. We’ll break down common Medicare terms and compare costs so you can make the best decision for you.
Most Affordable Medicare:
- Best Overall: Humana
- Best Network of Providers: HAP
- Best Coverage for Provider Choices: BCBS
- Best Online Portal: Aetna
Medicare Overview
Medicare is the national health insurance plan established in 1965 as a health insurance program for the elderly. It’s most commonly available to people 65 and older and some younger recipients with disabilities recognized by the Social Security Administration. For example, if you have end-stage renal disease (permanent kidney failure), you qualify for Medicare no matter your age.
You must be an American citizen or legal permanent resident to be eligible for Medicare. Medicare is divided into several well-defined parts:
- Part A: Hospital insurance. Part A covers care in a hospital, skilled nursing facility, and in some cases, home.
- Part B: Medical insurance. Part B covers certain doctor’s services, medical supplies, outpatient care and preventive services. Medicare Part A and B are known as Original Medicare.
- Medicare Part C, which replaces Parts A and B, is hospital and medical insurance provided by private insurance plans. Part C plans are also called Medicare Advantage plans.
- Medicare Part D is prescription coverage that can be added on to the government’s Part A and Part B plans or a Part C plan. Part D plans can also be added to Private-Fee-for-Service plans and Medicare Medical Savings Account plans. Generally, you can sign up for Medicare 3 months before your 65th birthday.
Medicare Advantage (MA) programs are governed by the Centers for Medicare & Medicaid Services, or CMS. CMS dictates what providers can charge and sets rules about how they can market their plans. Medicare Advantage plans use a 5-star system based on categories such as customer service and quality of care. Generally, a plan must be rated 3 stars or higher to be considered credible.
Average Medicare Insurance Costs
The average U.S. household headed by someone who is 65 or older spends an average of $6,833 annually on health care according to the U.S. Bureau of Labor Statistics. What you spend will depend on what type of Medicare plan you select, plan premiums if any, what is covered and what costs are not covered by the plan.
Medicare plan options today come in all flavors. HMO and HMO-POS plans are health maintenance organizations that are made up of a network of doctors and hospitals you must choose from. If you want to see a specialist, you’ll usually need a referral. HMOs tend to be highly focused on preventive health and maintenance. Preferred Provider Organizations (PPOs), one of the options, generally have networks of doctors and hospitals who all agree to established rates.
Here are some sample rates and out-of-pocket maximums for 2021:
- HAP Primary Choice Medicare (HMO): $4,300
- Priority Medicare Key (HMO-POS): $5,500
- Aetna Medicare Value Plan (PPO): $3,010
- BCN Advantage HealthySaver (HMO): $4,500
- Priority Medicare Ideal (PPO): $5,800
- Humana Gold Plus (HMO): $1,000
What Impacts Medicare Rates
Many factors impact the cost of Medicare:
- CMS: This federal organization described above oversees, monitors and approves national insurance rates.
- Your income: Let’s say you’re in a higher income bracket because you’ve earned more money throughout your life. You’ll pay higher premiums. On the other hand, if you’re in a lower income bracket, you’ll pay less. You can qualify for extra help based on your income in some cases. You may qualify for a free or low-cost Medicare Advantage plan if you meet poverty level guidelines.
- Your age: You may have more health care needs if you’re over 75 compared to if you’re 65–75 — your age may be a consideration.
- The cost of living: Rates may increase or drop based on the national average cost of necessities such as housing, transportation, food and other necessities.
- Location: The state you live in may have the authority to raise certain Medicare rates, as rates vary from state to state.
- Health status: You may pay higher rates if you’re overweight with a BMI over 25, smoke or have a health condition due to eating habits or lifestyle.
Some recipients who receive Original Medicare still have gaps in coverage. In those cases, you can purchase Medicare Supplemental insurance from private insurance companies. The cost of these plans vary and are regulated by the federal government.
What’s The Medicare Income Monthly Adjustment?
Most people will pay the standard monthly premium amount ($148.50, 2021 amount) for their Medicare Part B coverage. However, if your modified adjusted gross income (AGI) is above a certain amount, you may pay an Income Related Monthly Adjustment Amount (IRMAA). Medicare uses the modified AGI that you reported on your IRS tax return 2 years ago. For example, if your yearly income in 2019 was above $111,000 up to $138,000 (individual) or above $222,000 up to $276,000 (joint return) your monthly premium will be $297. The maximum monthly premium in 2021 is $504.90.
How to Get a Medicare Quote
You can go to the Medicare Plan Finder on Medicare.gov. to decide which plan is best for you. You can perform a basic search by entering your zip code and answer a few questions. Your results will include:
- Prescription drug plans with Original Medicare
- Medicare Advantage plans without prescription drug plans
- Medicare Advantage plans with prescription drug plans
Another option is working with a local Medicare insurance advisor. Because plans can vary from one county to the next, they often have the greatest insight into what plans are going to be best suited to your needs. A free online directory can be accessed at MedicareSupp.org.
Companies that Offer Medicare
There are many aspects of health care plans to think about as you choose a Medicare plan. Here are a few to consider:
- Ask your friends and family members who have Medicare plans for their recommendations.
- Compare plan star ratings and reviews.
- Look at sites such as Medicare.gov to compare plan features and costs.
According to the American Association for Medicare Supplement Insurance some 26.5 million individuals are enrolled in Medicare Advantage plans. Medicare Supplement is the choice of nearly 14 million seniors.
We’ve put together a list of the top Medicare providers according to rates and customer satisfaction surveys.
- Medicare Advantage Plans
1. Best Overall Medicare Provider: Humana
Humana offers affordable Medicare Advantage plans and is ranked 3rd in J.D. Power’s 2019 Medicare Advantage survey. The survey is based on:
- Coverage and benefits
- Provider choice
- Cost
- Customer service
- Information and communication
- Service and billing
2. Cheapest Medicare Provider: Health Alliance Plan (HAP)
HAP is the cheapest Medicare provider based on rates alone. HAP Primary Choice Medicare also features hearing, dental and vision coverage and is rated 3.5 out of 5 stars.
HAP also offers free gym memberships and up to $400 per year toward over-the-counter medications.
- Medicare Advantage Plans
3. Best Coverage for Medicare Provider: Humana
Humana offers discounts on eye exams and contact lenses, access to a nurse helpline 24/7 and special offers on massage therapy and weight loss programs.
It also offers competitive rates and is top-ranked by consumers. Humana received a score of 3 of 4 on J.D. Power’s Medicare survey.
- Nationwide coverage
4. Best Coverage for Provider Choices: Blue Cross Blue Shield
Blue Cross Blue Shield plans available in many states provide health and Medicare insurance to millions of Americans. It’s also a top-ranked provider by J.D. Power and among the top results on the Medicare.gov search engine.
Approximately 95% of the nation’s doctors, hospitals and specialists contract with Blue Cross Blue Shield, the highest percentage among health insurers. BCBS also offers automatic enrollment, doesn’t require referrals and offers many low-cost plans.
- Member support
5. Best Online Portal: Aetna
Aetna has the best online portal, according to Retirement Living’s survey of Medicare Advantage plans in 2019. It’s user-friendly and features online information so you can compare each plans in your state. Your account is also easy to manage online. Aetna is ranked 4th on J.D. Power’s survey, so it’s a top plan all around.
Do Your Research and Choose Wisely
You may feel pressure to choose a particular Medicare plan from commercials and brochures you receive in the mail, but take your time and research what each plan offers. Resources like Medicare.gov, CMS.gov, MedicareSupp.org, the Kaiser Family Foundation and J.D. Power can offer up plenty of information. Make a list of the features you need, compare plans, consider price and service and then sign up for the one that best suits you.
About Laura Hipshire
Expert-level knowledge of Medicare Advantage plans and regulatory guidelines