If you’re just turning 65, it’s important to enroll in the right plan now — or you could lose out later.
You’re turning 65 — congrats! Now the tricky part: deciding which Medicare coverage to get.
It’s important to understand your options so you can find coverage that meets your current and ongoing health care needs. You’ll have an opportunity to change your coverage during Medicare’s annual open enrollment, which takes place annually from October 15 to December 7, but certain plans may become more expensive or even off-limits if you don’t sign up for them when you’re initially eligible.
When reviewing your options, you’ll likely want to keep two things top of mind: coverage and cost.
Coverage is typically broken down into:
- Hospital or inpatient care: This is Part A of Original Medicare.
- Medical or outpatient care: This is Part B of Original Medicare.
- Prescription drugs: This is not part of Original Medicare, but there are other ways to get prescription drug coverage. We’ll go into detail in this article.
- Vision, hearing, or dental care: This is not part of Original Medicare, but there are other ways to get these types of coverage. We’ll go into detail in this article.
The cost to you is typically broken down into:
- Premiums: An amount you pay on a regular basis, such as monthly, to Medicare or a private insurance company for health care or prescription drug coverage
- Deductibles: An amount you pay for a health care service or prescription drug before Medicare or a private insurance company begins to pay
- Coinsurance and copayments: An amount you pay for a health care service or prescription drug after you have met any deductibles
- Costs for services or drugs that are not covered: An amount you pay if a health care service or prescription drug is not covered by Medicare or a private insurance company
With that in mind, here’s what you need to know about each of your options.
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Option 1: Original Medicare (Parts A and B) + Medicare Prescription Drug Plan (Part D)
Original Medicare is the fee-for-service health care program offered by the federal government that most people are eligible to receive starting at age 65. It includes hospital or inpatient care (Part A) and medical or outpatient care (Part B), but deductibles and coinsurance may apply—meaning you could have high out-of-pocket costs. Original Medicare doesn’t include vision, hearing, dental, or long-term care in nursing homes.
You won’t pay a monthly premium for Part A if you currently receive Social Security benefits or paid Medicare taxes for at least 40 quarters while employed, though there is a deductible ($1,632 in 2024). For Part B, Medicare charges a monthly premium, which starts at $174.70 (in 2024), based on your income.
If you want prescription drug coverage, you need to purchase that separately through a Medicare Prescription Drug Plan (Part D), which are offered by private insurance companies. The premium for Part D is also tied to your income. In 2024, the average total monthly Part D premium is estimated to be $55.50 per month, according to the Centers for Medicare and Medicaid Services.
Most people are first eligible for Medicare when they turn 65. Your initial enrollment period begins three months before the month you turn 65 and ends three months after the month you turn 65 —but the government penalizes you if you enroll late and don’t have other health insurance.
If you do have health insurance through an employer (either your own or a spouse’s) with at least 20 workers, you can delay Medicare enrollment until you no longer receive that coverage. You should still enroll in Part A if it’s premium-free for you, but you can delay signing up for Part B with no penalty until you quit working or no longer have the employer coverage.
But — and this is important — be sure to understand the rules, and don’t miss your deadline for signing up, warns David Armes, principal of Dover Healthcare Planning LLC, a fee-only Medicare advisor based in Long Beach, California. Medicare has penalties for people who enroll late — especially for Parts B and D. “A lot of people innocently think they don’t need to enroll right away,” Armes says, “and they wind up paying a lifetime penalty for that.”
For example, if you don’t sign up for Part B when you’re first eligible, Medicare will increase your premium by 10 percent for every 12-month period that’s passed since you were eligible for coverage. Part A and Part D also charge penalties for not signing up for coverage when you’re eligible.
Keep in mind that if you have other types of insurance (more on that below), you may not need a Part D Prescription Drug Plan. But you will need to sign up for Parts A and B regardless.
When Original Medicare Isn’t Enough
Due to the potentially hefty out-of-pocket costs of Original Medicare, more than half of all Medicare beneficiaries choose plans that have additional benefits, according to a 2023 report from the Kaiser Family Foundation. This can reduce their costs and provide more comprehensive coverage than Original Medicare.
For example, these plans may include vision, hearing, and dental care — along with programs like SilverSneakers, which offers access to gyms and fitness classes at no extra cost to you. (Looking for a plan that includes SilverSneakers? Click here.)
There are two main types of plans that may offer additional benefits:
- You can choose to receive your Original Medicare benefits through a Medicare Advantage plan (Part C).
- Or you can keep your Original Medicare and add a Medicare Supplement insurance plan (Medigap).
You can’t have both Medicare Advantage and Medigap — you’ll need to choose which one is right for you, and that will depend on different factors. Keep reading to learn more.
Option 2: Medicare Advantage (Part C)
Nearly half of people on Medicare today get their Medicare benefits through a Medicare Advantage plan (Part C), according to the Kaiser Family Foundation (KFF) report mentioned earlier. You would still pay a separate premium for Part B, but these are managed care plans offered by private insurance companies that provide all Part A and Part B benefits.
If you enroll in a Medicare Advantage plan and also want Part D prescription drug benefits, you must get your Part D benefits through the Medicare Advantage plan.
Medicare Advantage plans typically include additional benefits, such as vision and dental care as well as fitness programs like SilverSneakers.
Medicare Advantage plans are typically HMOs or PPOs, meaning you’re limited to a network of doctors or pay more to see out-of-network doctors.
Armes says Medicare Advantage plans have become popular because they are often the most affordable way to get additional benefits. The CMS projects enrollment in Medicare Advantage plans to climb to 33.8 million in 2024, which would be about half of all people enrolled in Medicare.
“Because of their low premiums and comprehensive coverage,” he adds, “Medicare Advantage plans are attractive to Medicare beneficiaries.”
Option 3: Original Medicare (Parts A and B) + Medicare Supplement (Medigap)
About 20 percent of people on Medicare have a Medicare Supplement insurance plan (Medigap). Like Medicare Advantage plans, Medigap plans are offered by private insurance companies. However, these plans don’t replace Original Medicare — they add to Original Medicare to help cover the costs that Original Medicare doesn’t, including deductibles, coinsurance, and copayments.
Medigap plans do not include prescription drug coverage, so you would need a Part D Prescription Drug Plan to get these benefits.
But Medigap plans may include benefits not covered by Original Medicare, such as fitness programs like SilverSneakers. Some Medigap plans may also include health coverage when you travel outside the country. Learn more about how to compare Medigap policies at medicare.gov, the U.S. government’s official Medicare site.
Though Medigap plans can be more expensive than Medicare Advantage, they’re accepted anywhere Original Medicare can be used. That means a far larger swath of doctors, hospitals, and other health providers than you’ll typically find in a Medicare Advantage HMO or PPO, Armes says. Moreover, certain Medigap plans offer highly comprehensive coverage — meaning you will pay little or no out-of-pocket costs for the covered health services.
On the downside, Medigap plans may cost significantly more than Medicare Advantage. “We tell people that if they get a comprehensive Medigap plan, they should expect to pay $100,000 in premiums over the course of retirement,” Armes says.
If you decide that a Medigap plan is right for you, it’s generally best to sign up during your initial enrollment period. You have six months to enroll without the insurer asking questions about your health status. After that initial six-month “guaranteed issue” period, Medigap insurers can increase your premium based on your health status—or deny you coverage altogether.
How to Decide Which Medicare Plan Is Right for You
Shopping for Medicare coverage can be confusing, so it’s important to start early and do your research.
The decision should come down to several factors, including your health, premiums and out-of-pocket costs, and your comfort level with choosing a plan with a lower premium in exchange for what could mean higher out-of-pocket costs if you have a major health issue.
The good news is there are several resources available to you:
- You can compare plans available in your area with Medicare Plan Finder, a tool through the U.S. government’s official Medicare site.
- You can work with a Medicare counselor through your State Health Insurance Assistance Program (SHIP).
- You can talk to any personal resources, such as your benefits administrator if you currently have health care coverage through an employer or a financial planner if you have one.
- You can turn to various organizations that provide free or low-cost help to seniors looking to enroll in Medicare.
- You can get help if you’re looking for a Medicare plan that includes SilverSneakers. Just click here.
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