Don't Assume You Can Rely on Traditional Medicare Alone
Medicare's basic coverage probably won't go far enough.
Costs and coverage from 'original' Medicare
Traditional Medicare means Part A plus Part B.
The basic form of Medicare is known as "original" or "traditional" Medicare. Both names refer to Medicare Parts A and B.
Part A, Medicare's "hospital insurance," covers hospital care and some home health services. Most people don't pay premiums for Part A, but you do face a $1,408 deductible in 2020 when you're admitted to a hospital.
Once a hospital stay stretches past 60 days, patients also must pay coinsurance of $352 per day.
Part B, Medicare's "medical insurance," covers doctor visits, tests, preventive screenings, outpatient surgical care, some medical equipment, physical therapy and mental health services.
But you have to meet a $198 deductible, and then Part B picks up only 80% of those costs. "Beneficiaries are responsible for the other 20%, with no limit," says Roberts.
Part B also comes with premiums, starting at $144.60 per month in 2020. You can be required to pay more if your income surpasses some thresholds. Medicare has five higher premium levels for seniors at higher incomes, going all the way up to $491.60 per month.
Why most seniors will want more than original Medicare
Traditional Medicare has many coverage gaps.
There are two big problems with trying to make it on Medicare Parts A and B alone:
First, original Medicare doesn't cover many of the essentials, including prescriptions, dentures, eyeglasses or hearing aids.
And second, original Medicare's out-of-pocket costs have no cap. Many common health conditions require a significant amount of care – and your 20% share of the outpatient costs under Part B can be colossal.
So, most seniors will want to look into some other options, which include going deeper into the Medicare alphabet.
The alternatives to original Medicare
Medicare Part C is also known as Medicare advantage.
Medicare Part C, also known as Medicare Advantage, is a private insurance alternative to traditional Medicare that often includes additional benefits, such as vision, dental or drug coverage.
Medicare Advantage plans do have annual out-of-pocket limits, typically $6,700 if you stick within your plan's network of medical providers.
When you're enrolled in Medicare Advantage, you're still responsible for paying your Part B premiums. There might be an additional monthly premium amount for Part C, though not always.
Part D is the way to add prescription drug coverage to original Medicare. Part D drug plans are offered by private insurance companies and cost an average of $32.74 per month in 2020, though prices vary by location.
Seniors will usually benefit most from choosing a Part C Medicare Advantage plan — or going with original Medicare plus Part D prescription coverage and yet another option: Medicare supplement insurance.
Supplement plans — also known as Medigap — pay the steep out-of-pocket costs from original Medicare and might even cover medical expenses when you travel outside the U.S. But Medigap doesn't provide coverage for vision, dental or hearing care, or prescriptions.
As with Parts C and D, Medigap plans are sold by private insurance companies, and different insurers can charge vastly different premiums for very similar plans. So it really pays to shop around and find the best price.
Can anyone make do with original Medicare?
You may be able to get by on original Medicare if you also can sign up for Medicaid, the federal health insurance program for lower-income Americans.
When Medicare leaves you holding the bag — for deductibles and that stiff 20% Part B copay — Medicaid will cover those costs, plus it pays for services original Medicare won't touch, including dental, vision and even long-term care.
Nearly 20% of seniors on Medicare also are eligible for Medicaid, according to federal data. To be eligible for Medicaid, your income and assets must meet strict limits.
Alternatively, if you're in good health and have no foreseeable long-term medical issues, you may assume that Medicare Parts A and B will provide enough basic coverage.
If you do go this route, be prepared to pay for dental visits, eyeglasses and prescription medications on your own. And, you'll want to have a good cushion of emergency savings, just in case you do suddenly find yourself on the hook for a huge out-of-pocket bill.
