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HEALTH Insurance
HEALTH INSURANCE INSIGHTS

People 65 and over are eligible for Medicare and can choose between Original Medicare or Medicare Advantage.

Senior citizens have health insurance options not available to most people under the age of 65. Medicare is the health insurance program that covers millions of American seniors.

Medicare works similarly to other types of health insurance. For instance, Medicare doesn’t pay every last dime of your health care expenses. Patients are on the hook for some costs, and the degree to which they have to pay out of pocket for senior citizen health insurance often comes down to choices they make as individuals.

Read on to learn more about the best health insurance options for retirees and other seniors.

KEY TAKEAWAYS
  • Seniors can choose Original Medicare or Medicare Advantage through a private insurance company. Those who pick Original Medicare need to get a separate Part D plan to cover prescription drugs.
  • Medicare Part A, which covers inpatient care, is free to most Americans, while Medicare Part B has a premium. Both parts of Original Medicare have deductibles.
  • Members of Original Medicare can also get a Medigap plan that helps cover out-of-pocket costs, such as deductibles and coinsurance.
  • Medicare Advantage is offered by private health insurance companies and the plans often have additional coverage not found in Original Medicare.

What is the best health insurance for seniors?

For most people, senior health insurance plans basically boil down to Medicare. There are two main ways to get Medicare:

Original Medicare. Original Medicare provides coverage in two parts. Part A is hospital insurance; Part B is medical insurance. Those who sign up for Original Medicare can use any hospital or doctor accepting Medicare.

People with Original Medicare also can sign up for additional coverage, such as Medicare prescription drug coverage (Part D) and Medicare supplement insurance, also known as Medigap.

A Medicare Advantage Plan. Also known as Part C, this type of coverage is often described as an "all in one" package that combines coverage found in Parts A, B and (in most cases) D. Some of these plans, which private health insurance companies offer, have lower out-of-pocket expenses than Original Medicare.

However, unlike Part B coverage, those with Medicare Advantage coverage typically need to see physicians and other providers in the plan’s network and service area if they want the lowest health care costs.

Part C offers some benefits not found in Original Medicare, such as:

  • Vision
  • Hearing
  • Dental

Health Insurance coverage options for retirees

Looking for affordable health insurance for retirees? You have several options.

If you’re retired and have turned 65, you’re eligible for Medicare coverage. At that point, you will need to decide whether you want to enroll in Original Medicare (Parts A and B) or Medicare Advantage (Part C).

Part A is free to nearly all Americans, so you should sign up for that hospital coverage. Part B has premiums, but not signing up when you’re 65 means you’ll pay more for Part B coverage down the road.

People who work beyond the age of 65 can remain on their employer’s health insurance plan rather than join Medicare. However, not signing up for Medicare Part B will mean you’ll pay higher premiums once you sign up for a Medicare plan. The Part B late enrollment penalty is 10% for every 12 months you didn’t sign up for Part B coverage.

That means that if you delay signing up for Part B for three years, you could wind up paying 30% more for premiums once you get Part B.

Medicare Advantage is another option. About 40% of Medicare beneficiaries have a Medicare Advantage plan, which is offered by private health insurers. These plans are typically low cost and have additional benefits than what’s found in Original Medicare.

Finding affordable health insurance for early retirees is a different story. If you retire early – before age 65 – you need to secure your own individual health insurance policy. Such plans can be expensive because you don't have an employer helping pay for your health insurance costs.

However, government subsidies can help offset the cost if you get an Affordable Care Act health insurance marketplace plan. For most people, income determines whether or not they are eligible for such subsidies.

What is excluded from health insurance coverage?

Most types of health insurance exclude some types of coverage or expect you to pay some of the cost of your care.

Items that are – and are not – covered vary greatly among employer-based and individual health insurance plans. However, since the passage of the federal Affordable Care Act -- often known as “Obamacare” -- virtually all standard health insurance plans must cover a set of 10 categories of services.

These services - - known as "essential health benefits" -- include things such as:

  • Physician services
  • Inpatient and outpatient hospital care
  • Prescription drug coverage
  • Pregnancy and childbirth
  • Mental health services
  • Dental coverage for children

The Affordable Care Act also requires that health insurance companies accept members regardless of pre-existing conditions.

Even the ultimate form of senior health insurance -- Medicare -- has some limits on coverage. For example, Original Medicare doesn’t cover any of the following:

  • Long-term care
  • Most dental care
  • Eye exams related to prescribing glasses
  • Dentures
  • Cosmetic surgery
  • Acupuncture
  • Hearing aids and exams for fitting them
  • Routine foot care

Medicare Advantage plans may cover some of those items. Otherwise, you will have to find separate coverage or pay for those services yourself.

What does health insurance for seniors cost?

The cost of health insurance for seniors depends greatly on the type of coverage.

Those who still have coverage through an employer may find it easier to land low-cost health insurance for seniors. They typically don’t pay as much as those who purchase individual coverage through a health insurance marketplace. However, government subsidies can substantially cut the cost of an individual plan if your income qualifies you for such price breaks.

If you have Original Medicare, you typically don’t pay a premium for Part A coverage. However, Part A has a deductible ($1,484 in 2021) and you may owe coinsurance costs after receiving care.

The standard monthly Part B premium amount is $148.50 in 2021. However, it may be higher depending on your income. There is a $203 Part B deductible for 2021. Once you meet this deductible, you’re usually responsible for 20% of the Medicare-approved amount for most doctor services, outpatient therapy and durable medical equipment. That’s called coinsurance. Medicare picks up the rest of the costs.

Meanwhile, Part D monthly premiums vary by plan. Also, retirees with higher incomes may pay more.

If you purchase Medigap coverage, it pays to shop around. The U.S. Centers for Medicare & Medicaid Services notes that private insurers may charge different premiums for the same level of coverage, so it’s important to shop around for Medicare supplement coverage.

Medicare Advantage plans

The cost of a Medicare Advantage plan also varies. Many of these plans have no premiums. However, you may be subject to other costs, such as deductibles, copayment and coinsurance. In addition, you may be responsible for much -- or all -- of the cost of care if you see a provider who isn’t in network.

In 2021, the average Medicare Advantage premium is $21, according to an analysis by the Kaiser Family Foundation. Many plans charge no premium. In fact, nearly two-thirds of people enrolled in a Medicare Advantage plan pay no supplemental premium other than what they pay for Part B.

However, it’s important to note that you may owe other costs associated with your Medicare Advantage plan. For 2021, the average out-of-pocket limit for Medicare Advantage enrollees is $5,091 for in-network services, and $9,208 for both in-network and out-of-network services (PPOs), according to Kaiser Family Foundation.

Here’s a look at average Medicare costs:

Average monthly premiumsAverage deductible
Original MedicareUsually free$1,484
Part B$148.50$203
Part D$30.50$350
MedigapAbout $150, but can cost much more depending on the policyVaries by policy
Medicare Advantage$21$405

How to save money on seniors health care?

Saving money on Medicare coverage isn’t always as straightforward as it sounds. It’s important to look more deeply at your options and not just select a plan that appears to be affordable on the surface.

"Often, seniors end up paying more overall if they pick a plan that doesn't cover all of the out-of-pocket costs,” says Tatiana Fassieux, education and training specialist with California Health Advocates.

For example, she notes that in 2021, a senior who selects a Medicare Supplement High Deductible Plan G -- which has a low premium -- will be responsible for the first $2,370 before the plan starts paying.

If a senior selects a $30 premium Medicare Advantage plan, he or she could potentially face up to $11,300 in maximum out-of-pocket costs before the plan starts paying 100%.

Three tips to save on Medicare

Additional tips for saving on Medicare coverage include:

  • See if you qualify for Extra Help. This program helps those with limited income and resources pay Medicare prescription drug program (Part D) costs. These may include premiums, deductibles and coinsurance. Social Security Administration estimates that Extra Help can save about $5,000 per year on Part D prescription drug costs.
  • Enroll in a Medicare savings program. Medicare has four savings programs run by the individual states. Such programs help cut the cost of Medicare premiums and other costs. Call your state Medicaid program to find out if you’re eligible.
  • See if you are eligible for Medicaid. If your income is low enough, you might qualify for this coverage. Call your state Medicaid program to see if you are eligible for the low-income program.

There are many other ways to save. For example, enrolling in a Medicare Advantage program may offer additional benefits that can save you money depending on your care needs. Shopping around and comparing these plans can get you the best deal.

Also, remember that enrolling on time for certain programs -- such as Medicare Parts A, B and D -- might help you avoid higher costs in the future in the form of late-enrollment penalties.

How to choose the best health insurance for seniors

When selecting the right health insurance coverage, it’s essential to tailor a health plan to your needs.

“Seniors should consider how much coverage they want based on their health history,” Fassieux says.

So, for instance, if you regularly see a doctor, you may want a plan with a lower deductible. If you don’t need much healthcare, a health insurance plan with a higher deductible and lower premium might be a better fit.

There are many effective ways to zero in on the policy that is best for you, says Casey Schwarz, senior counsel, education and federal policy at the Medicare Rights Center.

“People just take in information differently,” she says. “Some people like to read everything and research it and figure out for themselves. Some people want someone to sort of walk them through it.”

If you’re overwhelmed by the process, a little help can go a long way.

“Finding a good local broker in their community can assist the senior in selecting the best coverage that meets their health care needs and budget,” Fassieux says.

She recommends seniors look for “free local and unbiased information” from their State Health Insurance Assistance Program (SHIP).

“There is one in every state in the union,” Fassieux says. “The SHIP telephone number is printed on the back cover of the ‘Medicare & You’ booklet that all Medicare beneficiaries receive.“

Ultimately, the best health insurance for retirees depends on your own individual needs. Fassieux also reminds you that once you choose a plan, you’re not stuck with it forever.

Seniors have a yearly opportunity to review their coverage options during the annual open enrollment period between Oct. 15 and Dec. 7.

“Seniors can enroll, change or disenroll from their Medicare Advantage or Part D prescription drug plan,” she says.

Between Jan. 1 and March 31, seniors enrolled in the prior year in a Medicare Advantage plan have one more chance to make changes to their coverage, Fassieux says.

Best health insurance companies for retirees

If you decide to get coverage through Medicare Advantage, you have plenty of options to sort through. As with shopping for any health insurance plan, some policies are likely to serve your needs better than others.

Medicare has identified 13 plans with a "five-star rating." These are among the options that include the best health insurance for seniors. Plans that rank highly based on reviews of 45 different quality and performance measures from health care providers, member satisfaction surveys and the health plans themselves.

Medicare rates Medicare Advantage plans on up to 45 different quality and performance measures, including:

  • Breast cancer screening
  • Care coordination
  • Claims appeal process speed
  • Colorectal cancer screening
  • Customer service
  • Diabetes care
  • Health plan complaints
  • Members choosing to leave the plan
  • Older adult care
  • Promptness of appointments and care

Only 5% of Medicare Advantage plans with prescription drug coverage received a five-star rating and about half of plans received at least four stars.

Best Medicare Advantage plans

Here are the five-star offerings for 2021:

  • Capital District Physicians’ Health Plan
  • CarePlus
  • HealthNow New York
  • HealthPartners
  • Healthspring of Florida
  • Healthsun
  • KelseyCare Advantage
  • Kaiser Permanente
  • Martin’s Point Generations Advantage
  • Quartz Health Plan
  • Sierra Health and Life
  • Tufts Associated Health Maintenance Organization
  • UnitedHealthcare

Frequently Asked Questions

What is supplemental health insurance for seniors and how much does it cost?

A Medigap policy is a supplemental form of insurance sold by private insurers that helps Medicare enrollees pay for costs not covered by Original Medicare.

Medigap policies can cover costs such as:

  • Copayments
  • Coinsurance
  • Deductibles

Some Medigap policies may also cover other care, such as medical care received outside the U.S. However, there are many other things a Medigap policy doesn’t cover, such as the cost of long-term care, and vision and dental care.

Medigap policies can be priced in any of three ways:

  • Community-rated (also known as "no age-rated"). The same monthly premium is charged regardless of age.
  • Issue-age-rated (also known as "entry age-rated"). The monthly premium is based on the age you are when you buy the Medigap policy.
  • Attained-age-rated. The monthly premium is based on your current age and goes up as you age.

Wondering about the average cost of supplemental health insurance for seniors? The U.S. Centers for Medicare and Medicaid Services says the cost of Medigap policies can vary widely, adding that there can be "big differences in the premiums that different insurance companies charge for exactly the same coverage."

How does health insurance for retirees differ?

For most of their adult lives, people get their health insurance either through an employer-based plan or by purchasing an individual plan. That includes health insurance for retirees under 65. If you retire early, for example, you won’t be eligible for Medicare.

Everything changes when you turn 65 and become eligible for Medicare. At that point, most health insurance for senior citizens comes through the federal health insurance plan known as Medicare.

However, retirees 65 and older who meet the income and asset limits for their state are also eligible for Medicaid, which is cheaper than Medicare. And some retirees have combined Medicare and Medicaid coverage, which is called dual coverage.

Do you need other health coverage than Medicare?

Affordable health insurance for seniors can sometimes require you to sign up for more than just Original Medicare. Schwarz says it can help to have additional health insurance coverage in some cases.

“People who choose Original Medicare often may want to consider Medigap, which is a private insurance plan that works with Medicare,” Schwarz says.

Some people enrolled in Medicare also have retiree coverage or they qualify for Medicaid that works with Medicare. Having these other types of coverage can cut costs for some recipients, allowing you to find your goal of cheap health insurance for seniors, Schwarz says.

If you have multiple types of health insurance, insurers follow a system called coordination of benefits. Coordination of benefits decides which insurer pays first for people with dual health insurance.

What options are available if you need to buy insurance on my own?

Health insurance for seniors over 65 is a brand-new ballgame. Once you become age 65, you’re eligible for Medicare. You can go to the federal government’s official website and sign up for Original Medicare.

Or, if you prefer to sign up for Medicare Advantage, you can go to the official Centers for Medicare and Medicaid Services webpage and compare Medicare Advantage plans by using the Medicare Plan Finder tool. You can also use this tool to find the right prescription drug plan.

How can I compare benefits and understand what is covered by a plan?

You can use the official federal government website to compare benefits and learn what various plans cover.

However, if you feel confused or overwhelmed by the process, you can also seek out help through your state’s State Health Insurance Assistance Program, or SHIP, program.

The SHIP National Technical Assistance Center offers a tool at its website that allows you to search for a SHIP program close to you.

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