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Choosing Individual Health Insurance Over Medicare: Your Health Coverage Options

Medicare is designed to provide the retirement and the chronically ill communities with affordable healthcare. However, because many people are working past the age of 65, there’s a lot of confusion surrounding which plans they should choose, and if individual health insurance is even an option.

Difference Between Health Insurance and Medicare

Medicare caters to individuals over the age of 65 or those that have certain end-stage terminal diseases. Because Medicare is a Government-backed program that many healthcare providers accept, it can offer care at a lower price and from a larger selection of doctors than a private or employee-held policy. Medicare also only covers the person that qualifies and can’t be extended to cover any dependents.

While private health coverage also covers the insured individual, private companies will allow coverage to extend to dependents and spouses under the same plan as the primary policyholder. Private insurance is also available through an employer or for insureds to secure on their own, while Medicare is only available through the federal government. 

Those that are used to private insurance coverage or coverage provided by an employer are used to medical, prescription, dental, and vision all being provided under the same coverage plan. With Original Medicare, only outpatient care and hospital stays are covered. Original Medicare also doesn’t carry out-of-pocket maximums like many other private and employer-provided healthcare plans.

Medicare vs. Individual Health Insurance: Costs and Premiums

The premiums for both Original Medicare–which includes Medicare Part A and Part B–and employee-provided or private insurance depend on several factors: where a person or family lives, their ages, the benefits of the plan that they choose, and the out-of-pocket expenses associated with their selected plan, just to name a few.

In general, Original Medicare costs less per month than private insurance plans or employer-provided plans. Insureds who qualify for Medicare Parts A and B can receive the benefits of Medicare Part A for little to no cost and can get Part B for less than $200 per month depending on how many months they’ve paid into the Medicare system before they turned 65.

Keep in mind that while Original Medicare may cost less monthly, there aren’t any out-of-pocket maximums for Medicare Parts A and B. Original Medicare also doesn’t have coverage for vision, dental, or prescription coverage in the plan, whereas an individual health insurance policyholder can add those coverages to their plan through their employer or the Health Insurance Marketplace.

Assistance with out-of-pocket expenses and additional coverages can be obtained by other Medicare parts, such as Parts C and D, but those are separate expenses that will ultimately add on to monthly premium costs. Medicare Parts A and B also have separate deductibles for each part that must be met before the actual coverage kicks in, while private coverage does not.

Medicare vs. Individual Health Insurance: Networks

Because Medicare is such a large program, the number of doctors available within the Medicare network far surpasses the number of doctors within the networks of the individual health insurance companies.

If a patient with individual health insurance was to go to a doctor outside of their network, their out-of-pocket costs would increase substantially or they would be without coverage altogether while being examined by the out-of-network doctor. Knowing which doctors and hospitals are within and outside of the network for an individual health insurance program can also be a challenge, as not all doctors in an in-network hospital are also in the coverage network. The chances of this happening for a Medicare patient are much lower, as a wider array of doctors accept Medicare as a payment option.

Medicare vs. Individual Health Insurance: Dependents and Benefits

Medicare only covers an individual over the age of 65 and can’t be extended to cover spouses or dependents, whereas individual health insurance can cover extra insureds under the same plan. Medicare also has a variety of semi-streamlined coverage combinations to choose from to suit a patient’s needs.

While the Medicare payments may be lower in some instances, Medicare may also have gaps in coverage that a beneficiary is unaware of until they encounter them. For example, Original Medicare, or Medicare Parts A and B, cover hospital stays and outpatient treatments, but prescriptions aren’t covered under either of those plans. Without the addition of Medicare Part D, the beneficiary will have to pay for prescriptions out of pocket. Those with private or employer-provided health coverage often will not encounter those same issues as prescriptions and others are usually covered under their main healthcare plan. 

Choosing Between Medicare and Individual Health Insurance

Ultimately, the choice between Medicare and individual health insurance depends on the patient. While it’s true that anyone over the age of 65 or anyone with a terminal, late-stage illness is eligible for Medicare, individuals are now working well into their mid to late 60s, giving insureds access to both Medicare and individual health care programs. Therefore, the insured can carry both Medicare and an employer-provided plan if they choose.

One thing to keep in mind, however, is that insureds can accrue financial penalties if they don’t sign up for Medicare as soon as they’re eligible.

The other main question to consider is which plan will be primary if a patient with both Medicare and an employer-provided plan needs medical attention. The answer to that question depends on the type of additional coverage the insured carries. If a patient’s employer has less than 20 employees, then Medicare will be primary and the employee coverage will be secondary. If a patient has a COBRA plan in addition to their Medicare plan, COBRA will be primary and Medicare will be secondary, barring any special rules from COBRA providers.

There are certain instances when Medicare and additional non-Medicare plans do not work together. For example, as soon as an insured qualifies for Medicare, they automatically no longer qualify for Health Insurance Marketplace coverages.

Additionally, Medicare benefits and veteran benefits are also incompatible as both are considered primary. Which set of benefits covers the veteran if they need medical care depends on where the veteran goes for care: at a military hospital, the veteran benefits apply, and at a civilian hospital, the Medicare benefits apply.

You’re just a few steps away from seeing your Medicare Advantage plan options.

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You’re just a few steps away from seeing your Medicare Advantage plan options.

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