Health insurance is an unavoidable part of American life. Everyone needs it, and everyone has to figure out the best coverage options for their health and well-being. Because seniors are eligible for Medicare, it seems like it would be easier to select coverage for someone aged 65 or older. However, this isn't true. Medicare includes various options, and if you're not careful, you could wind up not being covered for essential services.

What Is Medicare?

Medicare is a government health insurance program for individuals who are age 65 or older. It's also available to younger people with permanent kidney failure, ALS, or long-term disabilities. Medicare is designed to provide healthcare benefits to enrollees regardless of income, medical history, or current health status.

History of Medicare

Medicare was signed into law by President Lyndon B. Johnson in 1965. At the time in the early 1960s, nearly 50% of people over age 65 were uninsured. With the advancements of Medicare, that number has now dropped to below 1%. In 2020, Medicare rules were updated and new rules were implemented. 

Medicare Coverage

Original Medicare has different parts. Part A is for hospital expenses, and Part B is for outpatient or office services. Part C is Medicare Advantage, a different way of getting benefits. Part D is for prescription drug coverage.

Medicare Part A

Medicare Part A helps pay for intensive needs, which include:

• Inpatient hospital services and care

• Limited stays at a nursing facility post-hospitalization

• Hospice care

• Certain types of home healthcare

In general, you won't pay premiums for Part A. If you have a hospital stay, you must pay a deductible before your Medicare coverage kicks in. In 2023, the Medicare deductible is $1,600.

Medicare Part B

This is medical insurance that covers medications, services, vaccines, and some or all of the following:

• Medical equipment (like oxygen tanks or wheelchairs)

• Annual flu shot

• Pneumonia vaccine

• At-home dialysis

You will pay monthly premiums for Part B. The standard premium in 2023 is $164.90, which will likely be deducted from your Social Security benefits.

What Is Medicare Advantage?

Medicare Advantage is another way to get Medicare Part A and B coverage. These plans are offered through Medicare-approved private insurance companies, which must follow Medicare rules.

Common Medicare Advantage Plans

Four of the most common types of Medicare Advantage plans include:

• Preferred Provider Organization (PPO) plans

• Health Maintenance Organization (HMO) plans

• Private Fee-for-Service (PFFS) plans 

• Special Needs Plans (SNPs)

You are eligible for each of these if you meet the criteria for Original Medicare and live in the service area of the desired plan. Some plans have $0 monthly premiums, while others come at higher costs. Even with Medicare Advantage, you have to pay your Part B premium. Medicare Advantage plans are similar to standard individual health insurance policies you receive through an employer. They have different monthly premiums, co-pays, co-insurances, out-of-pocket limits, and provider networks.

Medicare vs. Medicare Advantage

Medicare Advantage plans can offer coverage for services that Original Medicare doesn't. Examples include:

• Fitness programs

• Vision

• Dental

• Hearing

Some Medicare Advantage plans can also offer optional coverage of more benefits.

Which Is Right for You?

More seniors prefer Medicare Advantage plans over Original Medicare. However, this is nuanced. With Medicare Advantage, you usually receive more preventive care. However, if you have a chronic illness and require frequent hospitalization or significant health needs, Original Medicare is likely the better option. The best way to determine which is right is through Medicare open enrollment. Contact a trusted health insurance provider to determine the best coverage for you and your needs.