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Andrew Smith

Andrew Smith

Medicare vs. Private Health Insurance: How Do You Choose?


You’re not alone if you’re approaching 65 but aren’t ready to retire. Around 20% of Americans over the age of 65 are still working. And, since you aren’t ready to retire just yet, you may have a new medical insurance alternative to consider: Medicare. This article contrasts Medicare with private health insurance, as well as provides some additional facts to think about before choosing coverage.

medicare vs private insurance

What Is the Difference Between Health Insurance and Medicare?

The distinction between private health insurance and Medicare is that Medicare is primarily for individuals 65 and older and offers more coverage options than private health insurance, whereas private health insurance does not cover dependents. Not only does Medicare offer a variety of coverage options, but there are also plans within those options that provide different levels of coverage.

When it comes to private health insurance, picking coverage isn’t difficult. If you have an employer-sponsored plan, you have a restricted number of options from which to choose. If you’re looking for an Affordable Care Act (ACA) plan, you may compare premiums, out-of-pocket expenditures, and coverage differences. These items are frequently listed in the Summary of the Plan Benefits.

HealthMarkets can assist you in evaluating your choices. You can evaluate those sorts of policies to discover the greatest cost and coverage for your needs if you choose a Medicare combo plan. Choose a plan combination that best suits your needs, and then learn more about each plan’s features. Now is the time to start comparing plans.

medicare advantage plansMedicare vs. Private Health Insurance: Networks

When it comes to networks, Medicare is the clear leader. Original Medicare is likely your best option if you don’t want to be limited to a small number of doctors or facilities. You can go to any provider who takes Original Medicare if they accept the national program. If you add a Medicare Supplement plan, you can preserve your freedom while also benefiting from decreased out-of-pocket costs.

A small number of offices, hospitals, and healthcare professionals are contracted by private health insurance programs. A network is made up of these places and people. Unless it is an emergency, you will have limited or no coverage from your health insurance plan if you visit someone outside of your network. This can add up quickly, especially since it isn’t free is always obvious which providers and locations are supported. An in-network hospital, for example, may have recruited a doctor who is out-of-network for you.

medicare beneficiariesMedicare vs. Private Health Insurance: Premiums

This is an area where your private Affordable Care Act (ACA) or employer plan may beat Medicare. The average monthly employer premium is $108.2

While most people will pay $0 for Medicare Part A premiums, the standard premium for Medicare Part B is $170.10 in 2022. Parts A and B (Original Medicare) are the basic building blocks for coverage, and delaying your enrollment in either can lead to financial penalties.

The Medicare Part B premium may be high for basic coverage, but some Medicare Advantage plans can have a $0 premium. These plans won’t erase your Part B premiums, but they can provide extra coverage at little to no cost.

Medicare vs. Private Health Insurance: Out-of-Pocket Costs

The second thing to think about is your annual out-of-pocket expenses. Copays, coinsurance, and deductible amounts are examples of these. As a national program, Medicare has negotiating power with healthcare providers, whereas commercial health insurance plans negotiate as individual corporations. The amount that a healthcare provider can charge you is reduced as a result of this negotiation. Lower copays and coinsurance payments will reflect these negotiated prices.

When comparing Medicare and commercial health insurance, you need also consider deductibles.

medicare advantageCan You Have Medicare and Private Health Insurance?

Yes, you can keep your private health insurance plan even if you enroll in Medicare. However, it is important to review the costs you will incur by having two active plans (like paying two separate premiums). Additionally, you may need to find out which plan will get billed first for services.

In the case of ACA plans, your coverage would be considered a duplicate. Medicare and ACA plans are not designed to coordinate benefits. So, medical costs would go to one plan or the other. Keeping your ACA plan may also mean dealing with late enrollment penalties for Medicare in the future.

Affordable Care Act Subsidies & Medicare

If you have an Affordable Care Act (ACA) plan, you can keep your coverage once you turn 65. However, you cannot keep any premium tax credits (or subsidies) once your Medicare Part A coverage begins. If you decide to keep your ACA plan, you must notify your insurance company to stop any subsidy payments. Otherwise, you may be required to pay them back when filing your taxes.

Small Business Health Insurance Options Plans (SHOP)

If you work for a company with 1-50 employees, you may be able to keep your employer coverage through SHOP. Keeping this plan will allow you to delay Medicare enrollment. You will not be subject to late enrollment penalties until after this coverage ends.

If you work at a company with a different level of employment, you should ask your employer if your current employer-based coverage will remain your primary coverage. If it will become a secondary coverage option, it may be in your best interest to sign up for Medicare when you are first eligible. Otherwise, your employer coverage may refuse to make payments until Medicare has been billed first. This may put you in an expensive, and frustrating, coverage hole.

medicare coverageIs Medicare Better than Private Insurance?

Deciding between Medicare vs. private health insurance is an important choice that only you can make. HealthMarkets can help you get Medicare quotes online and compare them to your current coverage, at no cost to you.

Compare premiums, out-of-pocket costs, and health coverage. Plus, HealthMarkets can even help you figure out which plan best suits your needs. Answer a few questions, and we’ll rank plans that best fit your needs.

More to explorer

Part D / Prescription Drug Benefits

Part D / Prescription Drug Benefits

Introduction to Medicare Part D Before 2006, Medicare covered some medicines given during a hospital stay (Medicare Part A) or a doctor’s

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