Last updated December 21, 2023
When to use:
As a guide for the different Medicare Coverage choices available to callers. See Medicare Enrollment Periods for when people can enroll.
Original Medicare:
Original Medicare consists of Medicare Part A (hospital insurance) and Part B (medical insurance). It is a fee-for-service plan, meaning that Medicare beneficiaries usually pay a fee (deductible, coinsurance, and copayments) for each service and the provider is subsequently paid a fee for the service provided. These amounts are determined by the federal government and are generally the same for most people covered by the program. For current cost sharing amounts see the Medicare related cost sharing quick reference.
Medicare Eligibility:
- U.S. citizen or permanent legal resident who has been in the U.S. for at least five years
- 65 or older
- Been receiving Social Security Disability Benefits for 24 months
- Have end-stage renal disease or amyotrophic lateral sclerosis (ALS)
Original Medicare Considerations:
- 95% of people do not pay a premium for Medicare Part A.
- To enroll in Medicare Part A premium-free, a person needs at least 40 work credits (through their own work record or that of a spouse).
- There is no annual cap for out-of-pocket expenses.
- Does not cover benefits like routine dental, vision, or hearing care.
- Medicare Part A and Part B include very limited drug coverage.
- There are no provider networks and enrollees do not need referrals to see specialists, but the provider must participate in Medicare and accept Medicare payment. It is best to select a provider that accepts assignment so the person’s out-of-pocket costs are limited.
Enrollment:
- A person is automatically enrolled if already receiving Social Security.
- If a person is not already receiving Social Security at age 65, they must contact Social Security to enroll.
- In most cases, if the person or their spouse is still working and getting large group employer health insurance, you do not need to enroll in Part B.
Medigap Policies (Medicare Supplements):
Medigap works with Original Medicare to help pay for certain costs that Original Medicare does not cover, such as copayments, coinsurance, and deductibles. There are Basic (with riders), Extended Basic, Medicare SELECT, and plans similar to Plan N, High Deductible F, M, K, and L options. Medicare SELECT plans require people to see network providers for maximum coverage. Each type of Medigap policy offers a different level of basic benefits, but each plan type must include the same standardized benefits regardless of the insurance company. The only difference between same type of Medigaps is the premium and the level of customer service so a true comparison between Medigap policies is not possible.
- For example, an Extended Basic policy sold by Company A will provide identical coverage to an Extended Basic policy sold by Company B.
- The only differences legally permitted with individual Medigap policies are premiums and the level of customer service provided by the company.
- Companies are allowed to charge more for tobacco users and people who reside in certain areas of Minnesota.
In Minnesota, Medigap policies are community-rated, meaning they charge the same monthly premium regardless of the person’s age. In addition, premiums may increase over time for reasons other than age, such as inflation. Rate increases cannot apply only to specific people and must be increased across the board for everyone who has a specific Medigap policy. All premium increases must be approved by the Minnesota Department of Commerce.
Medigap Eligibility:
- Have both Medicare Part A and Part B
- Accepted by the company selling the policy or have guaranteed issue rights (GIR), which include:
- The first six months of enrolling in Medicare Part B (Medigap Open Enrollment Period)
- A second six-month open enrollment period is also available when someone on Medicare due to disability turns 65.
- Other GIR as outlined in the CMS publication, Choosing a Medigap Policy
Medigap Considerations:
- Generally, Medigap policies have higher monthly premiums and lower cost-sharing than Medicare health plans.
- Policies may offer coverage while traveling abroad.
- Policies work with any provider that accepts Medicare.
- Note: There is a provider network with Medicare SELECT policies, so use of participating providers is important to ensure the plan provides coverage at the highest level.
- Policies are portable, meaning if someone moves out of state, they can take the policy with them. The premium may be higher depending on where they move.
- This is not true of Medicare SELECT policies. If someone moves out of state, they may need to enroll in a different policy or plan if network coverage is not available where they are moving to.
- Policies do not include Medicare Part D so people can enroll in the stand-alone Part D plan that is the most cost effective for them. Medigap policies do not cover prescription drugs so it is important people enroll in a separate Part D plan if they want prescription drug coverage.
- Policies do not offer extra benefits like routine dental, vision or hearing coverage beyond what’s already covered by Original Medicare. Note: SELECT policies may offer more coverage.
Medigap Enrollment:
A person must purchase a Medigap policy through a licensed agent or broker. It is recommended that staff and volunteers use the Medigap Premium Tables document in Health Care Choices for the most current information.
Medicare Advantage:
Medicare Advantage plans are an alternative to Original Medicare. Instead of having Medicare benefits administered through Medicare Parts A and B, people can choose to get their coverage through a private Medicare Advantage plan offered by private insurance companies that contract with Medicare. Enrollees in a Medicare Advantage plan sign over their Medicare benefits to be administered by the Medicare Advantage plan, so the only payer of services can be the plan, not Original Medicare.
Medicare Advantage Plan Eligibility:
- Have both Medicare Part A and Part B
- Resident of Minnesota
- Live in the plan service area
- Use providers that participate with the Medicare Advantage Plan
- Point-of-service option allows enrollees to see most Medicare providers outside of the plan’s network (higher cost)
Medicare Advantage Plan Considerations:
- Plans have a wide range of premiums and coverage options.
- People must pay the Medicare Part B premium in addition to any premium charged by the plan.
- Medicare Part A, Part B, and generally Part D (if included) benefits are all included in the plan to simplify benefit administration.
- If the plan does not include Part D, a stand-alone Part D plan is typically not an option.
- Additional benefits, such as routine dental, hearing, vision and gym memberships are often included in the plan.
- Seeing providers outside the plan’s network may not be covered or may cost more.
CAUTION: If an individual wants prescription drug benefits (Medicare Part D), they usually need to enroll in a Medicare Advantage plan that includes Medicare prescription drug coverage. Not every Medicare Advantage plan includes prescription drug coverage so always check the specific plan they are considering. Enrolling in a separate Part D plan when coverage is offered by the Medicare Advantage plan will result in immediate disenrollment from the Medicare Advantage plan.
Medicare Advantage Plan Enrollment:
- People can enroll via www.Medicare.gov or contacting the plan directly
Medicare Cost Plans:
Cost Plans are offered by private insurance companies who contract with Medicare. The plan may or may not include coverage for prescription drugs or other benefits not available under Original Medicare. If the member chooses to go out of the plan’s network, they would still be covered by Original Medicare. People must pay Original Medicare deductibles and coinsurance amounts. Cost Plans are only available in 21 counties of Minnesota.
Medicare Cost Plan Eligibility:
- Have both Medicare Part A and B or just Part B
- Resident of Minnesota
- Live in the plan’s service area
- Not have end-stage renal disease
Medicare Cost Plan Considerations:
- Plans may include additional benefits such as routine dental, vision and gym memberships.
- Generally, plans have extended travel benefits, which make them a popular choice for snowbirds.
- People must remain in the plan’s service area to stay enrolled in the plan, but coverage under Original Medicare is permitted if outside of the area and health care is needed.
- Allows people to choose between getting their Medicare Part D coverage through the plan or through a stand alone Part D plan, whichever is more beneficial.
Medicare Cost Plan Enrollment:
- Can enroll in the health portion any time the plan is accepting new enrollees.
- Have to have a valid Part D SEP in order to enroll into the Part D portion of the cost plan if getting Part D coverage through the cost plan.
- People can enroll via www.Medicare.gov or contacting the plan directly