Individuals at 65 should Carefully Weigh their Options between Individual & Medicare Plans

medicare plan

Individuals who are soon completing their 65th birthday may be receiving a lot in the mail about  Medicare. Till now individuals must be on an individual and family health plan and now they will get the option to enroll in Medicare plans or continue with their individual plan. People need to know that Original Medicare plans work a bit differently from the individual and family plans. Individuals at times may find difficulty in knowing which plan is right for them. In this article, we will discuss how Medicare is different from regular individual health insurance plans.

The prime difference between Medicare and individual health plans is that Medicare is designed to absorb risk, as it serves individuals who may have expensive and complex medical needs and also who are relatively healthy.¬† In contrast to Medicare plans, individual health plans mainly protect the health insurance carrier’s interest, so they either avoid providing coverage to people who frequently use medical care or charge higher premiums from such individuals. This was the reason that behind people over 65 were unable to purchase individual plans before Medicare was enacted, as having a health insurance plan was an expensive affair for them.

Medicare is basically a federally administered health insurance program in which Americans pay throughout their working lives and enroll in either when they retire or in case of a serious disability. The resources contributed by the entire nation is pooled to protect older and disabled citizens in the event of an acute illness or injury. After qualifying for the Medicare plan, no one is excluded based on their income, age, or health status.

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In comparison to Medicare plans, an individual health plan is of commercial nature and has an entirely different mandate. Health insurance companies offering individual health plans receive premiums to fund the costs of their enrollees’ healthcare costs along with the administrative cost. Besides these costs, the companies also look for sufficient profit margins to allow borrowing in the capital markets.

Difference between Medicare and Individual Health Plan

Seniors should know that Original Medicare provides coverage for only hospital and medical benefits, unlike the individual health plans that provide coverage for essential healthcare services as well as preventive healthcare services. It means Original Medicare does not provide coverage for things like prescription, dental, and vision, and if they wish to obtain a plan that provides similar coverage as individual plans, then they will have to check the Medicare supplemental plans.

Some of the noticeable difference between Original Medicare and Individual Health Plans are:

  • Medicare enrollees do not have any limit on their healthcare spending, whereas individual health plans come with an out-of-pocket maximum for the covered in-network services.
  • Every senior person in the family of 65 years or above need to separately enroll in a Medicare plan, but spouse and children can be included in the individual and family health plan. To obtain Medicare coverage, individuals have to qualify on their own through age or disability, whereas in individual and family plans coverage is extended to dependents like spouse and children.
  • Medicare plan does not come with prescription drug benefits and if a person wishes to have prescription coverage then he/she will need to purchase a separate Part D plan, whereas prescription coverage is included in most of the individual and family health plans.
  • Medicare plan has 20% coinsurance, and in individual and family plans copays and coinsurance vary by plan metal-tier.
  • Medicare enrollees have the flexibility to visit any health care provider who accepts Medicare but people having individual plans can only visit in-network healthcare providers.
  • Medicare plan does not come included with dental and vision coverage whereas some of the individual plans may include dental and vision coverage.
  • The Original Medicare premium is the same for every enrolled person, whereas individual and family plan’s premium gets affected with enrollees age, location, and based on their tobacco use.
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Medicare Plan has similar benefits as Individual Plans

Individuals who are looking to have similar benefits as individual health plans can opt to have Medicare Advantage plans, as these plans have similarities to traditional health insurance plans:

Some of the common attributes of Medicare Advantage plans and traditional individual health plans are:

  • There is a maximum out-of-pocket limit that protects enrollees from huge medical bills because it will be the maximum amount, which enrollees will have to pay for the covered services in a calendar year.
  • Both plans offer prescription drug coverage for the covered medications.
  • These plans have a set copays, this allows enrollees to know in advance the exact amount which they will owe for a medical service, this will make their financial planning easier.
  • Members of both these plans have access only to in-network healthcare providers. Doctors, hospitals, and specialists have agreed to work on a negotiated rate with the insurance company.
  • Members of Advantage plans as well as individual plans enjoy additional benefits like dental, vision, wellness programs and, many more medical services.

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