Many people mistakenly think Medicare is free. While you can qualify for premium-free Part A, the rest of your Medicare coverage comes at a cost. Generally, pre-Medicare coverage includes a maximum out-of-pocket that caps your expenses during the year. However, that is not how Original Medicare works. There is no cap on your costs during the year, which can be financially devastating but have no fear. There are plans you can purchase to help you save money by capping your costs or paying your Medicare premiums.
You can work with a Medicare broker to find the right plans you need for your situation. Brokers can be a great resource since they specialize in various plans and represent multiple insurance carriers. You may wonder, “How does a Medicare broker get paid?” This is a valid question to ask before you start this process, but the good news is they get paid by the insurance carriers they represent, so you shouldn’t pay anything for their assistance. They can help you with how you can save money on Medicare.
Medicare Supplements
If you’ve heard of Medicare Plan G or Medigap plans, these are also known as Medicare Supplements. A Supplement plan is a secondary insurance plan offered by private insurance carriers. They pay after Original Medicare which means they help lower your costs during the year.
For example, if you purchase a Medicare Supplement Plan G, your only out-of-pocket costs during the year will be the Part B annual deductible. Once you pay the deductible, you should not pay anything else for your approved hospital and medical costs because you’ll be covered 100% between Medicare and Plan G.
Your costs during the year are predictable with most Medicare Supplement plans. Although you pay an additional premium for the plan, it can significantly decrease your yearly expenses.
Medicare Advantage
Medicare Supplement plans can be expensive or might not be a great fit for many people, so an alternative is Medicare Advantage. Enrolling in a Medicare Advantage plan means the plan will provide you with your Medicare benefits and services rather than the federal government. Therefore, the plan will approve or deny your services, but they must offer the same services you’d get from Original Medicare.
Your cost-sharing is different as you’ll pay copays or coinsurance as you go. These plans typically have low premiums, even as low as $0/month, and maximum out-of-pocket costs. Once you reach your plan’s out-of-pocket limit, your plan will cover your expenses for the rest of the year.
So, if you feel a Supplement is not the right fit but also want to protect yourself from financial devastation, a Medicare Advantage plan can be a great choice.
Part D
In case you didn’t know, Original Medicare does not cover the retail drugs that you get from the pharmacy. Original Medicare only covers drugs administered in an outpatient setting, in the hospital related to your stay, or those used with durable medical equipment. Therefore, other medications you are prescribed can be covered by Medicare Part D plans. This is why you’ll want to enroll in a Part D plan when you have Original Medicare only or paired with a Medigap plan.
Although Part D drug plans do not cap your costs right now, they can provide some help covering the costs of your drugs. However, in 2025, the structure of these plans will change as there will be a $2,000 cap on your out-of-pocket costs for your prescriptions.
Medicaid and Extra Help
Depending on your income level, you can apply for your state’s Medicaid program even when enrolled in Medicare. Medicaid can help cover your Part B premium and your out-of-pocket costs. When you qualify for Medicare and Medicaid, you are eligible for specific Medicare Savings Programs, determining how much assistance you’ll get with Medicaid.
When you qualify for Medicaid, you also qualify for Extra Help. The Extra Help program is specific to your Part D drug costs. It can help with your premium, deductible, and cost-sharing. Even when you don’t have Medicaid, you can still qualify for Extra Help.
Cancer policy
If cancer is in your family’s medical history or you want peace of mind, you can purchase a standalone cancer policy. These typically offer a lump sum if you ever get a cancer diagnosis, which can help cover your treatment, medications, and other cancer-related services. Since some cancer drugs fall under Part D, these policies can help you save money if you are diagnosed.
Final thoughts
When you enroll in Medicare, it’s important to understand how much it is and what it pays towards your services. This will help you determine what added coverage you need to help with your costs.
