Medicare is a federal health program that helps cover the healthcare costs for people aged 65 and over, and for younger people with an approved medical condition or disability. While that sounds straightforward at first, it gets a little more complex when you delve into the details. Original Medicare offers Part A, B and D, as covered in our guide to the best Medicare Part D plans, so you will find plenty of coverage choices.
Plan C, also referred to as Medicare Advantage, enables you to combine Plan A and Plan B alongside Plan D, but it lacks the flexibility of Original Medicare. Why? Because, when picking from among the best health insurance companies, you might be limited by where you live.
To ensure you’re making the right choice for your coverage needs, here we run through Medicare’s pros and cons to help you decide whether it’s right for you.
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Is Medicare worth it?
Even with the limitations we’ll come to shortly, general consensus is that Medicare is a program worth signing up for. Before its inception in 1965, around 49% of adults 65 and over didn’t have any health coverage. Contrast that against today far more do, and it’s clear to see that Medicare is helping to provide health coverage to those who wouldn’t otherwise be able to afford it.
Couple that with the fact that Medicare also provides coverage to younger Americans with disabilities and approved medical conditions, and you have a program that’s helping those who need the most regular medical care to receive it without paying vast amounts of money that would likely exceed their annual income.
Even though we’re fans of Medicare, this is your decision. To help you make an informed choice, here’s a balanced rundown of the pros and cons...
Pro: It has low monthly premiums
When you weigh up the cost of operations, prescription drug costs and all the other related expenses that can come from having an unexpected or long-term health condition, Medicare can be a financial lifesaver.
Most enrollees qualify for free access to Part A and pay a monthly fee for Part B, which in 2020 costs $144.60 per month. When you consider that an average hospital stay would set you back around $15,000, not including the cost of any surgery you might need, that monthly Medicare fee starts to look pretty appealing.
Con: It has no out-of-pocket limit
Original Medicare doesn’t have an out-of-pocket limit, which is a big drawback. With no cap on the amount of extra cash you might be expected to part with for covered healthcare services in a single year, you could find yourself with an additional bill alongside your monthly premium. A lengthy hospital stay, for example, could still cost you thousands of dollars, even with Medicare.
Pro: Broad eligibility and acceptance
There are very few eligibility hurdles to jump over with Medicare, which is a refreshing change from a lot of other government programs. To be eligible for Medicare Part A and Part B, you generally need to be:
- 65 years or over
- A US citizen or a legal permanent resident who has lived in the US for at least five years
- Under 65 years but with an approved medical condition or disability, such as Lou Gehrig’s Disease (ALS) or End-Stage Renal Disease (ESRD)
Over 90% of physicians accept Medicare, and it can be used in all states, as well as the US territories of Guam, Puerto Rico, American Samoa, Northern Mariana Islands, and the Virgin Islands.
Con: Some important aspects of care aren't covered
When you’re paying a monthly premium for healthcare services, you may expect everything to be covered, but Medicare Plan A and Plan B fall short here. While they provide a wide range of hospital and medical benefits, they omit coverage of the following:
- Prescription drugs
- Routine hearing care or hearing aids
- Routine vision care or eyeglasses – look at the best vision insurance instead
- Routine dental care or dentures - you'll still need to look at the best dental insurance
If any or all of the above areas are ones that are important to you, then you may want to consider Medicare Advantage.
Pro: It offers several coverage options
Medicare’s customizable offerings and coverage options enable you to design a health care plan that’s right for you. Medicare Advantage, known as Plan C, is sold by private insurance companies and combines Plan A and Plan B plus the additional benefits of Plan D into one easy to manage bundle.
If you stick with the Original Medicare you can complement it with a Medigap plan to protect yourself against any out-of-pocket expenses incurred while on Part A and Part B.
Con: But it can also be confusing
If filing a tax return or choosing home insurance leaves you scratching your head, then you can add another source of confusion to your list in the form of Medicare. While the different coverage options offer plenty of choices, that alphabet soup of variety can make it harder for you to figure out what’s best for you.
There are also enrollment requirements and timeframes that you need to be aware of. If you miss your initial enrollment period, which begins three months before you turn 65 and runs until three months after, then you’ll need to wait until a general enrollment period opens up, unless you qualify for special enrollment.
Also, keep in mind that if you fail to sign up for Plan B when you first become eligible and don’t have an approved exception, you face penalty premiums for each year you don’t register.
Pro: The program is flexible
A huge plus with Original Medicare is that it lets you select any physician or hospital throughout the country, as long as they accept Medicare. This gives you access to a broader range of providers and the freedom to choose the best fit for you and your health needs regardless of your location.
Con: It disadvantages older enrollees
Those aged 85 years and over are spending around three times more on healthcare services than those aged 65-74, which means their out-of-pocket expenses are significantly higher. That in itself isn’t unexpected, most of us know that the older we get the more health issues we’re likely to encounter, but enrollees shouldn’t be penalized by an exorbitant rise in their medical expenses as they age.
For Medicare to be a truly equitable system, the increased health costs incurred in later life need to be taken into account and incorporated into the monthly premium for all enrollees.
Pro: Medicare has increased medical standards
Now here’s a big tick in Medicare’s favor. Did you know that medical standards have increased since the creation of Medicare back in 1965? In recent decades, the government has become more involved in overseeing hospital infection rates and readmissions, and this frequent monitoring has forced hospitals to become more diligent and accountable.
Karen Davis, Director of the Roger C. Lipitz Center for Integrated Health Care at the Johns Hopkins Bloomberg School of Public Health, told US News that, “When hospitals find out they aren’t as good as other hospitals, they get serious about improving. When they find out it’s possible to have lower rates of infections, for instance, they try to find out what good practices are and follow them to get good results.”
Con: High cost to government and taxpayers
Running the Medicare program costs money and lots of it. According to Kaiser Family Foundation stats, in 2018 Medicare spending totaled close to 15% of the overall federal budget, and that’s expected to rise to 18% over the next decade.
That’s a staggering amount that takes money away from other important services such as education, mental health, and social justice. When you consider that 36% of Medicare funds come from payroll taxes, the cost to both you and the government is extensive.
Is Medicare worth it? Only you can decide
Deciding whether to enroll in Medicare is an important decision, so you’ll want to make sure you’re as knowledgeable as you can be about this health coverage program before you make it.
If you're unclear about which plan, if any, is right for you and your specific health needs, then we recommend calling the team at Medicare or visiting the official Medicare website. You'll find lots of useful information there that can help you decide if Medicare is right for you.