Medicare Vs. Employer-Sponsored Coverage: An Honest Comparison
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Medicare Vs. Employer-Sponsored Coverage: An Honest Comparison

Medicare Vs. Employer-Sponsored Coverage: An Honest Comparison

Once someone hits the age of sixty-five, they're eligible for Medicare. However, if a worker already has employer-sponsored coverage or coverage through their spouse, they may be wondering if it's worth it to make the change to Medicare.

Some benefits come with switching coverage, but the potential drawback is that Medicare will not always cover all the costs associated with healthcare.

About Medicare

Before the article, your first question might be, “What is Medicare?”. Medicare is a federal health coverage program for senior citizens. Your eligibility derives from the Social Security program and how many years you paid into it while working. Those who meet the requirements can join Medicare at age sixty-five, the standard retirement age. 

Original Medicare, offered by the federal government, consists of Part A and Part B. Part A covers all inpatient costs concerning hospital treatments and stays. Part B covers outpatient treatments. 

Those with Original Medicare may choose to add a Medigap policy for supplemental coverage or Part D to cover prescription drugs. Medicare Advantage (also known as part C) is another option that lets enrollees achieve insurance coverage through private companies. Part C functions similarly to employer-sponsored group health plans. 

About employer-sponsored coverage

With employer-sponsored coverage, enrollees are typically part of a group plan that purchases health insurance through a private insurance company. Employees may have a choice of plan tier, and the employer withholds premiums from employee paychecks. 

Coverage is relatively standard across companies. Beneficiaries have access to inpatient care, outpatient care, and prescription drug coverage. Enrollees may also have vision and dental or the option of adding either at an extra cost. 

Medicare vs. employer-sponsored coverage

If you're trying to decide what type of coverage you should opt for once you're sixty-five, the factors below may help you determine what's best for you.

Premiums

In most situations, you'll pay a $0 monthly premium for Medicare Part A and $148.50 for Part B. However, if you didn't pay into Social Security for at least thirty quarters, you may need to pay up to $471 for Medicare Part A. The Part B premium may be more if you're in a higher income bracket.

Employer-sponsored coverage will vary in premium cost. Sometimes you'll share the cost with your employer, or your employer may cover the entire premium.

Deductibles

Medicare deductibles are set by benefit period, which is every thirty days. Employer-sponsored coverage applies the deductible for the year. Medicare Part A has a deductible of $1,484 per benefit period, and Part B has a deductible of $203 for each benefit period.

For employer-sponsored coverage, the deductible can vary widely. You may have a plan with a deductible similar to what you'll get with Medicare, but many plans have deductibles that are much more expensive.

Inpatient treatments

Once you've met your deductible, Medicare will completely cover all inpatient treatments as long as it's within your stated benefits.

With employer-sponsored coverage, this cost can vary, but you'll usually have the required copayments and coinsurance.

Outpatient Treatments

Medicare will cover 80% of all covered outpatient benefits.

For employer-sponsored coverage, you'll typically pay copayments and coinsurance based on your plan. 

Prescription drug coverage

Medicare doesn't offer prescription drug coverage, but you can purchase a Part D plan for coverage or go with a Medicare Advantage plan that includes prescription coverage. You can also find other ways to save on prescriptions.

Most employer-sponsored plans include prescription drug coverage, and you'll typically pay a copayment.

Other benefits

Medicare doesn't include benefits like vision and dental. However, many Medicare Advantage plans do offer these extra benefits.

Most employer-sponsored plans either come with
vision
and dental or allow you to add on these benefits for an added fee. 

The choice between Medicare and employer-sponsored coverage can be challenging. Medicare is cheaper, but you may not have the coverage you need. One option many people choose is to get Medicare and use their employer-sponsored coverage to supplement it. Your health is vital, so regardless of your choice, ensure it’ll support your life for years to come. 

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