Health Insurance

Medicare Part C vs. Part D: Costs & Eligibility

Ashley Brooks13 Aug 2021

Medicare provides health insurance through federal funding to eligible groups of individuals. Different plans exist within Medicare, providing coverage for various medical services. The Original Medicare and Medicare Advantage, also called Part C, offer Parts A and B but does not guarantee Part D, the expanded prescription drug benefit. 

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Medicare Part C (Medicare Advantage) 

Medicare Advantage is also called Medicare Part C and includes parts A and B of Medicare plans. These types of plans are offered by Medicare-approved private companies that enforce the same rules set by Medicare. While these plans are provider by private insurance companies, you are still in the Medicare Program and share the rights and protections covered by Medicare. 

You can join a Medicare Advantage plan even if you have a pre-existing condition. Certain Medicare Advantage plans offer benefits not covered by traditional Medicare insurance, such as dental, vision, or hearing services. With Medicare Advantage, you cannot buy Medigap, but this usually is not a needed add-on with Part C plans. 

The Most Common Medicare Advantage Plans 

While there are different types of Medicare plans, there are also various types of Medicare Advantage plans. According to Medicare, the most common types of Medicare Advantage plans are as follows:

  • Health Maintenance Organization Plans (HMO)
  • Preferred Provider Organization Plans (PPO)
  • Private Fee-for-Service Plans (PFFS)
  • Special Needs Plans (SNPs)

Health Maintenance Organization Plan (HMO)

With a Health Maintenance Organization Plan (HMO) under Medicare Advantage, medical care and services are generally covered for health care providers within the plan’s network. Services that can be received out-of-network include emergency care, urgent care, and dialysis treatment outside of your area. With HMO plans, you are typically required to get a referral from your primary care physician to see a physician, except for annual preventive screenings such as mammograms. 

For expanded coverage for services out-of-network, an HMO plan can have a point-of-service (POS) option. Although, receiving care from providers within your HMO network typically costs less than going out-of-network. Without a POS option, you may have to pay the full cost of your services outside of the plan’s network. 

HMO Prescription Drug Coverage

Typically, prescription drugs are covered under HMO plans, but you should verify that this is included with your plan. If you are interested in adding Medicare Drug Coverage (Part D) to your plan, you should specifically join an HMO Plan that offers prescription drug coverage.  

Preferred Provider Organization Plans (PPO)

Another Medicare Advantage plan, or Part C plan, is a Preferred Provider Organization (PPO) plan. PPO plans are offered by private insurance companies with their own network of doctors and hospitals. Like an HMO plan, you pay less if you choose doctors within the plan’s network and pay more for those outside of the network. 

While more expensive outside of the network, these plans provide flexibility in choosing your doctors, specialists, or hospitals. You often do not need a referral to see a specialist, and you also do not need to choose a primary care physician within a PPO plan. “Preferred” providers save you money when you use them as opposed to outside of the network. 

PPO Prescription Drug Coverage

If you join a PPO plan that does not offer prescription drug coverage, you cannot join a Medicare Part D Drug Plan. Please verify with your PPO plan that they offer prescription drug coverage. Otherwise, you may have to pay hefty out-of-pocket costs for necessary medications.

Private Fee-for-Service Plans (PFFS)

Like the other forms of Medicare Advantage plans, a Private Fee-for-Service Plan has several doctors within its network. To receive care outside of the network, your insurance provider must cover out-of-network care, but you will likely pay more than if you had received the care within their network of providers. 

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A PFFS plan determines how much you and your health care providers and hospitals are required to pay for certain services. You also do not need to get a referral to see a specialist with a PFFS plan. 

PFFS Prescription Drug Coverage

Certain plans may include prescription drug coverage, but you can join a Medicare Part D Drug Plan if yours does not offer drug coverage. 

Special Needs Plans (SNPs)

Medicare Special Needs Plans (SNPs) limit memberships to just those with specific diseases or characteristics. To best meet the needs of those the policy serves, they tailor the benefits, provider choices, and drug lists for comprehensive care. Doctors must provide care within the Medicare SNP network except for emergency or urgent care or those needing dialysis for End-Stage Renal Disease. 

SNP Prescription Drug Coverage

All SNPs must provide prescription drug coverage. 

Medicare Part D

Medicare Part D is the expanded prescription drug benefit as an optional add-on to your Medicare plan. Most Medicare Advantage plans and Part D plans have their own list of drugs they cover. The plans include brand-name and generic drug coverage and include at least two drugs for the most commonly prescribed categories and classes of drugs. If the list does not include your prescribed medication, your plan should have an alternative in that drug class.

A Medicare drug plan can make changes to its drug lists so long as it follows Medicare guidelines. This is due to the possible release of new therapies, drugs, or general medical information. Your copayment or coinsurance rates may also change depending on the costs set by the drug manufacturer.

Part D Plan Tiers

To make prescription drugs more affordable, many plans offer various tiers of drugs based on those they cover. Plan tiers may vary, but here is an example of a Medicare Part D Plan tier:

  • Tier 1: Has the lowers copayment covering most generic prescription rugs
  • Tier 2: Has moderate copayments for preferred, brand-name prescriptions
  • Tier 3: Has a high copayment for non-preferred, brand-name prescription drugs
  • Specialty Tier: Has the highest copayment for very high-cost prescription drugs

Typically, if a drug is no longer offered and your alternative costs more, you can ask for an exception. Similarly, if your drug is in a higher tier plan, but your prescriber is adamant about taking such a drug instead of a similar drug in a lower tier, you may also request an exception. An exception allows coverage of a drug not otherwise listed on the insurance plan.

The Cost of Medicare Part D

The cost of your Part D drug plan depends on your income. Above a certain income limit, you will have to pay an income-related monthly adjustment amount in addition to your plan’s monthly premium. The national base beneficiary premium for Part D plans is $33.06 per month for 2021. Below is a chart to break down your estimated premium based on income level.

If your income in 2019 was You pay (2021)
File Individual Tax ReturnFile Joint Tax ReturnFile Married & Separate Tax Return 
$88,000 or less$176,000 or less$88,000 or lessYour plan premium
$88,000 - $111,000$176,000 - $222,000N/A$12.30 + monthly premium
$111,000 - $138,000$222,000 - $276,000N/A$31.80 + monthly premium
$138,000 - $165,000$276,000 - $330,000N/A$51.20 + monthly premium
$165,000 - $500,000$330,000 - $750,000$88,000 - $412,000$70.70 + monthly premium
$500,000+$750,000+$412,000+$77.10 + monthly premium

Source: Medicare.gov

Medicare Parts A & B

Both the Original Medicare and Medicare Advantage include Parts A and B. Medicare Part A includes hospital insurance, while Medicare Part B provides medical insurance. 

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Part A

In general, for both Original Medicare and Medicare Advantage, Part A covers:

  • Inpatient hospital care
  • Skilled nursing facility care
  • Nursing home care
  • Hospice Care
  • Home health care

Part B

Medicare Part B covers medically necessary services. This includes services and supplies for the diagnosis and treatment of medical conditions. Additionally, Part B ensures coverage of preventative services for the early detection of illness. Through Medicare, you likely won’t have to pay for preventative services. Other care covered through Part B are as follows:

Medicare Eligibility

Not every American is eligible for Medicare. Medicare is generally available for individuals over 65 years of age, people with disabilities, and those with End-Stage Renal Disease. The Original Medicare and Medicare Advantage offer Parts A and B, hospital insurance, and medical insurance. If you or your spouse has worked and paid Medicare taxes for at least 10 years, you are eligible for premium-free Part A coverage. You can also receive Part A premium-free if:

  • You receive retirement benefits from Social Security or through the Railroad Retirement Board.
  • You are eligible to receive Social Security or Railroad benefits but have yet to file.
  • You or your spouse had Medicare-covered government employment.

You might be able to buy Part A if you or your spouse did not pay Medicare taxes while you worked, and are 65 years of age or older, a citizen or permanent resident of the United States. If you are under 65, you may be eligible to receive a premium-free Part A if you have been entitled to Social Security benefits or the Railroad Retirement Board disability benefits for 24 months or you are a kidney dialysis or kidney transplant patient. 

Medicare Part C and D Frequently Asked Questions (FAQs)

Navigating Medicare and the Health Insurance Marketplace can cause confusion and unanswered questions. Here are a few commonly asked and answered inquiries regarding Medicare plans.

When can I enroll in Medicare?

To join a Medicare health plan, including a Medicare Advantage plan, you must wait until your initial enrollment period when you become eligible, during the standard Open Enrollment period, or during a Medicare Advantage Open Enrollment Period. Open Enrollment is from October 15 to December 7 for coverage beginning the following January 1. Medicare Advantage Open Enrollment lasts between January 1 to March 31 each year. 

Where do I enroll in Medicare?

You may be enrolled automatically if you are eligible for Medicare, while some have to sign up. Be aware of your enrollment eligibility and enrollment dates not to miss your opportunity to receive coverage for the upcoming year. You can apply for Medicare here. If you are not eligible, you can navigate the Health Insurance Marketplace for other coverage options.  Supplemental insurance plans and care management plans are another way of getting covered.

What are premiums, deductibles, and copayments?

You usually have to pay these payments when you acquire a health insurance plan, such as Medicare. 

  • Premium: The monthly fee you pay to keep your insurance
  • Deductible: What you are responsible for paying out-of-pocket before your insurance begins paying for your care
  • Copayments/Coinsurance: The amount you pay at the time of service. This may be a set rate or a percentage of what the service may cost.

Bottom Line

Trying to determine your Medicare eligibility and plan options can be daunting. Speaking with a representative from a Medicare Advantage insurance provider or Medicare representative may help determine which plan is most affordable and suitable for your medical needs. If you are looking for prescription drug coverage, you will want to be sure your plan includes a Medicare Part D plan. 

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