Health Insurance vs Medicare: Which is Best in 2021?

Health Insurance vs Medicare: Best Comparison.

Every one of us has different healthcare needs depending on which one has to purchase a certain type of insurance plan. Private insurance companies generally provide a wide range of health insurance plans. Meanwhile, Medicare parts A and B are offered by the federal government. However, many private insurance companies provide Medicare Advantage and Medicare Supplement plans on behalf of the government.

So, what are health insurance and medicare?

Health Insurance vs Medicare:

Medicare

Medicare is a US-based health insurance program offered by the federal government. It started operating in 1966 under the Social Security Administration providing health insurance for Americans of 65 years old or above. Currently, it is administered by the Centers for Medicare and Medicaid. The federal government offers Medicare parts A and B that are also known as Original Medicare. With this insurance plan, you get coverage for hospital and medical expenses.

Health Insurance

A health insurance plan generally covers your cost for all hospital expenses, pre and post-hospitalization expenses including ambulance fees. It offers you and your family protection against unexpected medical expenditures. There are various private insurance companies that provide health insurance plans.

Now, let’s see what makes health insurance and medicare apart from each other.

Difference between Health Insurance and Medicare

Health insurance and Medicare might differ based on the following factors –

  • Premiums
  • Benefits
  • Dependents
  • Deductible
  • Out-of-pocket maximums

Health insurance Premiums

Health insurance premiums may vary based on the policyholder’s age, location, and type of plan. Sometimes, high deductible plans cost less per month, whereas low deductible plans have higher costs. Many people buy Medicare Advantage plans from private insurance companies, which is a combination of parts A and B with additional coverage. This is more cost-effective than Original Medicare.

Benefits

You can buy a health insurance plan to cover your expenses for medical as well as prescribed drugs. On the other hand, Original Medicare does not cover prescribed drugs. However, you can purchase a Medicare Part D separately that will provide you prescription drug coverage.

Dependents

Private insurance companies offer health insurance plans for both an individual and his/her family members. You can even include your family members under the same policy with no age restrictions. Whereas, Medicare is only offered to individuals of 65 years age or above. Therefore, if you have dependent on your family, it is better to opt for a health insurance policy.

Deductible

The deductibles of health insurance plans differ from one another. High deductible plans often cost less than low deductible plans. Here is an example of the average deductible for a health insurance plan and Original Medicare:

Plans Deductible
Health Insurance $1,655
Medicare Part A $1,408
Medicare Part B $198

Out-of-pocket Maximums

Health insurance plans come with out-of-pocket maximums. Once an individual pays for the coinsurance fees, Medicare will pay cent percent for that benefit. Whereas Original Medicare does not have an out-of-pocket maximum, although Medicare Advantage does often offer this benefit.

You can opt either for a health insurance plan or Medicare Parts A and B, or both. If you have both the policies, Medicare will establish a primary and secondary payer. The primary payer will pay the claim first, while the secondary payer will pay the rest, which the primary payer does not cover. You should select the correct option based on your healthcare needs.

Frequently Ask Questions:

Is Medicare considered a private insurance?

Medicare Part A and B or Original Medicare are also known as traditional Medicare. The U.S. government provides Medicare to the Americas of 65 years age or above. Part A is hospital insurance while Part B provides medical insurance. Since Medicare is provided by the federal government, it is not private insurance.

How to qualify for Medicare benefits?

You have to meet the following requirements to be able to enjoy Medicare benefits:

  • At least 65 years old or above
  • If under 65, an individual can be eligible based on disability or under other special conditions
  • A citizen of the U.S. or a legal resident living in the U.S. for at least 5 years.

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