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Is Medicare Better Than Employer Insurance?

One thing you don’t have to worry about is whether you’ll be happy with your Medicare coverage after your employer insurance ends. You might be surprised to know that when it comes to health coverage, people are more satisfied with Medicare than they are with employer insurance or other private insurance plans.

Most people are very satisfied with Medicare

Gallup surveyed Americans to gauge their happiness with their health insurance, and those with Medicare or VA benefits were more satisfied overall than those with any other type of insurance—even union and employer insurance. In fact, over three quarters who had Medicare were happy with the way their health care worked for them.

Primary Insurance Type % Satisfied with the way the health system is working
Military or Veterans 78
Medicare 77
Medicaid 75
Union 71
Current or former employer 69
Plan fully paid for by you or family member 65
Uninsured 41

 

How will paying change when I switch to Medicare from my employer insurance?

For most people, one of the biggest changes will be paying a monthly insurance premium for Medicare Part B. If you had employer insurance or health coverage through a union, your employer or union may have taken care of paying most of your monthly premium. Most people qualify for premium-free Medicare Part A, but generally most people pay the Part B premium.

If you’re getting retirement benefits from Social Security or the Railroad Retirement Board, your premiums are usually automatically deducted from your check. If you aren’t drawing benefits, you may get a monthly bill from Medicare. You can pay by check or arrange automatic withdrawals from a checking or savings account.

How will hospital and medical coverage change when I switch to Medicare from my employer insurance?

Depending on how you choose to get your Medicare coverage, you may have other changes. For example, if you choose Original Medicare (Part A and Part B), your health claims are handled a bit differently. Part A generally covers inpatient services at a hospital or skilled nursing facility. You pay a deductible for each benefit period; if you have multiple admissions, you may pay the deductible several times.

Part B covers your outpatient care, as well as doctor visits and other professional services while you’re in the hospital. You pay one annual deductible for Part B. There is also usually a 20% coinsurance amount for covered charges.

If you choose Medicare Advantage, your plan may look more like your employer insurance. Medicare Advantage is private insurance contracted with Medicare. You may or may not pay a separate monthly premium to your insurance company in addition to Part B. You may have an annual deductible with your plan, but you only pay one, compared to separate deductibles for Part A and Part B. Many Medicare Advantage plans use a copayment system. Instead of paying a percent of your covered costs, you pay a flat fee each time you get care. Medicare Advantage plans also have an annual out-of-pocket maximum, similar to most employer insurance plans. Even if you have catastrophic health expenses, your costs are capped each year.

Prescription drug coverage is another change from most employer insurance plans. If you choose Original Medicare, most prescription drugs you take at home aren’t covered. You’ll generally need to buy a separate plan for Part D coverage of prescription drugs. Most Medicare Advantage plans cover prescription drugs in the same way employer insurance plans do; you won’t have a separate premium for the coverage.

Do I lose benefits when I switch to Medicare from employer insurance?

It depends on the coverage you had with your employer insurance and the type of Medicare coverage you choose. Many employer plans include benefits for routine vision and dental care, which isn’t available with Original Medicare. However, you may be able to add a stand-alone plan to help offset those costs.

Many Medicare Advantage plans also include coverage for routine vision, dental, and even hearing care. In fact, Medicare Advantage plans may even offer benefits you don’t have through your employer insurance plan. For example, some Medicare Advantage plans offer:

  • gym and fitness benefits,
  • the services of a care coordinator,
  • and even a 24-hour nurse hotline

In 2018, Medicare gave approval for Medicare Advantage plans to offer expanded home health benefits. As a result, some plans cover:

  • home health aides,
  • meal delivery,
  • home safety equipment,
  • over-the-counter medications and devices,
  • and even non-medical transportation to and from the doctor or pharmacy.

Most people have enough Medicare plan choices to find coverage equal to the benefits they had with employer insurance. For example, if you choose Original Medicare, you can combine it with a Part D Prescription Drug Plan and a Medicare Supplement insurance plan to keep out-of-pocket costs to a minimum.

If you prefer a plan more similar to employer insurance, you should be able to find a Medicare Advantage plan in your area that gives you a similar level of coverage and cost-sharing. It’s a matter of comparing your options and finding the plan that works best for you.

To find a Medicare plan in your area, enter your zip code on this page.

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