Learn About Medicare Plans at Oak Street Health

Understanding Medicare Plan Types and How They Work

Medicare offers several different plan types, and Oak Street Health's informational guide explains how each one functions. The main categories include Original Medicare (Parts A and B), Medicare Advantage plans (Part C), and prescription drug coverage (Part D). Each plan type operates differently and covers different services.

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Original Medicare, administered directly by the federal government, consists of Part A (hospital insurance) and Part B (medical insurance). Part A typically covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health services. Part B covers services like doctor visits, outpatient care, medical equipment, and preventive services. People with Original Medicare can see any doctor or hospital that accepts Medicare, without needing to choose a specific network.

Medicare Advantage plans, also called Part C, are offered by private insurance companies approved by Medicare. These plans must cover everything that Original Medicare covers, but they often do so through a network of doctors and hospitals. Many Medicare Advantage plans include additional benefits not covered by Original Medicare, such as dental, vision, hearing, or fitness programs. However, these plans typically require members to use in-network providers, except in emergencies.

Part D is prescription drug coverage, which helps pay for medications. This coverage is available to anyone with Medicare and can be added to Original Medicare or often comes bundled with Medicare Advantage plans. The guide explains how deductibles, copayments, and coverage gaps work within Part D plans.

Oak Street Health's information also covers Medigap (Supplemental Insurance), which is designed to work alongside Original Medicare to help pay for costs that Original Medicare doesn't cover, such as copayments and coinsurance. Unlike Medicare Advantage, Medigap doesn't replace Original Medicare—it works in addition to it.

Practical takeaway: Each Medicare plan type serves different needs. The guide can help you understand the basic structure of each option so you can consider which approach might align with your healthcare situation.

What Different Medicare Plans Cover

Understanding what each plan covers is essential for making informed decisions about healthcare. Oak Street Health's guide breaks down the specific services and treatments included in different Medicare options, which can help you think through your own medical needs.

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Original Medicare Part A covers hospital care, including semi-private rooms, meals, nursing care, and use of hospital equipment during inpatient stays. It also covers up to 100 days in a skilled nursing facility following a hospital stay (with certain conditions), hospice care for people with terminal illnesses, and some home health services when ordered by a doctor. The guide explains how deductibles and coinsurance work with Part A—for example, in 2024, Part A has a deductible per hospital stay, and patients pay coinsurance amounts for stays beyond a certain number of days.

Part B covers doctor services, outpatient care, medical equipment, and preventive services. This includes doctor office visits, emergency room care, lab tests, X-rays, surgical services, mental health services, and rehabilitation therapy. Part B also pays for preventive services at no cost, such as annual wellness visits, cancer screenings, diabetes screenings, and vaccinations. After you meet your Part B deductible, Medicare typically pays 80% of approved charges, and you pay the remaining 20%.

Medicare Advantage plans cover everything that Original Medicare covers, but the specific coverage details depend on the individual plan. Many plans include services that Original Medicare doesn't, such as routine dental cleanings, eye exams, hearing aids, or gym memberships. Some plans cover additional services like transportation to medical appointments or nutritional counseling. However, coverage varies significantly from plan to plan and year to year, so reviewing the specific details matters.

Part D prescription drug coverage varies by plan, but all plans must cover certain categories of drugs. The guide explains how formularies (lists of covered medications) work and how costs are structured with deductibles, copayments, and coverage gaps. Some medications may require prior authorization or step therapy (trying other drugs first) before coverage.

Practical takeaway: Make a list of the healthcare services and medications you regularly use, then compare that list against the coverage details in different plans to see how your needs align with what each plan offers.

Costs Associated with Various Medicare Plans

Medicare plans involve different types of costs, and understanding these can help you compare options. Oak Street Health's guide walks through premiums, deductibles, copayments, coinsurance, and out-of-pocket maximums—the key cost categories in Medicare.

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Premiums are monthly payments for coverage. Most people don't pay a premium for Part A if they or their spouse paid Medicare taxes for at least 10 years. Part B has a standard monthly premium (in 2024, $164.90 for most people), though higher-income individuals pay more. Medicare Advantage plans have varying premiums—some have $0 premiums, while others charge monthly fees. Part D premiums differ by plan and can range from approximately $6 to $100+ per month depending on the drugs covered.

Deductibles are amounts you must pay out of your own pocket before Medicare or your plan begins to pay. In 2024, Part A has a deductible of $1,632 per hospital stay, and Part B has a $240 annual deductible. Medicare Advantage plans set their own deductibles, which may be $0 or several hundred dollars depending on the plan. Part D also has an annual deductible that varies by plan.

Copayments and coinsurance are your share of the cost for specific services. A copayment is a fixed amount (for example, $15 for a doctor visit), while coinsurance is a percentage of the approved cost (for example, 20%). In Original Medicare, after meeting your Part B deductible, you typically pay 20% coinsurance for most services. Medicare Advantage plans set their own copayments and coinsurance amounts.

Out-of-pocket maximums are annual limits on how much you pay for covered services. In Original Medicare, there's no annual out-of-pocket maximum, which theoretically means costs could be unlimited. Medicare Advantage plans have annual out-of-pocket maximums (in 2024, typically around $7,550 for in-network care), meaning once you reach that limit, the plan pays 100% of covered services for the rest of the year.

The guide also explains income-related premiums for higher earners. If your income exceeds certain thresholds, you may pay more for Part B and Part D. In 2024, these thresholds start at $97,000 for individuals and $194,000 for married couples filing jointly.

Practical takeaway: Calculate your potential yearly healthcare costs under different plans by adding premiums, estimated deductibles, and expected copayments or coinsurance for services you use regularly. This gives you a clearer picture of which plan might cost you less overall.

How to Use Oak Street Health's Information Resources

Oak Street Health provides information resources designed to help people learn about Medicare options. The guide itself is a free educational resource that explains how different plans work, what they cover, and what they cost. Understanding what information is available and how to use it can help you gather the details you need to make informed decisions.

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The guide organizes Medicare information into sections that cover plan types, coverage details, costs, and how different programs compare to each other. Each section explains concepts in plain language, avoiding medical jargon and industry terminology that might be confusing. For example, instead of just saying "coinsurance applies after deductible," the guide explains what coinsurance means and gives examples of how it works in practice.

Oak Street Health's information includes comparisons between Original Medicare and Medicare Advantage, showing the trade-offs between each approach. These comparisons highlight factors like network flexibility, additional benefits, out-of-pocket cost limits, and prescription drug coverage. By presenting this side-by-side information, the guide helps you see how different plans compare across multiple dimensions.

The resource also includes information about enrollment periods and how coverage begins. While this doesn't tell you whether you personally can make changes, it explains the general timing and structure of Medicare's enrollment windows. This contextual information helps you understand how the Medicare system operates.

Important to note: Oak Street Health's informational guide does not determine your personal situation. It provides general educational information, but your specific circumstances—your health conditions, medications, doctors, and financial situation—need to be considered separately. The