Updated: May 1

What if you still have private health insurance when you become eligible for Medicare? You might be covered under an employer’s group health insurance plan, for example, or your spouse’s plan.

If you are considering skipping Medicare in favor of private health insurance, there are important factors to consider. Here’s what you should know about health insurance alternatives before you decide.

What is the difference between Medicare and private health insurance?

Medicare, administered by the federal government, offers benefits, premiums, and cost-sharing structures determined at the federal level. These are generally standardized for everyone with similar income, and there are no exclusions for pre-existing conditions. Anyone who qualifies for Medicare can enroll.

On the other hand, private health insurance is offered by private insurance companies. While major health insurance plans may need to comply with the Affordable Care Act of 2010, private insurance companies have some flexibility, particularly regarding cost-sharing.

Can I Have Medicare and Private Health Insurance at the Same Time?

Yes, you can have both Medicare and private health insurance at the same time, known as having “dual coverage.”

Medicare is a federal insurance program for people over the age of 65 and for certain individuals with disabilities or health conditions such as end-stage renal disease (ESRD) and Lou Gehrig’s disease (ALS). On the other hand, private health insurance is provided by private companies.

While having both types of health insurance can provide additional coverage and potentially lower out-of-pocket costs, managing your benefits and claims can be more complex. It’s crucial to understand how the two types of health insurance work together and to carefully review your coverage to ensure that you are getting the best possible benefits for your needs.

Medicare plan coverage through private health insurance

Some optional Medicare plan coverage is available through private insurance companies that contract with Medicare.

• Medicare Advantage plans are an alternative way to receive your Original Medicare Part A and Part B benefits through private, Medicare-approved insurance companies. You’re still enrolled in Medicare, but the Medicare Advantage plan administers your benefits. The plan sets its premiums, deductible, and coinsurance/copayment amounts.

Most Medicare Advantage plans include prescription drug coverage, and many have extra benefits, like routine dental care.

You’ll still pay your Medicare Part B premium, as well as the plan premium. Some Medicare Advantage plans have monthly premiums as low as $0.

• Stand-alone Medicare Part D prescription drug plans provide prescription drug coverage. Medicare Part A and Part B typically don’t cover medications you take at home. Private health insurance plans contract with Medicare to deliver this coverage.

You might also want to learn about Medicare Supplement insurance. This is optional, supplemental coverage that works alongside your Medicare Part A and Part B coverage. It’s sold by private health insurance companies.

Medicare Supplement insurance companies cover some of your Medicare Part A and Part B out-of-pocket costs, like coinsurance, copayments, and deductibles.

Can I Get Private Health Insurance for an Existing Condition?

It depends on the specific private health insurance plan and the existing condition you have. Some private health insurance plans may not cover pre-existing conditions or may have exclusions for specific conditions.

Other plans may cover pre-existing conditions, but with a waiting period before the coverage becomes effective or with higher monthly premiums. It’s crucial to carefully review the terms of the plan and to inquire with the insurance company about any potential exclusions or limitations that may apply to your existing condition before enrolling in a private health insurance plan.

It’s worth noting that under the Affordable Care Act, private health insurance companies cannot deny coverage or charge more because of a pre-existing condition.

What happens if I don’t sign up for Medicare when I’m first eligible?

If you wait to enroll in Medicare Part A and/or Part B, you might pay a late enrollment penalty.

Medicare Part B: The penalty is 10% of the standard Part B premium for each year you could have had Medicare but didn’t enroll. So, if you waited two years to sign up for Medicare, you might pay a 20% higher premium than everyone else for as long as you have Medicare.

Medicare Part A: Most people qualify for premium-free Part A, so you likely won’t pay a Part A late enrollment penalty if you wait to sign up. However, if you don’t qualify for premium-free Part A and you delay enrollment, you may pay 10% more for your Part A premium. You pay this penalty for two times the number of years you could have been enrolled in Part A.

Suppose you decide to use private health insurance alternatives and delay signing up for Medicare Part D prescription drug coverage. You might have to pay a Part D late enrollment penalty. If your private health insurance doesn’t meet the Medicare requirements for creditable prescription drug coverage, you might pay a penalty added to your Part D premium when you do enroll in a plan. Prescription drug coverage is optional, but if you delay it, you could face the penalty.

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Can I choose a private health insurance plan on the Health Insurance Marketplace instead of Medicare?

It’s against the law for someone to sell private health insurance on the Health Insurance Marketplace to you if you have Medicare.

There are, however, exceptions allowing you to buy private health insurance instead of Medicare. These include:

• If you are eligible for Medicare due to having end-stage renal disease (ESRD) and haven’t signed up for Medicare.
• If you haven’t signed up for Medicare because you would have to pay a Part A premium.
• If you aren’t collecting Social Security benefits before becoming eligible for Medicare.

Please note that once you apply for Medicare, you might not be able to purchase certain private health insurance alternatives. Additionally, starting in 2021, Medicare Advantage plans can enroll people with end-stage renal disease (ESRD).

If you have Medicare, you can generally sign up for a Medicare Advantage plan or a stand-alone Medicare Part D prescription drug plan. In some states, you might also be eligible to purchase a Medicare Supplement insurance plan before age 65.

It's important to remember that Medicare Supplement insurance plans do not work with Medicare Advantage plans.

What is the difference between Medicare and private health insurance?

Unlike private health insurance, the Medicare program is administered by the federal government. Benefits, premiums, and cost-sharing structures are determined at the federal level and are generally the same for everyone with similar income.

One of the significant advantages of Medicare is that anyone who qualifies can enroll, without exclusions for pre-existing conditions.

On the other hand, private health insurance is offered by private insurance companies. While major health insurance plans may need to comply with the Affordable Care Act of 2010, private insurance companies have some flexibility, particularly regarding cost-sharing.

The product and service descriptions provided on these web pages are not intended to constitute offers to sell or solicitations in connection with any product or service. Please note that not all products are available in all areas, and all products are subject to applicable laws, rules, and regulations.

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