What Are the Benefits of Private Health Insurance Over Medicare? - Zupnick Associates

(by Andres Rojas)

When talking about the US healthcare system, it’s impossible not to draw comparisons between Medicare and private health insurance plans.

Both have set costs for premiums, copayments, and deductibles. However, even though private insurance plans are marginally more expensive, their comprehensive coverage is enough to offset their costs.

In this article, we’ll explore the benefits of private health insurance over Medicare. But before we start, let’s start by defining what Medicare is in 2021.

What Is Medicare?

Medicare is a federal health program that covers people who are aged 65 or over, or have a chronic disability or health condition. The program is composed of multiple parts:

  • Part A (hospital insurance): Covers hospital and hospice care, emergency room visits, and both inpatient and home healthcare.

  • Part B (medical insurance): Covers preventive healthcare, diagnostic tests, preventive screenings, medical equipment purchases, and treatment costs.

  • Part C (Medicare Advantage): This is a private health plan offered by insurance companies that bundle Part A and Part B Medicare (also known as original Medicare) into one plan that can also include services like dental and vision care not covered by a traditional Medicare plan.

  • Part D: This is an add-on plan that offers prescription drug coverage.

  • Medigap: Are private plans offered by insurance companies that can cover the costs of Medicare premiums and copayments.

As you can see, Medicare itself (Part A and B) offers limited medical coverage. Indeed, the program’s multiple downsides mean it relies on private insurance companies to plug the gaps.

Is ‘Medicare for All’ Really the Solution?

When polled on the subject, many Americans have expressed their support for extending federal health coverage to all citizens. Opinions are strongly divided by partisan lines, though, with as many as 87% of Democrats favoring national healthcare for all.

However, while extending federal health coverage beyond the needy seems good on paper, in practice it has many limitations – namely, the rising taxes and disruption to health coverage it could entail. 

We might get nationwide free healthcare in the future, or we might never get it at all. Whatever the outcome is, one thing is for sure: private health insurance has so many benefits that it’s not going anywhere.

Benefits of Private Health Insurance Over Medicare in 2021

Prescription Drug Coverage

One of Medicare’s biggest weaknesses is its lack of prescription drug coverage. Since neither Plan A nor B covers the costs of drugs, individuals must either cover the expenses out of their own pockets or buy a Medicare Part D plan.

However, even Part D excludes certain prescription drugs – such as vitamins or fertility drugs – that are necessary for general health purposes. Private insurance plans, on the other hand, are highly customizable and almost always include prescription drug coverage.

Dependent Coverage

Medicare offers affordable health coverage to individuals who are at least 65 or have an eligible health condition. Unfortunately, this coverage doesn’t extend to an individual’s dependents.

Private health plans have no such limitation. Indeed, individuals who buy private insurance can usually extend their health coverage to their loved ones, regardless of their age. Moreover, ACA guarantees that private insurers can’t refuse coverage or charge more to individuals whose dependents have a pre-existing condition.

Vision, Hearing, and Dental Care

Original Medicare doesn’t cover most vision, hearing, and dental care costs. Covered individuals can solve this issue by buying a Medicare Advantage plan, but this can be a costly solution.

Private health insurance plans, on the other hand, are highly customizable. So whether they need regular eye exams, glasses, hearing aids, or oral surgery, individuals can find plans tailored to their needs.

Limited Out-of-Pocket Costs

Private health plans have an in-built out-of-pocket costs limit. Once covered individuals have reached this amount within a calendar year, the private insurer will pay for that individual’s health costs for the rest of the year.

Medicare, on the other hand, doesn’t put a cap on out-of-pocket expenses. So, if an individual needs extended hospitalization but doesn’t have a Medigap plan, all the costs will come out of his/her own pocket.

Private Insurers Offer Healthcare for All

While the ‘Medicare for All’ debate will likely rage for many years, private insurance will always be there to plug any coverage gap left by the federal government. So regardless of which side of the debate you’re on, make sure you peruse the market until you find a plan that perfectly suits your needs.

Don’t know where to start? Then contact us, and let our benefits experts find the best health insurance plan for your company.

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