If you are looking to enhance your Medicare benefits, you should consider AARP Medicare Plans. Original Medicare, Parts A and Part B, provides comprehensive health insurance coverage that is affordable to most people. However, it doesn't cover all the expenses that you'll face in retirement. The costs that remain can add up quickly, so many people elect to use a private Medicare insurance plan. In this article, we will review AARP Medicare Plans, and see how they can help you save money.

History Of AARP

AARP, which used to be known as the American Association of Retired Persons, was founded in 1958 as an interest group. Initially AARP was focused on helping retirees attain higher quality of life. As time has gone on, AARP has broadened its scope, both in terms of who its members are, as well as the areas in which it advocates. As of 2018, AARP had more than 38 million members. AARP is not an insurance company. However, they have agreed to endorse several United Healthcare Medicare products. They are paid by United Healthcare to do this.

Why You Need Help With Medicare Expenses

As mentioned in the introduction, Medicare will cover most of the cost for your health care, but not all of it. The amounts that you have to pay are often called gaps in your coverage. There are gaps in both Part A, hospital insurance, and Part B, medical insurance.

Medicare Part A Costs

The chief cost with Part A is the Part A deductible. This deductible is $1,600 for 2023. Under the terms of original medicare, this is the amount that you will have to pay before Medicare will start paying for your hospital stay or skilled nursing stay. If you have long hospital or skilled nursing stays, you may become subject to a daily coinsurance payment under part a. It is possible, although somewhat rare, to have to pay the deductible more than once in a year. This is much different from normal health insurance that you may have had in the past, where deductibles are paid once during a year.

Medicare Part B Costs

Part B also has a deductible, although it is quite small, $226 for 2023. Once you have paid this small amount Medicare will cover 80% of the cost for Your Part B care. Part B care can include things like doctors visits, laboratory work, outpatient surgeries, and also bigger ticket items like IV based chemotherapy treatments. You are responsible for 20% of the cost of your care under Part B. Importantly, there is no cap on the amount of spending you can incur during the year. This is also much different from other forms of health insurance you've likely had in your life. Because your costs are potentially unlimited, private insurance companies offer several options for reducing and limiting these costs. AARP Medicare Plans are available in each of the three main types of private plan currently available: 

• Part D prescription Drug Coverage
• Medicare Supplement Insurance
• Medicare Advantage Plans

AARP Part D Prescription Drug Plans

Part D, is the most recent innovation in Medicare. Prior to the enactment of Part D, which took effect in 2006, Medicare did not cover routine prescription drugs. Since Americans are spending an increasing amount of money each year on prescription drug coverage, Part D was created to help pay for needed medications. A Part D drug plan will have a monthly premium, and usually also has an annual deductible.

Besides the annual deductible, you will usually have a co-payment or coinsurance amount for every prescription you have filled. You will pay for prescription medications all through the year. There is no cap on your spending for Part D drugs, although this will be changing in 2024 and Beyond.

AARP Medicare Supplement Insurance Plans

One of the most effective ways to lower or eliminate out-of-pocket spending with medicare is to use Medicare Supplement Insurance, which is also called Medigap coverage. AARP Medicare Supplement plans are some of the most popular in the nation. As mentioned earlier, AARP is not an insurance company, so the Medicare Supplement Insurance plans are actually issued and underwritten by United Healthcare, although they bear the AARP brand name.

Medicare supplement insurance is standardized in 47 of the United States. In each of these states, there are a total of 10 standardized Medigap plans. Each one of these plans has a slightly different level of benefits, so you can choose the level of coverage best fits you.

Remember that these are standardized throughout the country, so Plan G in Florida, gives the exact same benefits as Plan G in Idaho. The same is true for the other nine standardized Medigap plans. This feature makes it very easy to compare Medigap plans from one insurance company to another. The only difference between them is the costs in terms of premium, the financial strength of the insurance company, and also their customer service reputations.

It's very simple to use your Medigap coverage. Anytime you go to the doctor or hospital, you will pay with your Medicare card as well as your AARP Medicare Plan card. Medicare remains the primary payer, so they pay first. Your provider will also bill your AARP Medicare Supplement Plan. How much your Medicare Supplement Plan will pay depends on the level of coverage you chose. More comprehensive plans like Plan G will pay 100% of the cost that you would normally be responsible for, as long as you have already met the part B deductible for the year. Other, less comprehensive Medigap plans, will pay a smaller percentage of your costs.

AARP Medicare Advantage Plans

The last option for limiting your costs is Medicare Advantage coverage, which falls under Part C of Original Medicare. Part C combines Parts A, B, and in some cases D, into one plan, which is administered by a private insurance company. In this case, United Healthcare is the insurance company. Some, but not all of their Medicare Advantage plans are branded with the AARP name.

Medicare Advantage plans usually come in one of two forms: HMOs, and PPOs. HMOs are the most common kind of Medicare Advantage Plan. They also tend to have the lowest fees, but also have the most restrictive specifications. With an HMO you must only see doctors and providers that are in the plan’s network. If you see non-network providers, your HMO plan will not pay any part of the cost, and you will have to pay full cost out of pocket.

By contrast, with a PPO plan, you can choose to see in network providers, or out of network providers. The plan will pay benefits in either case, but your out of pocket expense will likely be larger for out of network providers. Still, they do provide more flexibility than an HMO plan.

Whether you use an HMO or a PPO, you can expect to pay fixed co-payments for most services and procedures you use, although you may occasionally encounter a coinsurance percentage. You will pay these copayments and coinsurance amounts throughout the year. All the money you spend is recorded, and counts towards your annual out of pocket maximum (OOPM). You're out of pocket maximum is a hard limit on your spending during the year. If you spend an amount equal to your out-of-pocket maximum, your Medicare Advantage plan will pay 100% of the cost for your care for the rest of the year. This is an important feature, which is not available from Original Medicare.

Besides having an out-of-pocket maximum protection, most Medicare Advantage plans offer some combination of extra benefits, which are coverages for things not normally covered by original Medicare. Some of the more popular extra benefits include routine vision and dental care. In addition to this, many Medicare Advantage plans also provide part D drug coverage, these are known as Medicare Advantage Prescription Drug Plans (MAPD). MAPD plans incorporate the medical and prescription drug benefits into one plan. There is one premium, although there may be a separate drug plan deductible, even if the Medicare Advantage plan does not have a deductible for medical care.

FAQ About AARP Medicare Plans

Do I need to be an AARP Member in order to get an AARP Medicare plan? 

It depends. If you want Medicare supplement insurance that has the AARP brand, you will have to be a member when you apply for your coverage. Once you have your coverage in place, you are not required to maintain an active AARP membership. If you are interested in an AARP branded Part D drug plan or Medicare Advantage plan, you do not have to be an AARP Member to get that coverage.

When can I enroll in AARP Medicare plans? 

Your first opportunity to enroll in AARP Medicare plans will occur when you enter Medicare for the first time. Usually this happens when you turn 65, although it can be later than that if you continue working beyond age 65. It can also occur earlier than 65, if you qualify to enter Medicare early based on a health condition or disability status. In addition to your initial eligibility, Medicare also has an Annual Enrollment Period (AEP), which occurs from October 15th to December 7th each year. During AEP, you can enroll in or switch between Medicare Advantage and Part D drug plans.

There is no annual enrollment period for Medicare supplement insurance. Theoretically, you can enroll in a plan, or change plans, at any time during the year. However, there could be certain underwriting requirements that you need to meet. The best time to get Medicare supplement insurance is during your Medigap open enrollment., which happens when you first turn 65 and enter Part B. It lasts for six months.