Medicare in California

Medicare is a federal health insurance program that provides coverage for individuals aged 65+, younger adults with certain disabilities and people with end-stage renal disease. It consists of Parts A and B, with Part A focused on critical services and Part B on outpatient care. Part A encompasses emergency care, inpatient treatments, skilled nursing home care and home health care. Part B covers costs for outpatient care services, diagnostic tests, medical transportation and vital medical supplies and equipment. Part A’s premium is 0% for most people, while Part B’s monthly premium in 2023 was $164.90. Available data reveals the state of California spent almost 43.3 billion dollars on Medicare in 2021.

Medicare Advantage, or Part C, blends the coverage for Part A and B into one plan, excluding hospice care. As of 2023, California’s seniors can choose from 492 Medicare Advantage Plans, an increase from 2022’s 458. Premiums start at 0% for all plans, rising as beneficiaries add coverage options, such as hearing, dental and vision. Consequently, the state’s median monthly fee is $16.42. Medicare Part D specifically covers prescription drug costs. As several factors determine premiums, such as the individual’s prescribed medications and the drugs’ tier, costs can vary greatly. To manage out-of-pocket expenses, such as deductibles and copayments, seniors can enroll in a Medicare Supplement Plan, commonly known as Medigap.

Original Medicare’s administration falls to the Centers for Medicare and Medicaid Services (CMS), while approved private insurance companies preside over Medicare Advantage. There’s a discernible shift toward Medicare Advantage in California. Figures for 2023 reveal the average number of seniors with a plan exceeded the national average of 48% for the first time. Currently at 50%, it’s grown by 3% since 2022, and the trend appears to be accelerating. The number of Californians qualifying for Medicare Advantage in 2023 rose by 2.59%, but the number of eligible residents who enrolled was 6.78% higher than in 2022.

This guide examines Medicare in California and covers an array of options available to the state’s seniors. These include how to optimize coverage and make Medicare more financially feasible.

Options for Medicare Coverage in California

While Original Medicare provides basic coverage that’s a good fit for many older adults, it’s not sufficient for everyone. California residents have several options for building the best policy for their needs. Along with the regular program that’s administered by the federal government, there are additional options and alternatives beneficiaries can purchase from private health insurance companies. 

Original Medicare (Parts A & B)

Original Medicare’s coverage doesn’t change between regions. Therefore, a senior can get identical care wherever they are in the United States, including when they’re on vacation. However, Medicare’s coverage rarely extends beyond the country’s borders. Consequently, the U.S. Department of State advises Americans visiting other countries to ensure they have appropriate health insurance before they travel. 

Original Medicare beneficiaries settle their health care costs at the time they receive them. The insurance then covers 80% of the eventual fees, with the senior covering the remaining 20%. The deductible for Part A in 2023 was $1,600 and $226 for Part B.

Who Should Consider Original Medicare 

Original Medicare may be a good option for those who: 

• Travel frequently within the United States 
• Don’t need extra benefits such as home-delivered meals and coverage for over-the-counter medication 
• Want to choose their own prescription drug coverage 

Medicare Advantage (Part C)

Medicare Advantage’s flexibility offers eligible seniors more choice than Original Medicare’s inflexible coverage. There are five types of Medicare Advantage Plans, but insurance providers can personalize these, as long as they comply with the rules and regulations set by the CMS. 

Each type of plan caters to a different demographic. For example, PFFS plans enable beneficiaries to choose from a wider network of healthcare professionals, while HMO plans limit choice in favor of lower premiums. MSA combines a high-deductible plan with a medical savings account, empowering seniors who want more control over their health care expenses.

Who Should Consider Medicare Advantage 

Medicare Advantage may be a good option for those who: 

• Want more control over out-of-pocket medical expenses 
• Need additional benefits such as prescription drug coverage and dental care 
• Are generally healthy and may benefit from low premiums 
• Are comfortable with managed care 

The Top 10 Medicare Advantage Plans in California 

California residents have access to numerous highly rated Medicare Advantage plans. The following table features the top Medicare Advantage providers based on the respective number of enrollees. It also highlights how much beneficiaries pay for a given provider’s plans as of August of 2023, as well as the types of plans available. More information on Medicare Part C plans is available on the Medicare Advantage Plans in California page. 

Medicare Prescription Drug Coverage (Part D)

Original Medicare doesn’t pay for most prescription drugs through Part A or B coverage. Instead, seniors purchase separate prescription drug policies, also called Part D coverage. Medicare contracts with private health insurance companies to provide this coverage. There are multiple plans to choose from with varying monthly premiums, which beneficiaries pay in addition to their Original Medicare premiums. While seniors don’t have to purchase prescription drug coverage when they’re first eligible for Medicare, not obtaining this coverage at this time may result in late enrollment penalties they pay for as long as they have Medicare if they enroll later. 

Each prescription drug plan has its own formulary, or list of covered drugs. Formularies are typically split up into tiers. The tier a medication is in determines how much the insurance company pays and how much the beneficiary pays for it. Lower-level tiers are usually made up of generic and low-cost brand name drugs, while higher tiers are composed of more expensive brand name and specialty drugs. In most cases, the lower the tier, the lower the policyholder’s cost-sharing responsibility.

Who Should Consider Medicare Prescription Drug Coverage 

Seniors who may benefit from prescription drug coverage include those who: 

• Currently take prescription medication or expect to in the future 
• Want to avoid late enrollment penalties 
• Want to reduce out-of-pocket prescription drug expenses 

Medicare Supplement Insurance (Medigap)

While Original Medicare provides coverage for many medical costs, seniors may still have significant out-of-pocket expenses. These may include copays, coinsurance and deductibles. Seniors may be able to reduce their cost-sharing obligations by purchasing a Medigap plan. These plans can only be used with Original Medicare. It’s illegal for private insurance companies to sell Medigap plans to those with Medicare Advantage plans. 

In California, there are 10 types of Medigap plans, eight of which are available to new enrollees. Plans are standardized, meaning policyholders get the exact same coverage from a given plan regardless of the health insurance provider they buy it from. For more information on Medigap plans, seniors can refer to the Best Medicare Supplement Companies of 2022 page. 

Who Should Consider Medicare Supplement Insurance 

Good candidates for Medigap may be those who: 

• Have ongoing health issues and expenses 
• Travel overseas often 
• Want to access an expanded network of health care providers 
• Expect to need health services not covered by Original Medicare

Medicare Resources in California

Navigating Medicare’s enrollment process and private options can be challenging, but fortunately, California residents have access to several agencies and programs that can help them find the best coverage for their needs. Through the following resources, beneficiaries can get one-on-one help with understanding their benefits, enrolling in prescription drug coverage and researching Medicare Advantage and Medigap plans in their areas.