Medicare in California

Medicare is the health insurance program run by the federal government that provides coverage to retirees aged 65 and over and those with certain disabilities. As of 2020 nearly 6.4 million people, or 16% of California’s total population, are enrolled in Medicare. Of those people, about 2.8 million have Medicare Advantage, which is currently outpacing Original Medicare in growth. The number of Californians who rely on Medicare is steadily increasing and grew by over 11% between 2016 and 2021. Every year, the state spends approximately $65 billion on this program, or $11,833 per enrollee.

Original Medicare is made up of several parts. Part A provides coverage for expenses such as hospital stays, nursing home care and limited home health care services. This coverage is available at no cost to those who paid (or whose spouses paid) Medicare payroll taxes for a certain number of years. Part B covers medical services such as preventative care, outpatient services and medical supplies. The premium amount in 2022 for Part B is $170.10. 

In addition to the federally run Medicare program, there are privately run plans that seniors can enroll in for customized coverage. Medicare Advantage, also called Part C, offers Medicare-compliant plans administered by private health insurance companies. These plans include all the benefits in Parts A and B (except hospice care, which is covered by Medicare Part A ) and often have additional coverage for expenses such as prescription drugs, vision, dental and hearing services. Part D is prescription drug coverage. This can be added to Original Medicare, along with certain Medicare Advantage plans. Finally, Medicare supplement plans, or Medigap, are plans that private health insurance companies provide to reduce policyholders’ out-of-pocket costs.

This guide provides comprehensive information on Medicare in California, including an overview of the options residents have for personalizing their coverage and a list of resources to help seniors make informed decisions regarding their health insurance.

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 is administered by the Centers for Medicare & Medicaid Services and is open to seniors aged 65 and over, along with those under 65 years old, but with certain disabilities or end-stage kidney disease. It includes two parts. Part A covers inpatient hospital care, nursing home and skilled nursing care, hospice and home health care. Part B, or medical coverage, pays for medically necessary goods and services such as durable medical equipment, mental health services and emergency medical transportation. 

Unlike most private Medicare plans, Original Medicare’s provider network isn’t limited to the beneficiary’s geographic region, making it easier to obtain services while traveling within the country. In most cases, Medicare doesn’t pay for health services the individual receives outside the United States.

Under this program, seniors pay for services as they receive them. They must pay an annual deductible, which is $1,556 for Part A and $233 for Part B in 2022. After they’ve paid this amount, Medicare covers all eligible services at 80%. Beneficiaries pay the remaining 20% out of pocket. 

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 is another way to get Medicare coverage. These plans are administered by private health insurance companies and include all the same benefits as Original Medicare (except hospice care, which is covered by Medicare Part A). Along with this basic coverage, Medicare Advantage plans often provide additional benefits such as prescription drug coverage, enrollment into fitness programs such as SilverSneakers, over-the-counter medications and transportation for nonemergency medical services. Unlike Original Medicare, Medicare Advantage plans often have annual out-of-pocket limits, helping older adults anticipate their annual medical expenses.

There are four main Medicare Advantage plan types. These include Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Private Fee For Service (PFFS) plans and Special Needs Plans (SNPs). Rules regarding eligibility, premiums, deductibles, copayments, coinsurance, network providers and getting referrals to see specialists vary from one plan to another.

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 April 2022, 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.