What Are the Alternatives To Medicare?

While you're researching health insurance options for age 65 and beyond, you might wonder: are there alternatives to Medicare?

The answer is yes; you may be able to get insurance from an employer, another government program or a private company. Depending on your situation, however, Medicare may be the most cost-effective choice. 

Medicare Advantage (Part C) plans are the most common alternative to Original Medicare (Part A and Part B). In 2024, about half of all Medicare eligible adults were enrolled in a Medicare Advantage plan. You can learn more about Medicare alternative plans and compare Medicare Advantage plans in your local area by visiting MedicareAdvantage.com.

Do You Need an Alternative to Medicare Part A?

Typically, there's no need to find an alternative to Medicare Part A. That's because you'll receive Part A coverage for free as long as you or your spouse paid Medicare taxes for the required amount of time (40 quarters).

Part A pays for inpatient hospital stays, skilled inpatient nursing care in certain nursing homes and hospice. In some cases, it covers some of your home health costs.

If you have a health savings account (HSA), you must stop making contributions after you sign up for Part A. You may choose to delay Part A and Part B to keep contributing; bear in mind that you'll probably also need to delay Social Security. That's because Part A is required for everyone collecting Social Security benefits.

What Are the Alternatives to Medicare Part B?

Medicare Part B covers two types of non-inpatient services: preventative care and medically necessary services and supplies.

If you have Original Medicare, you'll usually pay a monthly premium for Part B. If you don't want Medicare Part B, there are a couple of possible alternatives.

Employer-Sponsored Insurance

If you're still working when you become eligible for Medicare, you can opt to stay on your company's — or your spouse's company's — existing insurance plan. As long as you're working, the government allows you to delay Part B coverage. Plus, you won't need to pay a penalty if you decide to enroll in Part B later. 

Keep in mind that you must delay Part B before your Medicare coverage starts. You become eligible to sign up for Medicare for three months before you turn 65. After you stop working, you can enroll for up to eight months from your last day or the last day of your employer's insurance.

Affordable Care Act Marketplace Insurance

If you don't want Medicare coverage, you can continue to buy a policy through the ACA Marketplace. Keep in mind that as soon as you become eligible for Medicare, you can no longer get a subsidy for Marketplace insurance. This change can make premiums unmanageable, but it depends on your finances.

Military Benefits

If you served or are currently serving in the military, the Veterans Affairs (VA) health care system or TRICARE may be alternatives to Medicare. VA health services covers preventative care, inpatient hospital services and emergency services. You may also qualify for mental health care, assisted living and home health care. In some cases, the VA covers certain vision and dental expenses. Depending on your financial situation and service history, you may have a copay.

TRICARE is another option for current and former service members and their families. Benefits vary based on the plan you choose, but most have copays and deductibles. Some TRICARE plans require you to be enrolled in Medicare Parts A and B.

Indian Health Services (IHS)

If you're an enrolled member of a federally recognized tribe, you may qualify for IHS benefits. These benefits are not health insurance; they simply allow you to get free or reduced-cost care at IHS facilities. You may also need Medicare or another insurance plan to pay for specialists, care at non-IHS locations or services that aren't IHS approved.

Is Retiree Insurance a Viable Medicare Alternative?

Retiree insurance isn't usually considered an alternative to Medicare. That's because most policies don't pay out until Medicare has covered its part — they're designed to supplement Medicare rather than replace it. In fact, your company's insurance provider might not allow you to join a retiree policy until you're enrolled in both parts of Medicare.

Can I Use Medicare Advantage as an Alternative to Medicare?

Although Medicare Advantage plans are sold by private providers, they aren't technically an alternative to Medicare; they're just a different way to get Medicare. You may see companies refer to these plans as "Medicare Part C." 

Each plan includes Part A and B coverage, plus additional benefits as determined by the provider. You must already be signed up for Part A and Part B before you buy a Medicare Advantage plan.

When you enroll in this type of plan, Medicare pays your provider each month. In return, the insurance company assumes responsibility for your medical costs. You may get extra coverage, but you'll probably also be restricted to doctors in the provider's network.

Medicare Advantage is one way to replace Original Medicare. Before you buy, however, make sure to see how the policy affects your choice of health provider, travel healthcare options and out-of-pocket costs. 

Medicare Part D Alternatives

Medicare Part D plans can help you pay for prescription drugs. If you don't want Part D, or if you're not eligible, consider a few alternatives. 

• Employer-sponsored insurance: If you're staying on your employer's insurance plan, you may already have prescription drug coverage. Just make sure to follow the Medicare rules for delaying Part A and/or Part B; that way, you can still enroll in Part D later without a penalty if you change your mind.
  
  
• Medicaid: You may be eligible for both Medicare and Medicaid. If so, all states currently offer prescription drug coverage as part of the Medicaid benefits.
  
  
• Programs of All-Inclusive Care for the Elderly (PACE): If you're eligible for Medicare and Medicaid, you may also qualify for PACE. If so, your prescription and non-prescription drugs will be fully covered.
  
  
• ACA Marketplace plans: If you decide to buy Marketplace insurance instead of Medicare, you may be able to find a plan with drug coverage.
  
  
• Federal employee health benefits (FEHB): Are you a federal employee who has received FEHB for at least five years? You may be able to get FEHB drug benefits in retirement instead of Part D.
  
  
• Veterans benefits: If you're enrolled in the Veterans Affairs (VA) health care system, you most likely qualify for prescription drug benefits. Coverage varies based on your Priority Group; people in Priority Group 1 get medications for free. All other Priority Groups have a small copay for each 30-day supply. This doesn't usually apply to medications for a service-related condition. Keep in mind that there's typically a $700 cap on benefits for everyone who is not in Priority Group 1.
  
  
• TRICARE: Most TRICARE plans come with some type of prescription drug coverage. If you have an existing plan, check the medical benefit or pharmacy benefit sections for details.
  
  
• Indian Health Service: If you qualify for IHS benefits, you'll typically get coverage for prescription drugs from an IHS pharmacy.

Any time you use an alternative to Part D, it's a good idea to make sure it offers at least as many benefits. That way, it counts as "creditable coverage," so you can avoid a penalty if you decide to switch to a Part D plan later.