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Marketplace, Medicare or Employer – Sponsored Coverage – Which to Choose?

Kathy Mock

Posted on 12/08/2020

by Kathy Mock

Marketplace, Medicare or Employer – Sponsored Coverage – Which to Choose?

Medical insurance; you don’t want it, but you must have it as well. The three major types of coverage plans you can opt for include the health insurance Marketplace coverage, Medicare, and employer-sponsored health coverage.

Here, you will find the differences between the three, along with a quick overview of which one to choose, if given the option.

Marketplace Coverage - What Is It?

Health insurance Marketplaces, also known as Exchanges, are places where health insurance companies and plans are organized and managed. The idea is to make the market more competitive for people who aren't eligible for Medicare or employer-sponsored coverage. Think of it as a "shop" for coverage where you can sort plans based on your income.

Those who have health coverage via Medicare don't have to worry about Marketplace coverage, the choices involved or the benefits. These marketplaces are regulated by the State or the Federal government, depending on the state.

What is Medicare?

Medicare is a health insurance program for anyone over 65 throughout the US. The program began in 1966 and in 2018, covered about 17.8% Americans. Apart from the elderly and veterans, younger people with disabilities or End Stage Renal Diseases are also eligible for Medicare.

There are two parts of Medicare; Part A and Part B. These cover the overall hospital and complete Medicare insurance, respectively. We’ll discuss Medicare in a separate blog for details.

What is Employer-Sponsored Health Coverage?

Employer-sponsored health insurance is a ‘job benefit’ offered by employers. It is a health policy chosen and bought by employers for eligible employees. Most of these plans are group plans and are also applicable for employees’ dependents. This is the most way Americans get insurance. A major benefit is that the cost of premiums is usually shared with employees in such plans.

Which Insurance Plan to Go For

All three plans have their own merits and demerits. When choosing you should take into consideration the premiums for coverage and your personal health care needs.

The standard monthly premium for Part B Medicare was $198 in 2020 (per annum). For employer-sponsored plans, on the other hand, according to Kaiser Family Foundation, in 2019 the annual premiums amounted to $7,188 for individuals and $20,576 for families. This cost is shared by the employers and employees and therefore the impact on you, the individual, isn’t as much.

At the same time, the average marketplace coverage (non-subsidized) for the benchmarked plan (silver) in 2020 amounted to $462 per month ($5,522 per annum). With subsidies, it costs $199 per month, or $2,388 per annum. There are cheaper options, as well as more expensive ones. But the problem is that the brunt of its financial load falls on you alone, unlike the employer-sponsored plans.

We’ll discuss each of these in more detail, along with offering more insights on how they work, in thier separate blog posts.

If you’re still confused about your medical coverage – either Marketplace coverage, Medicare or employer-sponsored health insurance, we recommend you call or write to us and say hi! We’ll be glad to help you sort all your medical insurance issues, along with any other retirement or financial planning issues you may have.

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