Over the past 50 years, the Medicare program has helped 43 million Americans get the health care they need while offering choices about how they can receive these benefits.
Choosing Medicare coverage is important to both your health and your budget, but making the right choice can be difficult and overwhelming. When President Lyndon Johnson signed the Medicare Act into law in 1965, he likely never imagined the myriad of options, paperwork, forms, and deadlines we have today.
With the alphabet soup-like options available, it can be confusing or even frustrating to sign up for the right Medicare coverage plan. The good news is that you do not have to do it alone.
This guide will help you decipher all the Medicare coverage jargon and point you in the right direction of the perfect Medicare coverage for you.
The Medicare advisors at Braden Insurance Agency Inc. in Louisville, KY are here to provide free, unbiased expert advice to help you find the best Medicare coverage for your needs and budget.
Table of Contents
- 1 Who is Eligible for Medicare?
- 2 Different Medicare Scenarios: Which One Are You?
- 3 Different Medicare Plans: How to Get Started
- 4 What is Original Medicare?
- 5 What is Medicare Part A?
- 6 What is Medicare Part B?
- 7 What is a Medicare Advantage Plan?
- 8 Types of Medicare Advantage Plans
- 9 Medicare Part D: Do You Need Prescription Drug Coverage?
- 10 What is the Medicare Donut Hole?
- 11 How Much Does Medicare Cost?
- 12 Medicare Supplement Insurance Policies
- 13 How Much Does Medigap Cost?
- 14 When is Open Enrollment for Medicare?
- 15 Medicare Plans: Things To Keep In Mind
- 16 Free Medicare Advice from an Independent Agent
Who is Eligible for Medicare?
You are eligible to join Medicare if…
- You are 65 years or older – regardless of whether you are already receiving Social Security, you are eligible for Medicare at 65, the age of your spouse at the time is irrelevant.
- You are under the age of 65 and qualify for disability.
- You are a U.S. citizen.
- A legal resident who currently lives in the United States or has lived in the U.S. for at least five consecutive years.
Different Medicare Scenarios: Which One Are You?
Each person and situation is unique. That’s why it is so important to understand all your options and devise a plan that is catered to you. Those who are eligible for Medicare coverage, typically fall into one of the following scenarios.
- You are about to turn 65 - If you fall into this category, you’ll likely be receiving a letter from the Social Security office in the mail. It may come several months, or even up to a year before your birthday. This is when it’s important to start thinking about your options.
- You are losing your health coverage from your employer - If you are retiring, and over 65 years old, you may be concerned about how to continue your medical coverage. This is the time that you want to look into your Medicare coverage options.
- You are over 65, but have not signed up for Medicare coverage yet - Some adults work well into their 70s and maintain their employer or independent insurance coverage. If you have not signed up for Medicare coverage, but are interested in the options available to you, we can help with that too.
Regardless of what scenario you are in, Medicare is very specific to the individual. Just because your neighbor has a Medicare plan, does not mean that that same plan will work for you.
Different Medicare Plans: How to Get Started
Almost everyone, especially aging Americans, has heard of Medicare coverage. However, most do not understand what it provides and how it works. At the most fundamental level, there are three basic types of Medicare coverage: Part A, Part B, and Part C.
- Part A and Part B = Original Medicare
- Part C = Medicare Advantage
They cover the same basic services, but they work very differently. If you choose Medicare Advantage, you will have to pick a specific policy from a particular private insurance company. If you choose Original Medicare, it will come from the government.
Once you choose between Original Medicare vs Medicare Advantage, there are other coverage choices to make and supplemental policy options. As you can see, Medicare coverage can (and will) get very confusing very quickly.
We will break it down so it is easier to digest. Just hang in there and keep reading.
What is Original Medicare?
Original Medicare (Part A and Part B) is operated by the government. It provides coverage for and access to doctors, hospitals, or other health care providers for Medicare participants over the age of 65. Part A is designed to cover the cost if you need to stay in the hospital while Part B is designed to cover ongoing health and wellness care and regular doctor’s visits care to keep you healthy.
What is Medicare Part A?
- Medicare Part A insurance helps pay for “medically necessary” care. This is care for an illness or medical condition that involves an inpatient hospital stay. Part A also helps pay for a stay in a skilled nursing facility as a follow-up to a hospital stay. Part A may also cover hospice care for the terminally ill and some skilled home care for the homebound.
What Providers Can I See?
- With Part A Medicare coverage, you can choose any qualified provider in the United States who has been accepted by Medicare and who is accepting new patients. Since Part A offers the same benefits throughout the United States, you are not limited to a particular state or region for your care.
What Part A Does Not Cover
- While Part A helps you pay the costs of hospital care when you are sick, there are some things it will not cover.
- Personal Cost in a hospital - like additional food options, telephone calls, etc.
- Custodial Care - This is the care that helps with the activities of daily life, like eating, bathing, or dressing.
What is Medicare Part B?
- Medicare Part B insurance covers an annual wellness exam plus additional preventive screenings at no cost to you. Part B also helps pay for the ongoing and daily care of an illness or medical condition. This includes doctor’s visits, care in clinics and hospitals without being admitted, laboratory tests, diagnostic screenings, and some skilled nursing care at home if necessary. Part B covers most doctor services you receive as a hospital patient, while the services of the hospital and staff are covered by Part A. Part B is voluntary, but most people sign up when they first become eligible.
What Providers Can I See?
- You can choose any provider who is eligible to participate in Medicare, and who is accepting new patients.
What Does Part B Not Cover?
- It does not cover any care for your eyes, teeth, or hearing. Only in very limited situations does it cover these. It also does not cover medical care you receive outside of the United States, except in a few very limited situations. Part B does not cover the cost of help with the activities of daily life, like eating, bathing, or getting dressed.
For free assistance on what is covered with Original Medicare (and what is not), set up a free, no-stress consultation with one of the independent agents at Braden Insurance.
What is a Medicare Advantage Plan?
Medicare Advantage plans, or Medicare Part C plans, are run by private companies, not the government. They have different combinations of coverage for hospital stays with coverage for doctor visits and wellness exams as well. Many times coverage for Medicare Advantage can be coordinated with your current primary care physician in Louisville, KY.
- Part C coverage provides a network of private companies that offer nationwide coverage for a variety of health and wellness services including emergency, urgent, dialysis and wellness care. Some policies include prescription drug coverage, some do not.
What Providers Can I See?
- The specific terms of these types of policies can vary. You may have to choose between specific doctors and hospitals in your area, but if your current doctor accepts Medicare, you can continue to see them. All Medicare Advantage plans offer nationwide coverage, but is assigned to a “service area”. Your service area is typically your county, state, or region. You need to live within this service area to join.
What Does Medicare Advantage Not Cover?
- A Medicare Advantage Plan covers the same services as Medicare Parts A and B, with the exception of hospice care, which is still covered by Original Medicare.
Types of Medicare Advantage Plans
Part C, Medicare Advantage Plans offer three main policies depending on your individual needs. Coordinated Care Plans, Private Fee for Service Plan (PFFS), and Medical Savings Account (MSA) plans. We will provide an overview of each of these with their options and services. Your medical needs will likely determine what plan is best for you.
Coordinated Care Plans: These plans offer one-stop shopping for all of your health care. They combine hospital care, doctor’s visits, and outpatient care in a single plan. Coordinated Care Plan options include:
- Health Maintenance Organization (HMO) Plans
This only includes doctors who belong to the plan, or hospitals in the network for your care. If you go outside the network for care, (other than emergency, urgent care, or out-of-area renal dialysis), you must pay for your own care.
- Point of Service (POS) Plans
This is a type of HMO plan that allows members the ability to visit doctors and hospitals outside their network for some covered services, usually for a higher copayment or coinsurance.
- Preferred Provider Organization (PPO) Plans
In this type of plan, you are more likely to have more freedom to choose your doctor. You can see doctors outside the network without having to pay the entire cost yourself, although you will usually pay a larger share of the cost of your care.
- Special Needs Plans (SNP)
These are care management plans designed for people with special needs. They combine hospital care and doctor’s visits and other outpatient care in a single plan.
Private Fee-For-Service (PFFS) Plans: The plans put a fixed out-of-pocket cost on doctors and hospitals. The cost you pay varies by plan and provider. The availability of these plans depends on the county and state in which you reside.
Medical Savings Account (MSA) Plans: This plan combines coverage for Medicare Part A and Part B services with the option to add funds to a tax-free savings account to pay for covered expenses tax-free. Once you have paid a deductible, the plan covers your Medicare-covered expenses. This is similar to a typical HSA insurance plan.
Medicare Part D: Do You Need Prescription Drug Coverage?
Simply put, Medicare Part D provides help with the cost of prescription drugs. This coverage is supplemental and not an automatic part of Medicare coverage. Part D coverage is offered through private insurance companies. There are two ways to get Part D coverage. A Prescription Drug Plan (PDP) just covers prescriptions, or you can buy some types of Medicare Advantage policies that include drug coverage. You can decide whether or not to enroll in Medicare Part D when you enroll for Medicare coverage.
- Medicare Part D is designed to help with the high costs of prescription drugs. However, different policies cover different drugs, so it’s important to know which plan covers the medications you need.
For free assistance on picking the right Medicare Part D plan, set up a free, no-stress consultation with one of the independent agents at Braden Insurance.
What Pharmacies Can I Use?
- It depends on your plan. Each one specifies the pharmacies members may use. Some policies offer nationwide coverage or mail order services while others limit your choice of pharmacies in your local area.
What Does Medicare Part D Not Cover?
- The federal government does not cover certain types of drugs at all. Weight-loss drugs, often taken in association with weight loss programs, are one example. However, you can usually find a plan that works with the medications you take on a regular basis. Each policy varies in which specific drugs they cover and which ones they do not. If you are prescribed a drug that is not covered, you are responsible for the full cost.
In most Part D plans, there is a stage of cost sharing called the “donut hole.” We will cover this in the next section.
Up to this point, we have talked about Medicare Part A, Part B, Part C, and Part D. But did you know that there are more parts, (and letters), to Medicare coverage? Stay tuned, we will talk about them in just a second.
What is the Medicare Donut Hole?
The Medicare Donut Hole refers to the coverage gap, or donut hole, in Medicare Part D prescription benefits. In other words, it means there is a temporary limit on what the drug plan will cover for the drugs you need. If you don’t spend more than $3000 on prescription drugs each year, this probably won’t affect you. However, if you’re prescriptions are a major expense, this can drastically affect your healthcare spending.
How It Works: Once you have reached a certain total dollar amount for your drugs (different plans have different dollar amounts) then you will enter the “coverage gap.” While in the “coverage gap” you continue to pay your regular premiums, but the price of your prescriptions goes up. Once you hit the next threshold amount, you exit the coverage gap and return to paying the same amount for your drugs as you did before.
Let’s look at an example.
- In January, you are paying just 5% of your drug costs at the pharmacy.
- By September, you have paid $3,750 total for prescription drugs. (Note: $3,750 is just an example figure and can vary)
- Because you’ve paid $3,750 (threshold #1) – you are now in the coverage gap.
- Instead of paying 5% for your drug costs, you’ll now pay 25% for name-brand drugs and 37% for generic.
- By November, you’ve paid $5,000 in prescription costs, and have reached your threshold #2.
- Now you are out of the coverage gap and you’re back to paying no more than 5% of your drug costs for the rest of the year.
- In January, the process starts again.
Congress has been working to close this coverage gap and provide more consistent coverage to those on Medicare. By 2020, you will pay 25% for both brand-name and generic drugs during the gap.
How Much Does Medicare Cost?
Medicare coverage is one of the most important resources for aging Americans. While the benefits are wonderful, it is not a free program. Recipients must pay for their Medicare coverage via premiums, copays, deductibles, and coinsurance.
Let’s define the difference between each of these types of payments:
- Premium: A fixed amount you have to pay to participate. Most Medicare premiums are charged monthly.
- Deductible: A preset amount that you have to pay your doctor or hospital before Medicare begins to help with your costs.
- Copayment (Copay): A fixed amount that you pay for office visits or services. These are often low, (i.e. $25 for a doctor visit) and they contribute to your deductible.
- Coinsurance: Once you meet your deductible amount, you enter coinsurance where you split your health care costs with the plan on a percentage basis. As in, you would pay 20% and your plan would pay the remaining 80%.
How Much Does Medicare Part A, B, C, and D Cost?
The costs of Medicare can vary significantly between individual policies based on needs and preferences. Here is a chart that spells out the basic costs of Medicare Part A, B, C, and D for 2019.