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Breaking Down the Parts of Medicare
Does this really need to be so hard? Medicare is confusing to say the very least. But one of the most important decisions you will make in retirement. Generally, the different parts of Medicare help cover specific services. Most people choose to receive their Parts A and B benefits through Original Medicare, the traditional program offered directly through the federal government. Under Original Medicare, the government pays directly for the health care services you receive. You can see any doctor and go to any hospital that takes Medicare (and most do) anywhere in the country.
In Original Medicare
- You go directly to the doctor or hospital when you need care. You do not need to get prior permission/authorization from Medicare or your primary care doctor.
- You are responsible for a monthly premium for Part B. Some also pay a premium for Part A.
- You typically pay a coinsurance for each service you receive.
- There are limits on the amounts that doctors and hospitals can charge for your care.
- If you want prescription drug coverage with Original Medicare, in most cases you will need to actively choose and join a stand-alone Medicare private drug plan (PDP).
- With Original Medicare you can also purchase a Medicare Supplement Plan to help reduce pout of pocket expenses from copays, and co-insurance.
Note: There are several government programs that may help reduce your health care and prescription drug costs if you meet the eligibility requirements.
With Medicare Supplement Plans or Medi-Gap
As you determine what the right Medicare plan options are for you, it’s important to be sure you have the coverage essential for your health care and retirement needs. On average, Original Medicare only covers about 80% of medical costs. It’s for this reason that some individuals choose to purchase Medicare Supplement Insurance Policies, known as Medigap.
Medigap policies are add-on policies only available to those with Original Medicare and are offered by private insurance companies to fill in gaps where Plans A & B leave off. Medigap can help with expenses such as deductibles, co-payments, or health care if you plan to travel outside the US. Here are some things to know regarding Medigap:
How Medigap Works – Like a typical insurance policy, Medigap is acquired by paying a monthly premium. Medigap plans are delineated by letter from A to N and premiums vary by carrier, but the benefits of specific Medigap plans are standard across the board. So, for example, Medigap Plan B will offer the same benefits no matter which company you choose to purchase it from.
Enrollment Period – The open enrollment period for purchasing a Medigap plan is six months from the first day of the month of your 65th birthday. You must be signed up for Medicare Part B before you can purchase Medigap. If you try to purchase outside this window, you could face higher rates or be ineligible altogether. Each insurance company will have its own rules and policies about enrollment, so it’s prudent to shop around before committing.
Coverage Options – Typically, Medigap plans are used to assist in paying Medicare deductibles, co-payments, co-insurance, and other services not covered by Medicare Parts A & B. More expensive plans may offer additional benefits such as prescription drug coverage, additional hospital benefits, or intermittent in-home health care.
If you would like to discuss whether or not adding a Medigap policy makes financial sense for you, do not hesitate to reach out. We would be happy to discuss your options to ensure you have the right health care plan that factors into your retirement goals.
The Medicare Advantage Route
Unless you choose otherwise, you will have Original Medicare. Instead of Original Medicare, you can decide to get your Medicare benefits from a Medicare Advantage Plan, also called Part C or Medicare private health plan. Remember, you still have Medicare if you enroll in a Medicare Advantage Plan. This means that you must still pay your monthly Part B premium (and your Part A premium, if you have one). Each Medicare Advantage Plan must provide all Part A and Part B services covered by Original Medicare, but they can do so with different rules, costs, and restrictions that can affect how and when you receive care.
It is important to understand your Medicare coverage choices and to pick your coverage carefully. How you choose to get your benefits and who you get them from can affect your out-of-pocket costs and where you can get your care. For instance, in Original Medicare, you are covered to go to nearly all doctors and hospitals in the country. On the other hand, Medicare Advantage Plans typically have network restrictions, meaning that you will likely be more limited in your choice of doctors and hospitals. However, Medicare Advantage Plans can also provide additional benefits that Original Medicare does not cover, such as routine vision or dental care.
Medicare Advantage, sometimes known as “Part C,” is something of a catch-all choice for those who are ready to sign up for Medicare. Medicare Advantage plans are offered by private insurers in conjunction with the Medicare program and can provide you with additional health insurance coverage.
What’s In Them? In addition to signing up for Medicare Part A (hospital stays) and Part B (medical coverage), Medicare Advantage plans offer their subscribers extra features. This frequently, but not always, includes the Medicare Part D prescription drug plan.1
In some cases, Medicare Advantage plans offer coverage for areas not normally offered within regular Medicare plans. This can include dental, hearing, and vision insurance.1
What are the Rules? Medicare pays for a fixed amount of your health care to the company offering your Medicare Advantage (MA) plan. Beyond that, each MA plan requires different out-of-pocket fees. Those fees can vary from plan to plan.1 Depending on your plan, you may have different rules you need to follow when seeking a medical referral to get treatment from a specialist or if you are seeking non-urgent care (even from health care providers within the plan).
It is also important to remember that rules, requirements, and features may change from year to year. It will be important to make sure that those changes line up with any treatment that you need.
Medicare Part D, Prescriptions
Part D – Prescription Drug Plan: Drug insurance plans are purchased through private insurers designed to help cover the cost of prescription medications. What types of medications are covered are determined by a formulary published by the federal government that is subject to change every year. Part D plans cover both generic and name-brand medications, with limitations. Some medications are not covered, in that event, an exception can be filed but there is no guarantee it will be granted.
What if I have an Advantage Plan? While most Medicare Advantage plans offer Part D coverage for prescription drugs, some do not. One example would be for Medicare Medical Savings Account plans. In cases where the plan cannot or chooses not to offer prescription drug coverage, you may have the ability to join a separate Medicare Prescription Drug Plan, depending on the type of plan you enroll in.1
You will likely have a number of questions and concerns as you examine your options for Medicare. The key to Medicare is to determine the Medicare coverage choices that work for your health care needs and budget. If you have questions on planning for your retirement health care costs, please do not hesitate to reach out. We are always here to answer your questions or address your concerns.
© 2021 Medicare Rights Center. Used with permission.
- Medicare.gov, April 1, 2021
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