Starting Medicare can be an intimidating process. There are a lot of options, confusing terminology, and people everywhere trying to sell you something different.
Every year, the Center for Medicare & Medicaid Services (CMS) publishes a new Medicare & You handbook. This handbook thoroughly explains the parts of Medicare, what is covered and how it works. You’ll also come across another book dedicated solely to Medicare Supplement plans: Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.
As the owner of an agency that helps seniors get insurance coverage, I know that these documents’ combined page count of over 200 pages can make this information very daunting. Those who attempt to start reading usually find themselves exhausted and confused. As your research continues, mail will start pouring in with brochures, flyers, postcards, booklets and pamphlets all related to Medicare options. The question is, “Where do I start?” The answer is the basics.
Original Medicare consists of Part A (hospital coverage) and Part B (outpatient coverage). Original Medicare can be used at any doctor or hospital in the United States that accepts Medicare. To see if a specific doctor takes Medicare, you can use the Physician Compare tool.
Original Medicare is then often paired with a stand-alone prescription drug plan (Part D). Original Medicare generally only covers about 80% of outpatient services and has a separate deductible for inpatient care. There is no limit to the 20% coinsurance you are required to pay.
Because of these expenses, experience has shown me that most people who want Original Medicare also enroll in a Medicare Supplement (Medigap) plan to limit their exposure to out-of-pocket expenses.
Medicare Supplement plans, also called “Medigap” plans, are also labeled with letters, like Plan F, Plan G and so on. You cannot have one of these plans without Original Medicare. Medigap Plans supplement the Medicare claims payment to fill in the gap for you. The Supplement is accepted anywhere that accepts Original Medicare and, similarly, allows participants freedom to travel across the country without worrying about whether a provider is in network. They provide coverage for the out-of-pocket expenses left by Original Medicare. When first enrolling in Medicare, there are no health qualifications, and you get to purchase any Medicare Supplement plan available. If you are outside of your initial election period, you may have to qualify with good health in order to get or change Medicare Supplement plans.
In my experience, Medigap plans are generally a good option for Medicare beneficiaries who want to keep Original Medicare but are concerned with the potential out-of-pocket costs they could be responsible for. Health and your individual desire to avoid networks play a large role in whether or not a Medicare Supplement is a good choice for you. Some beneficiaries choose to enroll in and pay for a Medicare Supplement policy even if they are in good health because they know they may not qualify for one in the future.
Medicare Advantage Plans take you from the freedom of any Medicare provider into a network where, depending on the type of plan, you may only be able to obtain services from a privately contracted network of providers. You will still have to pay any premiums for Part A and B to be eligible. When shopping for these plans, it is important to know whether your doctor will be in-network. You will typically have to select a participating primary care doctor and have all referrals coordinated through him or her. Your specialists, too, must be part of the plan’s network.
Medicare Advantage plans tend to have lower premiums than Medicare Supplement plans or none at all. They are pay-as-you-go plans in which the maximum out-of-pocket cost per calendar year is as high as $6,700. While most Medicare Advantage plans, in my experience, do include built-in drug coverage, the drug component is not necessarily tailored to your specific list of medications. Seniors must be very careful to fully investigate how their medications will be treated.
Advantage plans can often have more out-of-pocket costs than Original Medicare with a Medicare Supplement. Typically, each doctor visit, test and hospital admission has a co-payment at the time of service. Medicare Advantage is also a calendar-year contract, so you can change from one Medicare Advantage plan to another without any health underwriting — but only during the Medicare Annual Election Period each year.
I believe that Medicare Advantage could be a good fit for beneficiaries who rarely travel, want low monthly costs and don’t mind paying more out of pocket at the time of service. Those who have health issues and want to choose their doctors and specialists may want to consider options other than Medicare Advantage.
Unlike Medicare Advantage plans with built-in drug benefits, stand-alone Part D coverage can be tailored to your specific situation. You can choose a unique plan based on your current medications and preferred pharmacy. This plan, like the others, can only be changed once per year during the Annual Election Period. Typically, you cannot have a Medicare Advantage plan and a separate Part D drug plan.
Regardless of whether you decide to pay a little more and have the freedom and flexibility of a Medicare Supplement or you decide to forgo the premiums and abide by the network and managed-care restrictions of a Medicare Advantage plan, I always recommend choosing a plan that limits the out-of-pocket expenses of Original Medicare. With Original Medicare alone, you are subject to unlimited coinsurance. But, of course, having some coverage is better than no coverage at all.
Everyone wants to know, “Which plan is best for me?” Some enrollees opt to speak to a representative who can show them all the options, look into their preferences and local market, and offer advice; either way, the answer to that question always depends on your current situation, your medications, where you live and your health, so evaluate how these factors fit into the plans available in your area.
Original Date: Sept 13 2018