Understanding The Parts Of Medicare
Are you or a loved one ready to enroll in Medicare? Medicare has several different parts and it can be confusing to figure out what you need. That’s why we’re going to break it down quickly for you today. When you’re ready, you can schedule a free appointment with our sister company, Medicare Health Benefits, to have an agent come to you, answer your questions, and help you pick the best plan for your needs.
Original Medicare (Parts A and B)
Every Medicare beneficiary will begin their Medicare journey with “Original Medicare.” Original Medicare comprises of Medicare Part A and Medicare Part B. Most people are automatically enrolled in Part A when they turn 65, and some people are automatically enrolled in Part B.
Part A covers hospital care, skilled nursing facility care, nursing home care, hospice, and home health services. If you or your spouse paid Medicare taxes while working or if you are eligible for retirement benefits from either Social Security or the Railroad Retirement Board, you will not have to pay a premium for Medicare Part A. If you do not qualify for premium-free Part A, you’ll pay up to $422 each month (2018). If you do not enroll when you become eligible, you will face up to a 10% premium increase for enrolling late.
Part B covers medically necessary doctor services and treatments as well as preventive services like yearly wellness visits. It also covers laboratory tests, x-rays, emergency transportation (if medically necessary), durable medical equipment, mental health, and partial hospitalization. Every beneficiary will have a Part B premium. Most beneficiaries will pay the same standard amount ($134 in 2018). Once you meet your deductible, you’ll only have to pay 20% of the Medicare-approved amount for eligible medical services.
Part C (Medicare Advantage)
Part C, otherwise known as Medicare Advantage, is a combination of Original Medicare (Parts A and B) and additional benefits like prescription drugs, dental and vision, and fitness programs. It’s a great way for you to combine all the benefits you need into one plan and pay just one premium each month. Like any other plan, you will be responsible for paying a deductible before your plan begins to cover you. You may be able to find a plan that has a $0 deductible or a low deductible in exchange for a high monthly premium. You will also likely be responsible for copayments when you visit your doctor, hospital, or pharmacy. Copays can range from a few dollars to a few hundred depending on your service. Generally, you’ll be responsible for about 20% of the total cost.
Medicare Advantage plans are highly customizable. There are six types. You may not be eligible for all six, but you will likely have a few options to choose from.
- HMO Plans (Health Maintenance Organization) – You’ll have to select one primary physician to visit.
- HMO-POS Plans (Point-Of-Service) – You’ll select one primary physician, but you have the freedom to visit any specialist in your network for a fee.
- PPO Plans (Preferred Provider Organization) – You don’t have to choose a primary physician, but your costs will be lower if you see one who is in-network.
- PFFS Plans (Private Fee-For-Service) – You will not need referrals or a primary physician, but not many doctors accept PFFS plans.
- SNP (Special Needs Plans) – Only for those who are eligible for both Medicare and Medicaid, live in a nursing facility, or have a chronic illness or disability.
- MSA (Medical Savings Account) – Tax-free savings account for your medical bills. Medicare will deposit money into your HSA. You can use that account to pay for medical expenses.
Part D (Prescription Drug Plans)
There are two ways to get prescription drug coverage: through a Medicare Advantage plan, and through a Part D, or PDP (Prescription Drug Plan). If you do not enroll in some form of prescription drug coverage when you are eligible, you will be held liable for a late enrollment penalty fee.
Part D coverage is not the same for every plan. Each plan will have a formulary, which is a list of all the prescription drugs that it covers. The formulary will be divided into tiers according to cost level. Generally, tier one comprises of preferred (cheapest) generic drugs, and costs increase as you get to tier five, which usually includes specialty brand-name drugs.
If you choose to invest in a Medicare Advantage plan, your prescription drug premium will be included in your medical premium. If you choose to keep your Original Medicare and enroll in a separate prescription drug plan, you will have to pay a separate premium. Unless you are eligible for LIS (low-income subsidies), you will be responsible for anything from $13 to $80 per month depending on your income.
Medigap (Medicare Supplements)
Medicare Supplement plans are often confused with Medicare Advantage, but they are vastly different. While Medicare Advantage is a way to add coverage options (dental, vision, prescription drugs, etc.) to your plan, Medicare Supplement is a way to add financial benefits (help to pay for your copayments, coinsurance, and deductibles).You may hear Medicare Supplements referred to as “Medigap” because they can help close the gap between what you need to pay and what you have coverage for.
Medigap plans, much like Medicare Advantage plans, all vary. Unlike Medicare Advantage plans, Medigap plans are organized by letter. Carriers label their plans by A, B, C, D, F, G, K, L, M, and N. Each letter represents different coverage levels and costs. Some Medigap policies provide coverage for prescription drugs as well. If your Medigap policy covers prescription drugs, you cannot also have a separate prescription drug plan.
Medigap policies will require a monthly premium that is separate from your Part B premium. Each letter option comes with different costs. Some have higher deductibles and lower premiums, and some are the reverse. You’ll have to pick the solution that works best for you. Additionally, some plans have out-of-pocket maximums while others don’t, and some plans cover skilled nursing while others don’t. It all depends on your needs.
Ready to enroll? Give our sister brand Medicare Health Benefits a call at 1-844-431-1832.