What is Medicare? It is a government health insurance program for people age 65 and older and for some under 65 with certain disabilities.
What is the deal with Parts and Plans as that is really confusing? Parts A, B, C and D refer to the four subparts of Medicare. “Plans” refers to your plan options (A, B, C…G) if you choose to enroll in a MediGap plan otherwise known as a “Medicare Supplement Plan”.
What is “Original Medicare”? The Medicare program when it first came into existence consisted of only Parts A and B. Parts C and D were added in later.
What is “Medicare Part A”? Part A covers for the most part anything related to hospital services such as inpatient, hospice, skilled nursing etc.
How much does “Medicare Part A” cost? There is no premium for Part A if you paid the equivalent of 40 quarters of Medicare “Qualifying Credits” (QC). A Qualifying Credit means one three month period (January through March, April through June, July through September, or October through December) where you earned enough money at your job to satisfy the minimum required amount as set by the government. If you didn’t earn the credits but your spouse did earn them, then you are covered as well. If you don’t qualify based on work history, there are a couple other ways you can qualify. If you don’t qualify at all, then you can pay a monthly premium to be covered.
What is “Medicare Part B”? Part “B” covers pretty much everything else that the government deems medically necessary except for prescription drugs. Prescription drugs are covered under “Part D”.
How much does “Medicare Part B” cost? The monthly premium for Part B for 2013 is $104.90. There are indications that the premium for 2014 may not change at all or if it does change, it will not be a significant increase.
When and how do I enroll in Part B? You have seven months to enroll in Part B, your birthday month, the three months prior to your birthday month and the three months after your birthday month. If you wait too long to enroll, then you will pay a monthly penalty for the rest of your life unless you have a valid reason to wait such as still being on your employer’s group plan (in most cases). You can enroll by phone or online. The website address is www.socialsecurity.gov/retirement.
What is “Medicare Part C”? Part C otherwise known as “Medicare Advantage” is a program where the government pays insurance companies money each month to take care of you. In San Diego County almost all of the Medicare Advantage programs are HMO’s. In order to entice you to join up with them they have to do two things, one is to offer you at least the same benefits that Original Medicare Parts A and B covers, and two is to give you better benefits and other services not generally covered by Medicare such as gym memberships, dental, doctor transportation etc.
What is “Medicare Part D”? Part D is the prescription drug program implemented by the government to reduce the burden of prescription drugs on consumers. It s not the greatest deal in the world but it is better than nothing. As with anything involving big money and pharmaceutical companies, the result is a set of rules that leaves everyone confused and bewildered wondering who wrote this law. So this is pretty much how it works.
1. In order to participate in a Part D plan, you must either be entitled to Part A and/or enrolled in Part B of Medicare.
2. You have an initial deductible of $310.00 for 2014.
3. You pay 25% of the prescription drug costs between $310.00 and $2,850.00 or a total of $635.00. What that means is that out of the first $2,850.00 in actual drug costs, you pay $945.00.
4. The infamous “DONUT HOLE”. Consumers have a really tough time understanding it because it is confusing. But here it is simplified…..Once you have incurred $2,850.00 in total drug costs, then you hit the donut hole. The donut hole means that once YOU HAVE PAID OUT OF YOUR OWN POCKET $945.00, then YOU pay a much bigger portion of the actual drug costs for quite a while. You pay 72% of the generic drug costs and 47.5% of the brand name drug costs until YOU HAVE PAID OUT OF YOUR OWN POCKET A TOTAL OF $4,550.00. That means after you have already paid out $945.00, you pay big copays until you have paid out of your own pocket another $3,605.00.
5. If you have completed the donut hole and are $4,550.00 lighter in your wallet for the calendar year, then catastrophic coverage kicks in and you pay $2,55 for generic drugs and $6.35 for brand names drugs or a coinsurance of 5%, whichever is greater. So now that you are actually broke, you get some real relief.
6. The good news is that the donut hole will be phased out by 2020 so that sounds like a good thing doesn’t it???…..but of course that doesn’t mean what you think it means…it means that you have a 25% copayment for brand and generic drugs beginning in 2020 so instead of a donut hole, you now have a black hole to watch your money go to the pharmaceutical companies just like it does now.
Why would I choose a Medicare Advantage Program as doesn’t Original Medicare cover everything? NO!!!! As with anything from the government there is a catch and the catch is deductibles for hospital type services and 20% copayments on almost everything else. A Medicare Advantage program will reduce a lot of the copayments and deductibles.
What is a “Medicare Supplement Plan”? A Medicare Supplement program is where you pay a monthly premium to an insurance company and they pick up some or all of the deductibles and copayments such that you pay almost nothing for your health care. There are plans with the names of A, B, C, D, E, F, G etc. I only sell plan F now because that is the full coverage plan and I am not comfortable with putting consumers in a plan that does not have full coverage.
Why is a Medicare Supplement plan better than a Medicare Advantage plan? With a Medicare Supplement plan you can go to any doctor in the country that you want to as long as that doctor accepts Medicare. So if you live in two different states during the year, then you can go to a doctor in both locations and be covered. Medicare Advantage plans are regional in nature which means you have to go your primary care doctor for all of your medical care except for emergencies which are covered throughout the whole country.
Why is a Medicare Advantage Plan better than a Medicare Supplement Plan? The simple answer is $200.00 per month. The Medicare Advantage Plans usually include Part D prescription drug benefits such that you don’t have to buy a separate Part D plan. But if you go with a Medicare Supplement Plan then you do have to buy a Part D prescription drug plan that costs on average about $50.00 per month.
The really big difference is that Medicare Advantage monthly premiums are either usually $0 or perhaps $25 per month with one of the better insurance plans on the market. The typical Medicare Supplement Plan costs $150.00 per month and that premium goes up every couple of years. So if you want the freedom to go to whatever doctor you want wherever you want, then it will cost you $200 per month, $50 for Part D and $150 for the Medicare Supplement policy.
So when you really look at your monthly premium cost for Medicare, if you choose a Medicare Advantage plan, then your monthly premium cost will be your Part B premium of $104.90 and hopefully nothing else. If you have a Medicare Supplement Plan, your monthly premium cost will be your Part B premium of $104.90, your Part D premium of $50 and your Medicare Supplement premium of $150.00 for a total of approximately $300.00 per month.
So which one do you choose: Medicare Advantage or Medicare Supplement? As to your payment of medical bills, with a Medicare Supplement plan, the medical bill will be much less if not $0 in total, whereas with Medicare Advantage you will have deductibles and copayments. But Medicare Advantage plans have lots of benefits in addition to what original Medicare offers such as dental, gym memberships and more. Since Medicare Supplement Plans only augment original Medicare, they do not have those additional benefits. So which way your overall annual cost for medical expenses comes out is hard to say. I think it all comes down to your own personal choice.