If you’re in the process of deciding how you will get your Medicare benefits, or you’re just doing some health insurance research for a loved one who may be eligible for Medicare, you’ve no doubt noticed that there are a lot of coverage options. At Roberts Insurance Group, we like to keep things simple and easy, so we’ve compiled this primer that breaks down the basics of Medicare.

What is Medicare?

Medicare is a federal health insurance program for: people who are 65 and older, certain people under 65 who have disabilities, and people with end-stage renal disease. Medicare is broken into four parts: A,B,C, and D.

• Having to evaluate any health insurance plan can be reason to avoid dealing with it, but the addition of governmental bureaucracy may be enough to baffle the most savvy consumer.

  1. Medicare Part A covers inpatient care, skilled nursing facilities, hospice and home health care.
  2. Medicare Part B covers outpatient care–including physician services, durable medical equipment and drugs given in a clinical setting (like chemo). Part B does have a premium associated with it. You must have Part B once you retire or lose your group coverage—otherwise you’ll suffer a penalty.
  3. Medicare Part C is a Medicare Advantage Plan that you can purchase from a Medicare approved private insurance company and have in place in lieu of traditional Medicare Parts A and B. It will have a premium associated with it; it may or may not include prescription drug coverage; and, even if you chose it, you still must pay your Part B premium and any income adjustments, no matter what.
  4. Medicare Part D is prescription drug coverage purchased from Medicare approved private insurance companies and will have an associated premium.
  5. Medigap/Supplemental policies can be purchased from private insurance companies. These have an associated premium and “wrap around” traditional Medicare Parts A and B, providing a benefit beyond what Medicare pays.

It can get pretty confusing, so we made this handy chart breaking down Medicare:

Original Medicare vs. Medicare Advantage

If you’re deciding between Original Medicare and Medicare Advantage, here are some key things to keep in mind:

Cost

Your Premium: is the amount you pay for your health insurance coverage each month. Original Medicare and Medicare Advantage plans generally have different monthly premiums. In Original Medicare, you will pay a monthly Part B premium of $135.50 (in 2019). You may also have to pay a Part A premium if you did not pay enough Medicare taxes while you were working.

Many Medicare Advantage plans offer $0 or low premiums. These amounts will vary by plan and by geographic location, so be sure to check the specific plans available in your area.

Coinsurance: is the percentage you pay for a covered health service—it varies based on the total cost of the services you receive.

• Original Medicare usually requires a 20% coinsurance, so beneficiaries are responsible for paying 20% of the total bill. This can vary based on the amount of the final bill, which can make planning ahead a challenge.
• Medicare Advantage plans usually have set dollar amounts for most services and procedures, which allows their members to plan ahead.

The maximum out-of-pocket (MOOP) is the most you are responsible for paying in a year. Copays for doctor visits and hospital stays count towards the MOOP.

• Most Medicare Advantage plans have a MOOP. Once you’ve reached this amount for the year, your insurance company pays for 100% of covered services.
• Original Medicare plans do not have a MOOP, so there’s no limit to how much you’ll have to spend in a calendar year.

Coverage

• Original Medicare plans only includes hospital and medical insurance, so if you need prescription drug coverage, you’ll need to purchase a separate Part D plan.
• Medicare Advantage plans usually combine all Part A and Part B services with Part D prescription drug coverage.

Which doctors and hospitals can you use? If you have Original Medicare, you can go to any doctor that accepts Medicare. Most Medicare Advantage plans require you to see a doctor or facility in their network. When in doubt, ask your doctor what Medicare Advantage plans they accept.

Supplemental benefits

Some Medicare Advantage plans include dental, vision, and hearing, as well as perks like gym memberships and home delivery for prescriptions.

You can compare the differences between Original Medicare and Medicare Advantage in more detail here:

Medicare Eligibility and Medicare Advantage Enrollment

Most people 65 and older who get Social Security benefits are automatically enrolled in Part A and receive a welcome letter from the government. The welcome letter tells them how to get Part B and prescription drug coverage.

To enroll in a Medicare Advantage plan, a person must have Part A and Part B and live in the Medicare Advantage plan’s service area. Individuals can first enroll into a plan during the seven month period that begins three months before and ends three months after their 65th birthday. Medicare beneficiaries can also make changes to their plan during the Annual Election Period (AEP), which happens every year from October 15th to December 7th. If you make a change, the new plan usually becomes effective on January 1st of the upcoming year.

I’m already covered by Medicare, do I need to change anything?

It depends. The only way to be sure is to dedicate some time and attention to the process. There are several areas to focus on which can necessitate a change in your coverage:

1. Your health status and the panel of medications you take may have changed over the past year. The options you chose last year may not suit your needs now. Based on your health, a more comprehensive and/or cost-effective plan may be available.
2. The plan you are currently enrolled in may have changed.
3. Pay attention to any plan changes for next year. The deductible, covered services, out-of-pocket maximum, co-pays & co-insurance levels for specific services may be different.
4. For Medicare Part D Prescription Drug Plans, a prescription drug that was covered may be no longer. Or, that same drug may be available but cost more. In some cases, changing pharmacies may save you hundreds of dollars from last year.

Which plan options are best for me?

As you consider any health insurance plan, it’s important to think through your needs. AARP suggests considering these questions when you’re “shopping:”
What is your level of satisfaction with your current plan?

• Does the plan(s) you are considering allow you to see the physicians you want, go to your hospital of choice if the need arises, and obtain the prescriptions you need from your preferred pharmacy?
• Does the plan(s) you are considering require you to obtain referrals for specialist care or to stay within a specific network of doctors?
  If you go outside the network, what are the coverage levels?
• Are you staying put at your permanent residence for the upcoming year or is this the year you plan to spend the winter in a warmer climate?
• What is the cost for your current combination of products, including healthcare services and prescription drugs? In your analysis, make sure to include premium amounts for any product you have AND any out-of-pocket cost for deductibles, co-pays, co-insurance amounts or out-of-network costs.
• What is your utilization of healthcare in general; do you have any elective surgery or complex treatment coming up?
• What are your specific medications, at which dosages and intervals? Consider any changes that may have occurred over the past year.
• Have you received any notice in the mail called a Plan Annual Notice of Change, regarding product changes coming in the next year (this may affect levels of coverage, cost, or both)?
  Do you have a spouse or dependent children who require coverage?
• What is the out-of-pocket maximum on your plans and, based on that, the financial risk you are carrying in the event you were to incur astronomically high healthcare-related costs?
• What is the level of financial risk you are willing to take?