You finally have a good understanding of health insurance, but then you turn 65 and suddenly there’s Medicare and it’s a whole new ballgame. There are new terms to learn, new enrollment periods, and four parts of coverage where there used to be one. Understanding Medicare isn’t always an easy task. So, let’s start at the beginning.
What is Medicare?
Medicare is a government health insurance program run by the Centers for Medicare & Medicaid Services (CMS), a federal government agency. In addition to covering the medical needs of Americans over age 65, Medicare also serves some younger people with disabilities, as well as dialysis patients.
The Parts of Medicare
Medicare is comprised of four different parts—A, B, C and D. Medicare Parts A and B are sometimes referred to as Original Medicare, which is managed by the federal government.
- Part A covers hospitalization, some skilled nursing facility services, some home health care, and hospice services.
- Part B covers doctors’ services, preventive care, outpatient care, including lab work, X-rays, and medical supplies.
Parts A and B are provided to you through the Federal government. You can enroll in coverage during a seven-month window around your 65th birthday. Parts C and D are managed by private insurance companies that contract with Medicare to provide Parts A and B benefits. (We told you things would get interesting!)
- Part C, also known as Medicare Advantage Plans, includes Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans.
When you enroll in a Medicare Advantage Plan, all your Medicare services are covered through Advantage plan rather than Original Medicare. Most Medicare Advantage Plans also offer prescription drug coverage. Which brings us to…
- Part D, prescription drug coverage offered through private companies. It cannot be purchased as a stand-alone policy.
Why Choose Part C over original Medicare?
Some Medicare Advantage Plans do offer coverage for vision, dental, and hearing, which aren’t offered under Original Medicare. Depending on the carrier and the plan, Advantage plans may have lower costs than the equivalent services under Original Medicare. But the most important part to note is that having just Medicare Part A and B leaves you with large deductibles and unlimited copays for doctor visits, x-rays, etc. Medicare Advantage plans put a cap on out-of-pocket expenses, limiting your exposure to high medical bills.
You can purchase a Medicare plan if you are 65 or older, if you’re younger and receive certain social security benefits for a disability, or if you have end-stage renal disease, a type of permanent kidney failure that requires dialysis or a kidney transplant. If you receive social security benefits, then you’ll automatically be enrolled in Medicare as soon as you’re eligible. If you don’t already receive social security benefits, three months before you celebrate your 65th birthday, you can apply for Part A and Part B. You may opt out of your Part B coverage if you wish. If you decide to enroll later, however, you may have to pay a late enrollment penalty.
Under some circumstances, spouses, ex-spouses, widows and widowers, or other family members may be eligible for Medicare, even if you aren’t.
What does it cost?
Patients on Original Medicare (Parts A and B) can easily be deceived by their small monthly premiums. While it’s true that, generally, Medicare provides a lot of coverage for a much lower price than you’d get with any other insurance plan, there are a couple of plan features that can make Original Medicare financially devastating.
Patients on Medicare usually pay a 20 percent coinsurance for medical services. For a $200 doctor’s appointment, the bill wouldn’t be so bad at $40. But that 20 percent also applies to things like x-rays, colonoscopies, chemotherapy, and emergency room visits. Those services cost thousands of dollars, so that 20 percent starts to balloon very quickly. For example, let’s say you spend a night in the hospital, have some tests run and leave with a $10,000 bill. You’re now responsible for $2,000 of that. And unlike the health insurance you’ve been used to carrying, there is no out-of-pocket maximum. So that means there’s no cap on the exposure you face. This is where Medicare Advantage comes in. You can choose from a variety of options that can not only lower your coinsurance but will also limit your out-of-pocket expenses.
As you can see, selecting the best Medicare parts is an important decision for your health and your bank account. So if you have questions, our licensed agents are here for you to help make the process simple. Just give us a call at (888) 517-3944.