Medicare, where do you even begin? The daunting task of first understanding the basics of Medicare and then researching what you need to do to find additional options that fit your needs. My intent is to not make you a Medicare expert, but for you to grasp the basic information and educated yourself enough to be able to make the right decision for your current situation. Let’s talk basic Medicare first and then go into your options and what I recommend you to ask a licensed agent.
You received your Medicare booklet from the government; you might have cracked the pages to find out what the government wants you to know about your entitlement. It might have even put you to sleep at night rather quickly. What you need to understand about Original Medicare.
Part A is for Hospital, Skilled Nursing, Hospice and Home health care. Part A of Medicare is usually at no cost as long as you have paid into the system for more than 10 years or 40 quarters of your working life. If you are admitted to the hospital for any condition you are going to have to pay a deductible. In 2014 that amount is $1,216 and this starts your 60-day benefit period. The benefit period ends if you haven’t received any inpatient care for 60 days in a row and there is no limit to the number of benefit periods. Let me put this into a real life situation so you understand it better.
You are admitted inpatient to a hospital on January 15th, 2014 and released from the hospital on January 18th, 2014. You will need to pay you’re Part A deductible for $1,216 dollars.
You then go back into the hospital April 10th, 2014 and are admitted for 1 day your benefit period has started over since it’s been 60 days since you were released. Guess what, you are going to have to pay another $1,216 Part A deductible.
Your summer goes great but another health problem comes up and you end up back in the hospital September 2nd, 2014 spend 2 days admitted. You got it another $1,216 Part A deductible bill.
3 different visits more than 60 days apart with a total of 6 days in the hospital and your out of pocket for those visits would be $3,648!
Part B is easier to understand but not any less expensive. This is the part of Medicare that covers your doctor visits, outpatient services and your durable medical equipment. With recent changes to the law Part B has included some preventative services as well at no cost to you. In most cases you pay a premium for Part B which can be deducted from your social security check. Part B has an annual deductible for 2014 is currently $147. After the deductible is met you are required to cover 20% of what Medicare doesn’t pay for so it works similar to traditional insurance with an 80/20 coinsurance. Here is the problem with it, there are no caps or limits to your 20% co-sharing cost. A hundred thousand surgery is going to cost you twenty thousand dollars! There are options out there that can save you from these Original Medicare costs. My focus is to help you avoid costs like this but more importantly remind you that there is not one plan fits all out there.
You might have read or heard about Medicare Advantage or Part C plans that are eligible for you if you are eligible for Medicare. These are private insurance companies that sign contracts with Medicare and will administer your Medicare benefits for you. Medicare Advantage replace your Original Medicare Part A and Part B and most often will include a Part D, prescription drug plan. You must continue to pay your Part B premium if you join these plans. These plans tend to have $0 to $200 premiums and you must understand how HMO, PPO, or PFFS plans work.
HMO (Health Maintenance Organization): You will only be able to see physicians and hospitals that are in the network unless is an emergency. Due to the manage care aspect and being able to control costs they tend to provide lower premiums and lower co-pays to you.
PPO (Preferred Provider Organizations): These plans allow you to use doctors, specialists, and hospitals both in and out of network. You will pay lower co-pays or co-insurance if you stay within the network and usually do not need a referral to see specialists.
PFFS (Private Fee for Service): You can see any doctor, specialist or hospital as long as they will accept the plans terms and conditions. This does not apply for emergency situations
you need to ask a Licensed Medicare Agent if you are looking into these plans. “Will my doctor accept these plans and if so what plans is he/she in network with?” I can’t think of anything more frustrating to you if you spend all your time researching plans, select and plan that fits your needs and your budget only to come to find out you can’t see your doctor. It’s similar to getting ready to purchase a car only to find out the car does not have any tires. If you don’t care about changing doctors that’s fine move on to the next question.
Above I discussed the different network options, HMO, PPO, PFFS. You might have had experiences with these networks during your working career and you might have some bias to one or another. I’ve talked to thousands of beneficiaries that enjoy their HMO networks because they feel like their primary care doctor is able to guide them through their health care. I’ll give you an example of a real life situation from a beneficiary I helped enroll into a plan. I want to preface this story again that I’m not advocating for HMO plan but merely providing an example how it can be beneficial in one particular situation. A beneficiary was concerned with some chest pain and he assumed it was his heart. He had never seen a cardiologist before so you search through his provider book, closed his eyes and dropped his finger on a cardiologist. During his visit it was diagnosed as a gastrointestinal concern and he needed to go through another appointment process to speak with a gastroenterologist. He could avoided all this run around if he first went to his primary care doctor and received a referral to a gastroenterologist. Some beneficiaries will use a PPO plan just like a HMO plan but enjoy the ability to go out of network if they choose to.
to ask an agent if you live in an area that provides both HMO and PPO service areas, “What are the different co-pays to see my primary care doctor and a specialist, and will I need referrals?”
While we are on the subject of copays lets talk about the benefits of all these plans. Once you start researching Medicare Advantage plans a few things to keep in mind. Since these plans have a Medicare contract they have to provide the same benefits or better benefits then Original Medicare. Each carrier will have to provide a summary of benefits in a standardized format. My recommendation is to compare a few major benefits and ask this as your
Third question to an expert.
Maximum Out of Pocket: This is the maximum amount of money that you would have to pay in a calendar year. Think of this as your stop-loss, or in a catastrophic year the total amount you would pay for doctor visits, surgeries, hospital stays, physical or occupational therapy, and/or lab tests. Exclusions to his Out Of Pocket would be the medication you pick up at the pharmacy. The maximum in-network Max OOP is $6,700 for 2014, so plans in the $3,400 are on higher end of benefit for this category.
Hospital Co-Pay: This is your cost for being admitted into the hospital and it’s usually calculated on a per day basis. These are a little bit harder to compare as you might have Plan A that has a Hospital Co-pay days 1-7 at $200 per day and Plan B that has days 1-3 at $350 per day. Again when shopping for insurance I recommend thinking worst-case scenario.
Days 1-7 @ $200 per day
Days 1-3 @ $350 per day
Worst case you pay = $1400
Worst case you pay = $1050
So obviously if you were comparing these two plans even though in Plan A has lower per day charge which can seem attractive you over the long run you would pay less on Plan B.
Doctor copays for primary doctors and specialists are also important depending on your current situation.
Finally, depending on your current Rx needs each plan will cover medications differently. Understand how this component works as it could be the highest you of pocket costs if your medications are expensive or you are a taking multiple medications for different conditions. I will go more in-depth in my future articles regarding drug tiers, the donut hole and cost saving tips.
An enticing benefit to these plans is the extra benefits that provide to attract members. I’m sure you have heard the Silver Sneakers program. A free membership to your local gym with additional programs directed for seniors. Other value added benefits such as free over the counter items, discounts on hearing aids, basic teeth cleanings, routine eye exams, and meals after surgery can also can be offered by the plan. The
revolves around these additional benefits if they are important to you. These additional benefits can keep you out of major issues down the road through healthy living.
comes down to cost. How much is this going to cost you? Is their value in what you are going to have to pay per month? My mother just turned 65 in March of 2014. Prior to her getting on Medicare she was on an individual insurance plan that had a ten thousand dollar deductible and then it covered 70% and she had to pay 30% of her medical bills. Her monthly premium was $385 and that was a good rate! She enrolled into Medicare Part A no cost, and Medicare Part B – $104.90 a month pulled directly from her Social Security. She selected a regional HMO carrier that she felt comfortable with and her doctor accepted for $0 monthly premium. This plan goes for the remainder of 2014 and then in the fall she is going to look at other options to compare it against her current plan or she might just stay in the same plan for 2015. If you decide to explore Medicare Advantage plans always make sure you spend the time in the fall between October 15th to December 7th to review your options and make sure you are in the plan that fits your needs. These plans can drastically change on a yearly basis and many times plans will go away completely and it forces you to make adjustments. Understand that the government through the Medicare program is subsidizing these plans and these are private companies that specialize in providing health care. Don’t think that because there are plans out there for low to no premiums that you aren’t going to have excellent coverage.
I know there are a lot more questions that you might have regarding these Medicare options and my intent was to focus on five important questions. Also these questions will lead you to additional questions so that you can make an educated decision about these plans and if this would be the path you want to take for your Medicare coverage. Finally make sure you are working with someone that you feel has your best interests at heart. If for any reason you feel uncomfortable with what an agent is trying to tell you or you have a sense that they are trying to push you in a particular direction move on to the next agent. All agents that sell Medicare products are compensated differently and remember that it wont cost to access their services and knowledge. I recommend that when researching agents that you speak with one that represents multiple products and services. That way you can compare multiple plan options and educating yourself on what plan is going to fit your needs.
As you approach the time of your Medicare Supplement open enrollment period, you may be wondering what the best plan is for you – or whether you should even sign up for coverage at all. After all, Medicare itself provides fairly comprehensive health care coverage, right?
The answer to that is, “sort of.”
Although Medicare Parts A and B do provide coverage for certain hospitalization and doctors’ services, there are many “gaps” in Medicare’s coverage that could still leave you with the responsibility for paying high out-of-pocket copayments and deductibles every year.
A good Medicare Supplement, or “Medigap,” insurance policy will cover many of those charges, shifting some – or all – of the cost to the insurance company. This can be an extremely cost effective way to manage health care expenses, especially for retirees who are living on a fixed income.
Because there are many choices when it comes to Medicare Supplement plans, deciding which option is best for you can at first seem overwhelming. The good news is, though, that you can narrow down your choices by going through just three simple steps.
Step 1: Determine the Benefits That You Want
The first step in choosing the best Medicare Supplement insurance policy is deciding which benefits will best serve your specific needs. There are currently 10 different Medicare Supplement policies on the market today, each named after a letter of the alphabet. Medicare Supplement Plan A offers the most basic set of benefits, and all corresponding plans provide more comprehensive coverage options.
When determining the best Medicare Supplement insurance plan for you, it is important to decide on a policy that covers the items that you are most likely to use. For example, if you do not plan to participate in foreign travel, you may not need a policy that covers foreign travel exchange benefits.
The chart below outlines which benefits are provided with each of the Medicare Supplement plans in 2014.
Regardless of which insurance company you purchase your plan from, the actual benefits within the policy will be the same. In other words, the features in Medicare Supplement Plan A will not differ from one insurer to another – however, the premium that you pay can differ quite a bit.
Step 2: Decide on Your Budget
The next step is to decide on your budget. This will help you to ensure that the premium for your policy will not create a financial hardship. In pricing Medicare Supplement insurance, there are actually three different ways in which an insurer may come up with its premium cost. These include:
Attained Age – If premium is determined based on one’s attained age, it means that the price is calculated by the current age of the applicant. In this case, the premium for your policy will likely rise over time as you get older.
Issue Age – With issue age, the premium for your plan will also be based on the age that you are when the policy is initially purchased. However, the price will not change as you age. (The premium may, however, rise based on inflation or other external factors).
Community Rated – If a premium is community rated, it will be the same amount for all insureds in the same “community” or demographic who have the same type of policy – even if they are different ages. Here, too, the premium may change based on inflation or other external factors.
Step 3: Locking in Your Coverage
Once you have determined the Medicare Supplement insurance plan and premium that are right for you, it is time to lock in your coverage. Provided that you apply during your Medicare Supplement open enrollment period, you cannot be turned down for coverage or charged a higher rate of premium – even if you have an adverse health condition.
It is important to apply for your plan during your open enrollment period, though, because once this period has expired, you may be subject to higher premium rates for the same plans and coverages.
Prior to applying for coverage, you may have additional questions or concerns. If so, we’re here to help. now for instant access to one of our Medicare Supplement advisors and to obtain instant Medicare Supplement quotes.