The A,B,Cs & Ds of Medicare

[EDITOR'S NOTE: Figures quoted below are based on calendar year 2016]

Whether you're new to Medicare or you've been interacting with the system for a number of years, you'll find that it's a complicated subject that few people truly understand. At Elder Law Practice, we believe that educated clients make better decisions. If you're a Medicare novice, this article and the accompanying video (above) will give you a good introduction to the topic with links directing you to more detailed information on Medicare.gov. If you're a veteran, consider it a timely review as Open Enrollment approaches. 

When and how do you enroll in Medicare?

  • Enrollment is handled by the Social Security Administration. It is automatic only if you are already receiving Social Security benefits; otherwise you may enroll as early as 3 months prior to the month in which you turn 65, but no later than 3 months after that month.  There can be a penalty for people who didn’t enroll when first eligible. 
     
  • Medicare enrollment is automatic for people who receive Social Security Disability benefits for 24 consecutive months or have certain other disabilities, regardless of age. 

How much does Medicare cost?

Medicare Part A (hospital) is premium-free for most people. Medicare Part B’s premium is $104.90 if you became eligible for Medicare before 2016; otherwise, the premium is $121.80 or higher for individuals with high income. Medicare’s Part B premium is automatically deducted from Social Security benefits. The cost is the same whether the person is in Original Medicare or a Medicare Advantage Plan (such as an HMO or PPO). 

Learn more about enrollment and premiums

Does Medicare pay 100 percent of your medical expenses?

No. There are gaps. There is a Part A deductible of $1,288 deductible (per benefit period) and an annual Part B premium of $166. The patient’s liability for Original Medicare is known as “co-insurance” and is as follows:

  • Hospital (Part A) $322 per day, 61-90 
  • Skilled Nursing Facility, $161 per day,  21-100 
  • Medical (Part B) 20%

Learn more about what Medicare does and doesn't cover

How do I fill the Medicare gaps?

It depends. If using original Medicare, the gaps are most commonly filled with Medicare Supplement insurance (known as “Medigap”) but sometimes retiree, Medicaid, or other types of insurance can fill the gaps. Members of Medicare Advantage Plans do not usually have a secondary insurance, and will have to pay some deductibles and set-copays, depending on the service and the plan. 

Learn more about Medigap coverage.

What are the Pros and Cons of purchasing a Medicare Supplement (Medigap) policy to go with Original Medicare?

PROS 

  • Pays all or almost all of Medicare balances
  • Allows for provider freedom
  • They are regulated, standardized and offer certain protections
  • Benefits do not change
  • Auto renews each year

CONS

  • Annual premium increases are likely

Learn more about the pros and cons.

What is a Medicare Advantage Plan (sometimes known as Medicare Part C)?

A Medicare Advantage Plan is a type of Medicare health plan offered by a private company that contracts with Medicare to provide you with all your Part A and Part B benefits. Medicare Advantage Plans include Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service Plans, Special Needs Plans, and Medicare Medical Savings Account Plans. If you’re enrolled in a Medicare Advantage Plan, most Medicare services are covered through the plan and aren’t paid for under Original Medicare.

Learn more about Medicare Advantage Plans

What are the Pros and Cons of enrolling in a Medicare Advantage Plan?

PROS

  • There is no need for Medigap
  • Zero or reduced premium (still pay monthly Part B)
  • Coverage for some extra/optional services (ex. limited dental/vision) 
  • Pre-set co-payments 
  • No pre-existing restrictions
  • Medicare rights apply

CONS

  • Plans/Benefits can change each year
  • There are rules concerning provider access (exceptions for ER and out-of area urgent care)
  • There are restrictions regarding enrollment/disenrollment 
  • Purchase of a future Medicare supplement policy will be subject to underwriting (based on your health history), so there is no guarantee
  • Member has to pay for healthcare services if he/she doesn’t understand and follow the rules

Learn more about the pros and cons of Medicare Advantage Plans

What about Medicare prescription drug coverage?

Are you on Original Medicare? If so, Medicare prescription coverage is not automatic but is available to all people on Medicare. Unless a person has prescription drug coverage equal to or better than Medicare, he/she needs to enroll in a Medicare drug plan known as “Part D.” There can be a penalty for people who didn’t enroll when first eligible. You would need to choose a drug plan that contracts with Medicare. It is best to compare drugs plans based on your individual prescriptions. A Part D plan can cost from about $18 to $65 per month, with the average being around $32. There is an option to have the premium deducted from Social Security benefits.

Are you a member of a Medicare Advantage Plan? It is common for the prescription drug benefit to be included in a Medicare Advantage Plan, but if not, the individual may enroll in a stand-alone plan as above.

Learn more aboout prescription drug coverage options.~ 

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