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The Medicare Program provides benefits to those over the age of 65, the disabled, and those with End-Stage Renal Disease. Most people will qualify for coverage just before their 65th birthday and it is at that point in which they will have to decide whether they would like to have Original Medicare (Medicare Part A and Part B) or if they need something with more comprehensive coverage, for example a Medicare Advantage Plan, or a Medicare Supplement (Medigap) Plan.
Drug plans (Part D) are optional and can be added to Original Medicare coverage, while Medicare Advantage Plans often include it.
If you are approaching age 65, you will automatically qualify to enroll in Medicare, Part A, on the first day of your birthday month. You can enroll up to three months prior to your birthday and wait as long as three months after that date which is considered the initial enrollment period. During this period – a total of seven months – you will get coverage at standard rates regardless of any medical conditions you may have.
You will need to make your decision between adding Medicare, Part B, or choosing an Advantage Plan, Part C – one plan to combine the coverage contained in Parts A and B. There are advantages and disadvantages in both cases depending on your health care and prescription drug needs, as well as your financial situation.
Why Many Medicare Enrollees Are Going With Medigap Plans
Something that is continuing to trend well.
There is an incredible amount of information available to help you choose, however, it is overwhelming even to those who work in the healthcare industry. It is often easier to get the help of an experienced health insurance agent who is familiar with the program and how it works with other coverages and impacts other household members. It is an important decision and, if you decide to put it off until later, you could end up paying more for the coverage. Medicare Advantage Plans are purchased from private insurance companies and you will want to compare pricing and benefits along with network providers.
The annual election period runs from October 15th through December 7th. Monthly Part B premiums increase by 10 percent for each year you were eligible for Medicare and did not sign up. Additionally, you may be subject to premiums rated for any new health conditions. If you make your decision and change your mind, it is still possible to choose a different plan during the Special Disenrollment Period from January 1st through February 14th.
Medicare health plans also include other special programs provided by organizations and types of health plans that can be offered by public or private entities and provide Prescription Drug Plans, Part D, as well as other additional benefits. With so many moving parts to the process, asking for help from a licensed health insurance agent will ensure you understand what you have purchased and how it will work when you need to use it.
MEDICARE PART A
Medicare Part A covers inpatient hospital care, skilled nursing care, hospice, lab tests, surgery, and home health care. Your tax deductions from employment, or quarterly tax payments while self-employed, have been going into the Medicare Trust Fund to pay for this portion of coverage and is why you qualify automatically at age 65 when you may no longer have employee benefits. It is designed to handle catastrophic injuries and illnesses and carries a high deductible.
The 2019 deductible is $1,364 per benefit period and changes annually to match the cost-of-living increase. This amount is reported annually between October and November. If you had to pay for this coverage it would currently be $437 per month, but for the majority of the population, this coverage is considered premium free.
MEDICARE PART B
Medicare Part B covers doctor visits and other health care services, any outpatient care or home health care needs, mental health, and durable medical equipment. Some preventive services are covered that detect common illness in its early stages to avoid bigger problems requiring more extensive treatment later. If your health care provider accepts assignment – agrees to Medicare’s rates for services – preventative services once a year will cost nothing. The current costs for Part B are based on income reported in 2017 used to calculate 2019 costs. For those who had an annual income of $85,000 or less as an individual, or $170,000 or less jointly, there is a premium of $135.50 per month and an annual deductible of $185.
Premiums are adjusted for higher reported income as follows:
- $189.60 per month: Between $85,000 and $107,000 for an individual or between $170,000 and $214,000 if filing jointly
- $270.90 per month: Between $107,000 and $135,500 for an individual or between $214,000 and $267,000 if filing jointly
- $352.20per month: Between $135,501 and $160,000 for an individual or between $267,001 and $320,000 if filing jointly
- $433.40 per month:Between $160,001 and $500,000 for an individual or between $320,001 and $750,000 if filing jointly
- $460.50 per month: Over $500,001 for an individual or over $750,001 if filing jointly
You cannot enroll in Part B until you qualify for Part A first. Medicare Part A and B cover only services deemed medically necessary to diagnose or treat your medical condition and that meet Medicare’s accepted standards of medical practice. These standards are based on Federal and state laws, national coverage decisions made by Medicare, and local coverage decisions made by claims processing companies in each state.
Part B Plans operate without a pre-determined network of providers. You can use doctors, hospitals, and pharmacies of your choice, but should check to see if they accept Medicare’s assignment for the most affordable options.
MEDICARE PART C
When considering Part C, Medicare Advantage Plan coverage, you will be figuring out whether it makes more sense to continue with Original Medicare Part A and B coverage or replace it with Part C instead. Medicare Advantage Plans often include Part D coverage for prescription drugs. The same initial enrollment rules apply for the period three months prior to and after your birthday month – 7 months total – being the easiest and least expensive way to enroll. Medicare Advantage Plans work like an HMO, PPO, or Private Fee-for-Service Plan and include a network of providers that you must use unless you experience an emergency situation.
If you want to shift from one Medicare Advantage Plan to another, it is possible to do so each year during the Open Enrollment Period from October 15th to December 7th. Once you select a new plan to enroll in, you will be automatically disenrolled from your old policy as soon as your new plan’s coverage begins. You can also switch back to Original Medicare during the same period. If your Part C Plan included your Part D Drug coverage, that may require you to purchase a stand-alone drug policy at the same time. Both types of coverage are purchased through private insurance companies.
You will be able to get a free “welcome to Medicare” wellness check up in the first year of enrollment in either Part B or Part C. Just like Original Medicare, Advantage Plans only cover services deemed medically necessary to diagnose or treat your medical condition and that meet Medicare’s accepted standards of medical practice.
MEDICARE PART D
Medicare Part D, Prescription Drug coverage can come with your Part C, Medicare Advantage Plan, or as a stand-alone plan. Each policy has different formularies and tiers for pricing covered drugs. A lower tier will contain prescriptions that cost the least while drugs on higher tiers will cost more. It is possible for your doctor to ask for an exception for lower tier pricing on a drug that is medically necessary for a longer period of time. If the plan makes changes to your prescription’s pricing, they must notify you 60 days prior and allow you a three-month refill for time to find other options.
Drug costs include the annual premium for the plan you select. These costs vary depending on the drugs you use, the pharmacy you choose, and whether the drugs you are prescribed appear on your plan’s formulary.
In 2019, you can expect the following costs in addition to your premium:
- A deductible of $410
- Copayments or coinsurance requirements (e.g. $25 copay or an 80/20 percent coinsurance)
- Costs that exceed the annual limit of $3,820 until you reach the threshold of out-of-pocket costs at $5,100 – commonly known as the coverage gap or donut hole. You will receive a discount on brand name drugs at 75 percent and generic drugs at 63 percent from drug manufacturers during the gap.
- Costs related to any late enrollment penalty.
While prescription drug coverage is an essential health benefit, Marketplace and SHOP Plans are not required to be as good as Medicare Part D coverage. Look for policies that have creditable coverage. If you take maintenance drugs for chronic conditions, purchasing a drug plan will be a complex process requiring you to look up your medications and dosage in different formularies for comparison and pricing. Reach out for guidance from a health insurance agent. They generally have easier access to information by dealing with insurance underwriters directly and know the specific questions to ask regarding your health and prescription needs.
How Medicare Impacts Other Health Insurance
Replacing employer or union health coverage with Medicare can affect your coverage, your spouse’s, or other family members who still rely on that coverage. Replacing current coverage and COBRA coverage requires a letter from your employer to allow you to enroll during a special enrollment period (SEP). Your benefits administrator has information to help you make changes. Ask a health insurance agent who specializes in Medicare to make sure this is your best option.
Other creditable coverage that may interact with or be impacted by Medicare.
- Federal Employee Health Benefits (FEHB) Program
- Veterans’ Benefits
- TRICARE (military health benefits)
- Indian Health Services
Medicare Supplement Plans
During open enrollment, agents who sell Medicare Supplements are easy to find and will often reach out to you especially if you are just turning age 65. These policies do not provide full benefits but are designed to cover the deductibles, copayments, and coinsurance amounts that apply to Medicare Parts A and B. Medigap policies are no longer sold with prescription drug coverage. You would need to buy a stand-alone Part D Prescription Drug Plan.
Medicare Supplement Plans all include the same basic coverages no matter what company provides it. They may offer you more coverage, but not less than the standard benefit options. The most common are Plans A, B, C, D, F, and G. Plan A is the most basic while Plan F is more comprehensive and includes the option of purchasing a high deductible plan to keep premium costs down. Plan G is nearly identical to F, but does not cover your Medicare Part B deductible or have a high deductible option.
These policies only cover one person. If you have a spouse, they will need their own coverage. Premiums can be different from company to company and can also increase annually. It pays to revisit these policies every so often to be sure you are still getting the best possible rates.
If you have a grandfathered plan that does include drug coverage, you may be advised to keep it. Changing plans would mean removing the prescription drug coverage under your policy and adjusting the premiums. Call a Medicare Supplement insurance agent to weigh the pros and cons.
Medigap policies do not have a special enrollment period. You may purchase them at any time of the year. However, if you are switching Medicare Supplement Plans, make sure you take a look at effective dates to be certain you do not lapse your coverage and have to requalify for benefits under your current health status which may have changed since you took out the policy. Your rates may be affected.
If you change from Original Medicare to Medicare Advantage, you will no longer need a Medicare Supplement Plan and may need to cancel your Part D Prescription Drug Plan. Your effective dates will need to coincide with the enrollment dates. If you go 63 days or more in a row without creditable prescription drug coverage before your new Medicare drug coverage begins, you will be subject to a late enrollment penalty when purchasing your new drug policy.
Things to Know About Medicare Supplements
- Some Medicare Supplement (Medigap) policies offer coverage when you travel outside the U.S while Original Medicare does not.
- Medigap policies only supplement your Medicare benefits while Medicare Advantage Plans provide those benefits.
- You must have Medicare Part A and Part B first to purchase a Medigap Plan.
- Monthly premiums paid to the insurance company for Medigap Plans are in addition to what you pay monthly for Medicare Part B.
- Medicare Supplement policies are guaranteed renewable even if you have health problems and cannot be canceled as long as you pay the premium.
- Medigap policies sold after January 1, 2006, are not allowed to include prescription drug coverage. You must join a Medicare Prescription Drug Plan (Part D) to have the coverage.
- It’s illegal for anyone to sell you a Medicare Supplement policy if you have a Medicare Medical Savings Account (MSA) Plan.
Medicare Plans and Medicare Supplement (Medigap) policies usually do not cover long-term care, private-duty nursing, dental or vision care, hearing aids, or eyeglasses. This is health coverage that needs to be purchased separately.
Help with Costs
If you have limited income and resources, your state may help you pay for Part A and Part B. You may also qualify for Extra Help to pay for your Medicare prescription drug coverage.
Contact your Medicaid office to see what joint federal and state programs help with medical costs. Even if your income is higher than Medicaid income levels, the “spend down rules” take other things into consideration that may qualify you.
The Medicare Savings Programs (MSP) program in your state can help pay your Medicare premiums for Part A and Part B as well as deductibles, coinsurance, copayments, and prescription drug coverage costs.
Program of All-inclusive Care for the Elderly (PACE) combines Medicare and Medicaid programs to help the elderly pay for services needed to continue to live at home.
The Supplemental Security Income (SSI) helps to pay benefits to disabled adults and children who have limited resources, as well as people age 65 and older without disabilities, who meet the financial limits. Being part of this program automatically qualifies you for Extra Help with your prescription drug costs.
Find out if Medicare covers your needs:
- Ask your doctor or health care provider if the services or supplies you need will be covered by Medicare.
- Ask a licensed Medicare Supplement agent to find a plan that will work best for you and your unique circumstances.
Just like Medicare Supplement policies, there are certain medical services that Medicare Part A and Part B do not cover, including long-term care, routine dental care or dentures, vision care, and hearing aids. You need to purchase separate medical insurance for this coverage.
As you can see, Original Medicare, Medicare Advantage Plans, and Medicare Supplement Plans are complicated and rely on certain aspects of enrollment rules to avoid lapses in coverage and provide the right benefits and prescriptions. You may base these decisions on your current health as well as project possible needs in the future including the effect they have on others in your household. Medicare is a massive program and links with other government subsidized programs in case you need financial help. It can be overwhelming. Health insurance agents have studied the details of this program and are happy to explain it and help find the perfect plan for you.
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