Tips for Navigating the Medicare Maze

Most people have heard of Medicare but are confused about what it covers. This is understandable because Medicare is complex and confusing. Whether you’re new to Medicare, or already enrolled, here are some helpful explanations and tips.

Medicare’s Roots

Created in 1965 by the Johnson administration as a social-welfare program to help senior citizens cover some of the costs of their healthcare, Medicare consists of two parts: Medicare Part A and Medicare Part B. These are now referred to as Original Medicare. Medicare was never meant to cover all of your healthcare costs. It doesn’t protect you financially with a Maximum Out-of-Pocket limit - it covers some healthcare costs, but not everything.

What is Medicare?

Typically, when the term “Medicare” is used, we’re referring to the original Medicare program. This is composed of two parts: Medicare Part A and Medicare Part B. These are the foundation of Medicare.

1.     Medicare Part A:

·      Covers Inpatient Care, such as hospitalization, skilled nursing facilities, hospice, and required home health care

·      Is premium-free if you have met the eligibility and contribution requirements

·      Is also possible to purchase if you meet certain criteria

·      Does NOT cover Long-Term Care

2.     Medicare Part B:

·      Covers Outpatient Care, such as doctor’s office visits, labs, outpatient surgeries, and durable medical equipment

·      Is NOT premium-free

·      Premium cost will be assigned depending on your year of eligibility. Most people eligible for Medicare in 2019 pay $135.50/month.

When Do You Become Eligible for Medicare?

Typically, you qualify for Medicare when you turn 65 and have contributed to payroll taxes for 40 quarters (or the equivalent of 10 years.) You may also be eligible for Medicare if:

·      you have certain disabilities

·      you are  65 and the spouse of someone who has contributed to payroll taxes

·      you are an unmarried, disabled dependent and at least one parent is receiving Social Security Benefits.

Enrolling in Medicare

You can first enroll in Medicare during your “Initial Enrollment Period.” This seven-month window begins three months before the month you turn 65, includes the month you turn 65, and ends three months after the month you turn 65. Most people enroll in Medicare Part A at this time.

The Initial Enrollment Period is also the time to enroll in Medicare Part B, especially if you’re not actively employed. However, if you’re going to work past age 65, you may wish to remain with your employer sponsored group health plan and delay enrolling in Medicare Part B. Always consult with your HR Department to determine if the coverage, especially the prescription drug coverage they offer is deemed “Creditable Coverage” – coverage deemed at least as good as what Medicare offers.

It’s essential to plan your enrollment carefully; failing to enroll at the appropriate times can subject you to late-enrollment penalties which can be costly. Medicare is not forgiving!

Medicare Parts and Plans

Within the Medicare system, there are Parts, and there are Plans. Unfortunately, some of the same alphabet letters are used in the names of these Parts and Plans, which causes a lot of confusion.

There are four Medicare Parts, designated as A, B, C, and D:

·      Medicare Part A – Inpatient care

·      Medicare Part B – Outpatient care

·      Medicare Part C – Medicare Advantage Plans

·      Medicare Part D – Prescription drug benefit

There are 14 Medicare Supplement/Medigap Plans:

·      These plans include Medicare Supplement Plan A through Plan N.

·      Each plan letter covers a different combination of the deductibles, co-pays and co-insurance that Original Medicare doesn’t pick up. These are referred to as “gaps” or costs not paid for by Medicare hence the alternative name, Medigap Plans.

·      The benefits offered by each Medicare Supplement Plan A through Plan N are standardized. Each insurance company chooses which Plans they’ll offer and sets their premiums. For example, regardless of the insurance company you choose, a Medicare Supplement plan G will offer the same coverage only the premium will vary.

 

When you enroll in Medicare (Part A and Part B) and have received your red, white and blue Medicare card, you’re at a fork in the road with a choice to make. You have two options:

 

1)    Stay with Original Medicare which will pay your healthcare costs first. Then add a Medicare Supplement/Medigap Plan to cover the Out of Pocket expenses not covered by Medicare Part A & B and add a Part D prescription drug plan.  You’ll pay separate premiums for your Medicare Part B, your Medicare Supplement plan and Part D.  

OR

2) Enroll Medicare Part C, a Medicare Advantage Plan that usually has a Part D prescription drug plan bundled into it. This plan will be primary. These are cost effective network based plans similar to employer sponsored group health insurance and are offered by private health insurance companies. There are HMO – network only based plans and PPO style plans which give you the option to see out-of-network providers but at a higher cost. You’ll still pay your Medicare Part B premium but your Medicare Advantage/Part C can be a low as $0 premium for an HMO or a small monthly premium for a PPO. Each region of the country has different offerings. 

When deciding which Option you’ll choose, consider your health history and how you use healthcare. 

Questions to Ask Yourself When Navigating Medicare Enrollment

1.     Am I going to continue to work?

2.     Will my employer continue to provide health care, and what is the cost? Will Medicare offer more comprehensive coverage at a lower cost?

3.     How is my current health? Do I see a lot of specialists? Do I have chronic conditions that require frequent visits?

4.     How do I feel about getting referrals and being limited to network providers?

5.     What plan options are available in my area? Medicare can be very regional, so it’s important to know what your options are.

Best Practices for Those Currently Enrolled in Medicare

Pay attention during the Annual Open Enrollment Period, which takes place every year October 15 through December 7. You will receive a document in the mail called the “Annual Notice Change” from your current plan. It will list any changes to your current plan for the upcoming year, including covered drugs, network providers, plan adjustments, costs, coverages, co-pays, or maximum out-of-pocket expenses. Thoroughly review your plan and any changes to determine if it still meets your needs in the most cost-effective manner. If not, there may be another plan that is a better choice for you.

Take Advantage of Expert Guidance

There’s no doubt Medicare is confusing. That’s why it’s important to enlist the help of an informed advisor who can help you successfully navigate this complex system. As a licensed insurance broker, I share my expert knowledge with my clients to help them find the solution that will best fit their needs.