The Simple Need to Know About Medicare And Medigap Insurance

Well, you came to visit our site for some simple answers to your basic Medicare and Medicare Supplement questions.  So as too not waste to much time, let’s get right down to it.

In this article, I will discuss some basics you need to know about Medicare and supplemental insurance.

Your Medicare Options

There a 4 parts of Medicare offered by the federal gov’t.  If you have worked at least 40 quarters or 10 years, you are eligible for all of them once you have reached “eligibility.”  The “Parts” are not comprehensive plans but features you may choose to elect together to create some financial protection from medical expenses.  Part A of Medicare, for example, is just your hospitalization only.  It does not cover any visits to your doctor or any outpatient care for that matter.  You would need Part B for that.  Again,  the “Parts” are Medicare features you may choose to pay for.

Option 1 – Original Medicare

Now, there are two major options that a Medicare recipient will have.  The first is Original Medicare which is government run and strictly regulated.  It offers Part A , Part B and also Part D.  Stated previously, Medicare Part A is for hospitalization.  Part B is for outpatient care such as a doctor’s appointment, physical therapy or other outpatient medical services.  Skipping to Part D of Medicare…this is for prescription drug coverage.  You are able to enroll for a custom coverage plan right on the Medicare website that best fits your needs under Part D.

You can verify Medicare benefits by looking at your red, white and blue Medicare card.  If you are currently in Medicare open enrollment, both parts A and B of Medicare are a requirement to have a Medicare Supplement policy.

For most seniors on Original Medicare, we highly recommend enrolling in Part D of Medicare if you have not already.  Part D offers prescription drug coverage. Even if you are currently taking no medications, things can change quickly.  Prescription medication can be thousands of dollars a year, literally.  Protect yourself.  Here is the link to that information.  There are many prescription plan options available directly on the Medicare website.  You will be seeing which plans cover medications you are currently taking to maximize your dollar spent.  This is the absolute best resource to pick out coverage, period.  Everything available is right there.

Since you can change your plan annually, we suggest you complete this on the Medicare website if at all possible.  There you will discover a “plan finder” tool that will allow you to shop and purchase drug coverage directly on their website.  The Medicare “plan finder” tool allows you a lot of flexibility in selecting prescription coverage ideal for your needs.  Remember, Part D of Medicare is not required, but we recommend it to our clients who are on Original Medicare.  Prescription expenses can be outrageous.

Option 2 – Medicare Advantage (Part C and Optional)

The second major option Medicare eligible folks have, is Medicare Advantage.  This is otherwise known as Part C.  Your Medicare premiums you pay monthly are sent to a private company who manages your healthcare.  The number of providers that you can receive health care from depends on how restrictive the plan is.  Care is directed by the private company, not the providers.  All Medicare Advantage plans are required to offer the same basic benefits of Original Medicare. The insurance carriers must provide this as a minimum b

Medicare Supplements aka Medigap plans are not available if you elect Medicare Advantage (Part C) instead of Original Medicare.

Why?  

You are no longer on Original Medicare at that point.  You can tuck your red, white and blue card away.  While you have Part C, the card is useless. Medicare Advantage can however offer some nice bells and whistles that Original Medicare does not.  For example, dental, vision…even a gym membership. 

Be aware, these bells and whistles vary from the provider of the plan.  Expect to have copayments for services and being responsible for up to 20% of some treatments.

An important fact about Medicare Advantage…it is a private program. While CMS (Center for Medicare and Medicaid Services) have plenty of oversight rules in place, insurance companies offering the insurance plans are allowed to make various decision on health and taylor health care plans to limit certain treatments or facilities you may receive care at.   

Tuck your red, white and blue Medicare card away in a safe place.  You will not need it as your coverage has been transferred to a private insurer until AEP comes around again (annual enrollment period). 

What Should I Concern Myself With On a Medicare Advantage Plan (Medicare Part C)

If you live in a rural area be very careful about going down this path.  Make sure a good network of providers is available in your area prior to decision time.  Not all doctors and hospitals participate in Medicare Advantage networks.  You may end up extremely disappointed if your providers are out of network.  No coverage in those situations.  You are responsible for all charges for non participating providers.

You may have rights if some of your providers are removed from the network but beyond the scope of this article.

Be sure you have not enrolled in Medicare Advantage (Part C) if you want traditional, Original Medicare coverage and a Medicare Supplement (Medigap Plan).  Medicare Advantage (Part C)  is not Original Medicare.  

Carefully consider your decision with electing the Medicare Advantage path. While some people with poor health may find it is truely the best option for them, we do not encourage seniors to elect Part C (Medicare Advantage) otherwise unless your financial means makes it your only affordable option or you do have “deep pockets” with a solid rainy day fund in place.

Part C can look very, very appealing for some people as it is a low cost option.  Very nice on a fixed income, right?   We all like to save our hard earned money, don’t we?  Heck, some MA plans have no cost to the insurance company other than the Medicare premiums you pay each money out of your Social Security check.

Be aware of the potential for high out of pocket costs in a Medicare Advantage (MA) program. Understading OOP (Out of pocket) maximums in the various Medicare Advantage plans is very important. $6700 annually for cancer treatment is common.  What if the doctor needs to repeat the chemotherpy treatment again next year? Do you have a solid rainy day fund in place to cover the costs of chemotherapy?  Timing of treatments can easily become double just for rolling over into the next year.

Realize that behind the lower costs and amenities offered… there are limitations. Having dental, vision and hearing care which is not offered on Original Medicare is a nice perk. You must realize thought, this option for you have  Care is a private program. Since this is not Original Medicare, Medicare is not paying your health care claims. Make sure your doctor(s) is/are part of the Medicare Advantage plan you are considering.

Entering a Medicare Advantage plan is a 12 month contract.

Be it as it is, MA is a choice you may elect and change annually during AEP (annual election period) which is October 15-December 7 each.  This applies specifically to a move from any Medicare Advantage plan to another MA plan if you desire. If you currently have a MA or MA-PD (Medicare Advantage, prescription drug plan) you may also change between January 1 and March 31 of each year. This season is called OEP or Open Enrollment Period.

If you are planning on dropping Medicare Advantage and changing to Original Medicare, you may only do this between January 1 and February 14.  A separate Part D prescription drug may not be added outside AEP if you switch to Original Medicare. You will be required to wait until October 15 to enroll unless you meet certain criteria which is outside the scope of this article.

Medicare does not make any healthcare decisions in a Medicare Advantage plan.  Medicare Advantage is not a supplemental plan.  It is a health care option by itself.  MA plans essentially combines Parts A, B and in some cases, Part D of Medicare. The later is called MAPD.  Your premiums for those elected parts are paid to the private insurer running the MA plan you elect and typically deducted from your Social Security.

Since the potential for high out of pocket expenses is definitely there and care options are limited due to being in a network of providers, you may want to consider something that has stable and predictable costs each year.  Since Medicare is not determining the course of treatments you may be approved for, it is important to know the integrity and standards of the MA plan itself.

Original Medicare and Medigap for Taking Full Control of Your Healthcare

If you want maximum healthcare choices, you should consider being enrolled in Original Medicare.  Similiar Medicare Advantage, with Original Medicare, Parts A and B will cover 80% of all Medicare approved charges for your care.  In addition, you may opt to purchase a Medicare Supplement Plan (Medigap) from a private insurer that covers the remaining 20%.  You, your doctor and Medicare are now in the drivers seat.  Balances of approved claims are electronically sent over to a Medigap plan (if you own one) and they are responsible to pay the remainder according to the standardized benefits.  Black and white and no grey areas.

If you elect Original Medicare, be aware that you will not have dental, vision screenings/eyewhere or even hearing benefits as many Medicare Advantage plans offer. This would be solved by purchasing a dental, vision, hearing insurance (DVH) policy if you would like those holes “plugged” so to speak.

Original Medicare allows you to see the providers you wish. No referrals are ever required.  If you reference the Medicare and You Guide Book, you will find all the plans are standardized and strictly regulated by Medicare.  The different plan options are lettered “A” thru “N.”  Each plan has different benefits to “supplement” your Part A and Part B of Original Medicare.

The three most popular plans have been the Plan F, Plan G and Plan N.  The benefits of these plans are beyond the scope of this article and will be the subject of another one.  Here a some general points we stress with consumers… Plan F is the “top of the line plan.”  It has all the bells and whistles, but you pay for having it.  Plan G is the “best value” plan available and a great alternative.  Plan N is a more affordable option that makes sense to some seniors, though small co-payments for outpatient care visits are at the discretion of your provider. This co-payment is strictly regulated by Medicare.

In the end, our clients want protection from paying out thousands of dollars for the financial impact of healthcare.  Original Medicare is the answer for a good majority of people in the US.  Original Medicare with a good Medigap Policy will protect you from serious healthcare claims down the road. No surprises or potential financial disaster of the wrong Medicare choice.

FYI here… No Medicare Supplement company or plan will pay anything unless Original Medicare first approves and pays it’s portion of your healthcare claim.  Medicare Supplements are linked to Original Medicare as the “decision maker.”  Medicare Supplements are regulated by the government.  You should also know that all companies must pay exactly the same according to the Medigap plan’s letter (F, G, K, N etc). This is unlike a Medicare Advantage plan.

About Medicare Supplement (Medigap Plans)…If you refer to the Medicare and You guide, you will find it clearly states that the price for identical plans can vary significantly from one insurer to the next.  Be aware of this.  Many seniors are grossly overcharged for their plan of choice. Remember, these are not $0 dollar plans. You are getting maximum options if healthcare with Original Medicare. Supplemental insurance companies are not in control of treatments nor is there a network involoved.

Make sure you speak to a professional who can shop Medicare Supplement plans out for you to find the a good price on a stable carrier for the supplemental plan you desire.

Each standardized, Medicare created plan offered by private insurers is identical in payment assuming you compare plans in a apples to apples comparison.  Since all Medigap polices are labeled A-N, comparison from one company to the next in simple.  Days of apples to oranges comparison is gone.  Comparable Medicare Supplements all have to pay the same.  They have to pay the same since they are regulated by Medicare and your state. What you need to know in terms of a Medicare Supplement is the letter of the plan (A-N), how much it costs and the companies financial strength.  Picking the right company will require an experienced professional who knows the carriers who keep their premiums competitive over time in your state. The sweet deal for year 1 may quickly fade in the near future. This is beyond the scope of this article. Contact a seasoned pro.

Medigap vs Medicare Advantage – The Short and Sweet

What the two choices boil down to is this…

Do you value the lowest cost for health coverage and some bonus perks (includes dental and vision etc)?  Can you accept that you will only have access to network providers as a general rule? Are you willing to accept the potential of high out of pocket costs for cancer treatment? Are you willing to be denied certain treatments because the private company managing the care denies your the recommended medical treatment?

Or…

Do you want access to the the top providers without all the network restrictions and worry if you could need cancer treatment at some point? Do you want the best care possible?

If you selected the first option to save potential upfront money, Part C or a Medicare Advantage plan is your best option.  Pairing it with a good cancer plan is recommended however.

Now, if you lean towards unrestricted access to providers across the country including the Mayo Clinic and the like, Original Medicare (Parts A & B) combined with Medigap Plans F, G, N or even High Deductible Plan F or G are really the way to go.  Pairing it with optional senior dental, vision and hearing insurance coverage makes this the best coverage combo.

If you want the best, option 2 is the ticket. Yes, this is clearly more expensive, but you are in control with your doctors instead of the other way around.

 

Medicare and Medigap Conclusion

Medicare Advantage (Part C) can be an effective, low cost alternative to traditional Medicare as long as you understand its limitations.  It is intended to be the most affordable option. 

Is it meant to be top of the line…probably not.  The potential for very high out of pocket expenses exist in the vast majority plans. 

With that said, MA plans often throw in some nice bonus features such as dental, vision and even a gym membership. We can all use and take advantage of some of these bonuses.  This is certainly of value.

Medicare + Medigap will leave holes in the dental, vision and hearing area.  Medicare Advantage (Part C) plans typically offer some coverage for some or all of these 3 areas. 

Understand that unpaid claims with Original Medicare are almost always related to charges Medicare did not approve. It could be a wrong billing code or that the Medigap plan purchased was not full featured.  The top Medigap plans are F, G, N and High Deductible plans F, G.

In 1992 Medicare “standardized” the Medicare Supplement plans insurers could offer. This eliminated comparision problems from one plan to the next. It allowed seniors to shop their desire plan strictly by the “plan letter.”  Older Medigap plans are history as they varied greatly and were tough to compare.  I saw many of them when I started my career in the late nineties.

Nowadays, Medigap insurance companies all pay claims by the official Medicare rule book just like clockwork.  Medigap, Medicare Supplement insurers are strictly regulated at a Federal and State level and linked to any Original Medicare payments, electronically.

If you are turning 65 and are in open enrollment, no insurer can ask you any health questions.  They must accept you regardless of any health condition you may have.  This is the case on any Medicare Supplement plan you choose. 

If you have a medical condition that may prohibit you from changing in the future, it is very important to make a good decision now.   You see, the key to changing in the future is dependent on being able to qualify based on your health.  It may be your only opportunity to lock your benefits in.

Be aware, an insurance company with a recognizable name does not necessarily make them a good choice for you.  In fact, I have seen some of the largest rate increases come from some of the big name insurers.  Then again, some small, new to the Medicare insurance market carriers can and do have the same history. 

Big name rules definitely apply to Medicare Advantage insurers as well…the name does not matter at all.  Find the best plan in your area you can afford and ask people you know who may have had serious medical care under that plan.  What was their experience with their MA plan?  Did they feel the healthcare was great or was it compromised in some way?  This is my best piece of advice.  Medicare Advantage is a bit of a grey area you must accept that if you are electing it. Are you going to have access to the best treatments available on it?

Last tip here… make sure you have an independent specialist to help you out.  An agent who has been around the block that works in senior benefits can advise you on all the best Medigap insurance options to look at.  What is good for you now may not be so good 2 or 3 years later.  Takes time being in the business to see how to best serve your clientele in the long run and we take this very seriously.

Getting the help of an independent agent is free to you.  They are paid by the insurance company that issues any coverage on your behalf.  Reach out and get a healthcare advocate for yourself.  Medicare can be overwhelming for a lot of people.

If you have further questions, take look around the website a bit more, drop us an email or even consider giving us a call.  We’re always here to help.  Glad to do it with no commitments 269-244-3420.