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 complete care. This is a network of providers that you can receive health care from. Care is directed by the private company, not the providers.
Medicare Supplements aka Medigap plans are not available if you elect Medicare Advantage (Part C) instead of Original Medicare.
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.
This is a private program is run by numerous private insurance companies, not Medicare. In many areas of the country, you will have choices which insurer you will select. These plans are set up in HMO and PPO networks.
With that said, 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).
At that point, you may opt to upgrade to Original Medicare with Medigap coverage for broadened or full healthcare coverage. At that point, you would once again need to carry the card.
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.
Be sure you have not enrolled in Medicare Advantage (Part C) if you want traditional, Medicare coverage and a Medicare Supplement (Medigap Plan). Medicare Advantage (Part C) is not Original Medicare. We do not encourage seniors to elect Part C (Medicare Advantage) option unless your financial means makes it your only affordable option or do have “deep pockets” with a solid rainy day fund in place.
It can look very, very appealing for some people as it is a low cost option. Very nice on a fixed income. We all like to save our hard earned money, don’t we? Heck, some MA plans have no cost other than the payment of your Medicare premiums itself.
However, be aware of the high potential for high out of pocket costs in a Medicare Advantage (MA) program. $6700 annually for cancer treatment is common. Do you have a solid rainy day fund in place? Timing of treatments can easily become double just for rolling over into the next year.
You will have limited access to medical providers including hospitalization unless you are willing to pay 100% of the costs. Realize that behind the lower costs and amenities offered… there are limitations. Care is managed in this private program. Make sure your doctor(s) 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 are planning on dropping Medicare Advantage and changing to Original Medicare, you may only do this between January 1 and February 14. Drug coverage may not be altered until AEP as stated previously.
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. Your premiums for those elected parts are paid to the private insurer running the MA plan you elect.
Your healthcare is turned over to a private company who runs the program at their discretion. Yes, it must meet minimum Medicare standards which is 80% of the costs it approves. That is the key here. It can easily leave you with unknown healthcare costs and unpredictable lifetime expenses if your health takes a dive.
Just be sure if you elect Medicare Advantage (Part C) you understand you are entering an HMO or PPO. As such, your provider choices are restricted to a network. Any treatment options may be limited or not paid in full. If your doctor or hospital of choice is not in network, you will not have coverage if you see those providers. You may have rights if some of your providers are removed from the network but beyond the scope of this article.
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.
This is not Original Medicare folks. Be mindful of this. Possible compromises in your care should be considered here. Your doctor may suggest something that may not be approved by the MA plan. Remember, in the drivers seat we have a private company managing monies sent to them by Medicare on your behalf. There is basic regulation, but unlike Original Medicare, Medicare is not in the drivers seat. Be mindful and do your due diligence before deciding which Medicare Advantage plan is best for you. Medicare Advantage are often low upfront cost or even no cost plans. Don’t lose site, this is managed care. You and your doctor will have your hands tied.
Remember, you are under a private contract in a MA plan for 12 months. Medicare is not paying claims at all, the private care plan is.
Original Medicare and Medigap for Taking Full Control of Your Healthcare
Assuming you want or need maximum healthcare choices, you should be enrolled in Original Medicare. Now, 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.
Original Medicare allows you to see any provider you wish that participates with Medicare. 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 it.” Plan G is the “best value” plan available and our first recommendation. Plan N is a “non fixed cost” option that makes sense to some seniors, but it can pose some co-payments for outpatient care visits at the discretion of your provider. This co-payment is however limited by Medicare.
In the end, our clients want protection from paying out thousands of dollars for the financial impact of healthcare. Any of these 3 get the job done, nicely. 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.
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 essentially 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 benefits of the standardized, Medicare Supplement plan chosen. 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 coverage.
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?
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 to you as a eligible recipient.
Is it meant to be top of the line…probably not. Plenty of holes in the plans.
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. They just aren’t covered as with Medicare Advantage (Part C).
Some free advice here…there is no “best” Medicare Supplemental insurance company who pays better or never has a rate increase.
Don’t believe anyone who tells you otherwise. It is a lack of understanding or just hot air. We work with all the top rated companies.
Unpaid claims are almost always related to charges Medicare did not approve, a wrong billing code or a Medigap plan that was not full featured. The top Medigap plans are F, G, N and High Deductible plans F, G.
Working with all the top carriers in the industry, I can tell you this without reservation. Rarely do we have people even discuss plans with us other than the 5 listed previously.
I have personally worked with senior citizens since the late 90’s. Yes, I have seen many policies prior to standardized Medicare Supplement Plans.
In 1992 Medicare “standardized” the plans insurers could offer you. While those policies are all history these days, those older plans varied greatly and were tough to compare. Regulation of coverage was a bit more limited.
Nowadays, Medigap insurance companies all pay claims by the official Medicare rule book just like clockwork. Medigap insurers are strictly regulated at a Federal and State level and linked directly 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 smaller companies can and do have the same history. Anyway, it creates a lot of extra work for us, so we don’t forget who rocks the boat more than the others.
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.
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 for 1 year 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.
Independent agents are free to you for consultation as well as purchase. They are paid by the insurance company that issues any coverage on your behalf. Reach out and get a healthcare advocate for yourself. Trying to figure this all out on your own can be difficult and a good independent agent is a valuable resource to affordable, quality healthcare.
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.