Basics of Medicare Coverage

Insurance can be a very complex issue to navigate.  I will try to assist by defining key terms in understanding the various parts of Medicare.  There are 4 main parts to Medicare:

Part A – Hospital Coverage

Part B – Medical Coverage – Physician Office

Part C – Medicare Advantage Plans

Part D – Medicare Prescription Coverage

According to Medicare.gov, here are the terms you need to understand:

Medicare

Medicare is a federal health insurance program for people 65 and older and certain younger people with disabilities. It also covers people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant, sometimes called ESRD).

Medicare isn’t part of the Health Insurance Marketplace.

Part A – In general, Part A covers:

• Inpatient care in a hospital
• Skilled nursing facility care
• Inpatient care in a skilled nursing facility (not custodial or long-term care)
• Hospice care
• Home health care

Part B – Medical Outpatient Service – Physician Office Visits/Treatments/DME (Durable Medical Equipment)

Part B covers 2 types of services

• Medically necessary services: Services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice.
• Preventive services: Health care to prevent illness (like the flu) or detect it at an early stage, when treatment is most likely to work best.  You pay nothing for most preventive services if you get the services from a health care provider who accepts assignment.

Part B deductible & coinsurance

You pay $185 per year in 2019 for your Part B deductible. After your deductible is met, you typically pay 20% of the Medicare-approved amount for these:

• Most doctor services (including most doctor services while you’re a hospital inpatient)
• Outpatient therapy
• Durable medical equipment (DME)

To get help paying your 20% consider purchasing a Medigap plan.

Medicare Advantage (Medicare Part C)

Medicare Part C plans are offered by private insurance companies. 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. Most Medicare Advantage Plans may offer prescription drug coverage as well.

There are other less common types of Medicare Advantage Plans that may be available.  To learn more about these types of plans visit Medicare.gov.

TIP: Medicare advantage plans are only required to pay what Medicare pays, which is 80% of allowable charges.  In many plans, patients are required to pay the 20%. Make sure you understand your out-of-pocket cost when choosing one of these plans.  You may NOT add a Medigap plan on to a Medicare Advantage plan.

TIP:  If you are on a treatment plan taking chemotherapy or biologic therapy make sure you understand your out-of-pocket expense on these drugs.  For example, some Part C plans will have approximately $6,000 that the patient needs to pay before the insurance kicks in to pay for these treatments.  If you are not sure, call the plan and ask what your out-of-pocket expenses are for these treatments. That is very important. If you just ask if it is a covered drug, they will say yes.  This is correct — but at what expense is the key information you need to understand.  Remember: getting all the information will help you make an informed decision. Knowledge is Power.

TIP:  You can join Medicare when reaching the age of 65.  Switching between traditional Medicare and a Medicare Advantage Plan can only happen during Open Enrollment period.  The Open Enrollment period for 2020 will be from October 15th and continue until December 7, 2019.   Between January 1st and March 31 each year, if you are enrolled in a Medicare Advantage Plan, you can leave this plan and return to Traditional Medicare and purchase a Medigap plan.  You can also purchase a Prescription or Medicare Part D plan. In 2019, it also allowed you to switch between Medicare Advantage Plans. Only one switch is allowed during this time period.

Medicare Supplement Insurance

A Medicare Supplemental Insurance (Medigap) policy helps pay some of the health care costs that Original Medicare doesn’t cover, like:

• Copayments
• Coinsurance
• Deductibles

Medigap policies are sold by private companies.

Some Medigap policies also cover services that Original Medicare doesn’t cover, like medical care when you travel outside the U.S.  If you have Original Medicare and you buy a Medigap policy, here’s what happens:

• Medicare will pay its share of the Medicare-approved amount for covered health care costs (80%).
• Then, your Medigap policy pays its share.

What you need to know about Medigap plans

• You must have Medicare Part A and Part B.
• A Medigap policy is different from a Medicare Advantage Plan.
• You can buy a Medigap policy from any insurance company that’s licensed in your state to sell one.
• Any standardized Medigap policy is guaranteed renewable even if you have health problems. This means the insurance company can’t cancel your Medigap policy as long as you pay the premium.  However when switching between Medigap plans the do go through underwriting and may take into consideration your health history.
• Medigap plans are regulated and are sold by each company by the following letters.  For example, in 2019 these are the plans that are available.

Remember Medigap policies don’t cover everything

Medigap policies generally don’t cover long-term care, vision or dental care, hearing aids, eyeglasses, or private-duty nursing.

Retiree Coverage

According to Medicare.gov here is what you need to know regarding retiree coverage.

If you’re retired and have Medicare and group health plan (retiree) coverage from a former employer, generally:

• Medicare pays first for your health care bills
• Your group health plan coverage pays second

How your retiree group health plan coverage works depends on the terms of your specific plan. Your employer or union, or your spouse’s employer or union, might not offer any health coverage after you retire. If you can get group health plan coverage after you retire:

• It might have different rules.
• It might not work the same way with Medicare.

Since Medicare pays first after you retire, your retiree coverage is likely to be similar to coverage under Medicare Supplement Insurance (Medigap). Retiree coverage isn’t the same thing as a Medigap policy but, like a Medigap policy, it usually offers benefits that fill in some of Medicare’s gaps in coverage—like coinsurance and deductibles. Sometimes retiree coverage includes extra benefits, like coverage for extra days in the hospital.  For more information please go to www.medicare.gov.