Understanding Medicare and Your Options

• Standard Medicare comes with two different parts: Part A and Part B. To learn more about each of these parts and the coverage they provide, read this section.

• Medicare Advantage is often called ​“Part C” because it combines Parts A, B, and D all in one plan and fills the coverage gaps. To learn more about Medicare Advantage plans, read this section.

• If a patient qualifies for Medicaid, they are able to enroll in what is known as a ​“dual eligibles” program combining Medicaid and Medicare. To learn more about this insurance plan, read this section.

• If you or your spouse are still working and/​or have insurance through an employer, you might not need to opt into Medicare just yet. To learn more about insurance options outside of Medicare, read this section.

The Federal Medicare Program is a federal health insurance program instituted by the federal government that provides health coverage for adults over 65 and those under 65 with certain disabilities. The plan is funded by both the Social Security Administration and the Medicare taxes you pay on your income. Standard Medicare includes both Parts A and Part B coverage, leaving the patient responsible to make up for any gaps in coverage such as prescription drug expenses, dental or vision insurance, and any deductible costs.

Many people today are working past 65, for various reasons. If this is you, you don’t need to sign up for Medicare, as long as you are under your employer’s group plan covering at least 20 employees. You can also opt-out of enrolling at 65 if your spouse is covered by their employer group plan as well.

Once you become Medicare eligible, you can enroll in:

• Original Medicare, (Parts A and Part B), which pays providers directly for each service a person receives. 

• Medicare Part D for prescription drug coverage.

• Medicare Advantage, which is a type of private insurance offered by companies that contract with Medicare.

• MedSupp, a supplemental insurance plan that helps to cover standard Medicare’s gaps.

If you want prescription drug coverage called Part D with your Original Medicare, you will most likely need to sign up for a separate Medicare private drug plan. A drug plan through Original Medicare is called a PDP, while one through a Medicare Advantage plan is called an MAPD.

Let’s get deeper into the various parts of Medicare. Original Medicare or Traditional Medicare is referred to as Part A and Part B. Prescription drug coverage is called Part D. You might be wondering what happened to C, but don’t worry, Part C is called Medicare Advantage and we’ll talk about that later. There’s also MedSupp, and Medicare + Medicaid, but we’ll cover that later, too.

Medicare Part A

Part A, otherwise referred to as hospital insurance, is usually premium-free if you have worked for at least 10 years and paid into Medicare taxes. If these circumstances don’t apply to you, you can enroll in Part A with a monthly premium cost. Think of Part A as hospital insurance.

Part A Coverage

• Skilled nursing facilities

• Hospital visits

• Home healthcare

• Hospice care

Medicare Part B

Part B, which is known as medical insurance, and usually carries a monthly premium. Social Security will typically send you sign-up instructions at the beginning of your initial enrollment period, three months before the month of your 65^th birthday. Consider Part B as outpatient insurance or medical insurance.

Part B Coverage

• Doctor visits

• Preventative services

• Ambulances

• ER visits

• Outpatient procedures

• Durable medical equipment

• And more

Part B Premium

For 2020, a standard Part B premium will typically run $144.60 a month. This is usually drawn from Social Security or Railroad Retirement benefits. There are copays and deductibles with Part B, and individuals who earn more than $87,000 per year or $174,000 for couples, for their adjusted gross incomes, will pay more. 

You’re not forced to sign up with Part B when you become Medicare eligible. However, if you wait it could cost you more in the end, due to late-enrollment penalties. 

Part B Deductibles

• Your deductible in 2020 is $198

• You typically pay 20% of the Medicare-approved amount 

Let’s break this down to better understand what Part B might cost you for coverage. Let’s say you have a $100 doctor visit, you pay $20. If you were to have a more expensive specialist visit or surgery say $10,000, it would cost you $2000.

It’s not required to take Part B when you enroll in Medicare. But it is worth noting that you will incur a 10% fee for every year you went without it if you decide to take Part B later. It is also worth noting, that if you are currently working and have insurance through your employer you don’t have to take Part B when you become Medicare-eligible and you will not be penalized for it later.

Medicare Part D

Part D is the name used for your prescription drug coverage. Part D prices vary by plan. The premiums start at $35 a month and go up from there. And while you may not be taking any prescription drugs when you become Medicare eligible, if you wait until after your Annual Enrollment Period, you will be penalized with a higher rate when you do finally enroll. So think about this one carefully, it sneaks up on a lot of people. Plus, Part D has deductibles and copays, and they depend on your plan selection.

Original Medicare alone does not cover everything, meaning your out-of-pocket expenses may cost more than expected. If you consider the scenario above, where we discussed the $2,000 out-of-pocket hospital bill from just having Part B insurance alone, Medicare Advantage may help keep those expenses down. Medicare Advantage is considered managed care, as well as all-in-one insurance. This is because most Medicare Advantage plans combine Part A and B (what Original Medicare covers) along with Part D and additional benefits all in one plan.

Medicare Advantage Added Benefits

• Gym memberships

• Dental

• Vision

• Transportation to specialists

• Podiatry

• And more

Medicare Advantage Cost

These services may come at little to no cost, with fixed copays, so you’ll know how much you need to pay before anything is done. Plus, these plans usually come with maximum out-of-pocket limits and premiums that never rise. Like other insurance plans, you will have to stay within your network, and coverage is offered through private insurance companies during your Medicare Open Enrollment Period.

It is possible to have both Medicare and Medicaid services if you qualify. This means Medicare is your primary coverage and Medicaid becomes your secondary coverage. This is called​“dual eligible”. Having dual coverage generally will not cost you anything more and comes with additional benefits. Having both Medicare and Medicaid, means you are covered for Part A, Part B, and Part D. 

Dual Eligibles Added Benefits

• Dental

• Vision

• Transportation

• Over-the-counter drug benefits

• And more

Dual Eligibles Cost

These plans are usually $0 per month with $0 copays. You must stay in the plan’s network, but people with Medicare and Medicaid are not restricted to Medicare’s open enrollment, so you can enroll in this plan or change plans quarterly. 

Another way of covering expenses original Medicare doesn’t is through a MedSupp or Medigap plan. These plans work with Medicare and generally pay 20% of the coinsurance and a large part of the Part A deductible. However, they are different from Medicare Advantage plans because of cost and what services they each provide.

• Plans do not offer extra benefits besides what you already receive with original Medicare

• Plans do not cover Part D

• Monthly premiums typically run $180 — $500 per month

• Your network will remain the same as your Medicare network

• Enrollment happens any time of the year 

• If you sign up after you turn 65, any pre-existing conditions can factor into higher premiums and even being denied coverage

As of January 1, 2030, Medigap plans sold to new people with Medicare are no longer allowed to cover the Part B deductible. Due to this, Part C and Part F are not available to people new to Medicare starting January 1, 2020. If you currently have either of these two plans, or the high-deductible version of Plan F, or are covered by one of these plans before January 1, 2020, you will be allowed to keep your plan. In addition, if you were eligible for Medicare before January 1, 2020, but not yet enrolled, you may be able to buy one of these plans. 

Many circumstances lead to the decision on whether you should enroll for Medicare benefits when you turn 65. However, here are some things to take into consideration when making this decision:

• Are you still employed and covered by your employer’s group health plan?

• Does that group health plan cover at least 20 employees?

• Are you married to someone who is still working and covered by their employer’s group health plan that covers at least 20 employees?

If you answered yes to any of the above, it is not demanded of you to enroll in Medicare when you become Medicare eligible. However, there are certain things to take into account:

• If you don’t fall into any of the above categories, you incur a yearly penalty for every year you didn’t have Medicare coverage

• The premium for Medicare Part A is typically free for those who worked at least 10 years

• Medicare Part A can be used in conjunction with your employer’s group plan to help subsidize any out-of-pocket expenses

• If you leave your employer during that time, you’ll get an 8‑month Special Enrollment Period to sign up for Medicare

• Your 8‑months to find a Medicare plan begins one month after you leave your employer’s group plan, or one month after you separate from your employer, whichever happens first

• If you sign up during this time, you won’t have to worry about premium surcharges for being late. The 8‑month Special Enrollment Period is also available if you’re delaying Part B enrollment if you’re covered under your spouse’s employee group plan. Assuming it covers at least 20 employees

It’s good to remember, even if you are satisfied with your current Medicare coverage, plans change and costs rise every year, so it’s worth it to look into your options and make sure you’re getting the most from your benefits.