Many people find insurance, in general, to be a daunting topic—and Medicare is no exception. If you are on Medicare insurance, or soon will be, hopefully you can ease the burden of the topic, with a clear picture of your options.
Everyone is in a different place, literally, with Medicare. Some people are just entering due to the approach of their 65th birthday. Some are deciding if they should stay on an employer plan or move over to Medicare. Still others may have delayed taking Medicare and are in their 70s, and are now figuring out how to move over to Medicare (or if it’s a good idea) from an employer plan. And finally, some people have been in the government program for years, and are looking to make changes to their plan and coverage choices.
No matter which of the scenarios above might apply to you (or another version thereof), an excellent place to start is with an independent, certified advisor that can give you a clear picture of all of your options, as well as manage your enrollments, and advise you on potential pitfalls in your path. These people go through a series of exams and multiple certifications every single year, to be able to offer solid, up-to-date advice to Medicare beneficiaries. The plans, the rules, and the structure change annually, so the certifications and exams must be completed each year. Medicare is driven by the Centers for Medicare and Medicaid Services (CMS), who offers guidelines and rules of engagement to advisors, designed to protect seniors.
You’ll usually come across three main types of advisors:
- Government advisors – These work for the State Health Insurance Assistance Program (SHIP) and are paid through government funding.
- Captive agents – These work directly for one insurance company and are paid by that company.
- Independent agents – These don’t work for any one company. Instead, they’re licensed with many different insurance companies and earn a commission from whichever one you choose.
None of these advisors should be charging fees for the consultation.
Once you find the advisor of your choice, that advisor’s skill level in fact finding and applying years of knowledge and experience can make a big difference in your final outcome. For some, there is a lot to explore and a lot of rules to look back on. For others it’s a rather simple transition and merely a matter of choosing the type of coverage that fits your needs and desires.
Structure
Original Medicare is the only government sponsored portion of the program. It is the red, white and blue card that has a member number and an effective date for Part A and Part B. Those dates depend upon when you entered the program and can be different for both parts.
For most, Part A is premium free, and Part B has a base premium. CMS, a part of the U.S. Department of Health and Human Services, sets the standard Medicare Part B premium each year. In addition, if your modified adjusted gross income (MAGI) is above a certain threshold, the Social Security Administration (SSA) adds an Income-Related Monthly Adjustment Amount (IRMAA) to your Part B and Part D premiums.
Part A (hospital coverage) requires you to pay a deductible each benefit period before Medicare begins covering your inpatient stay. After the deductible, Medicare covers the first 60 days in the hospital, but if you need a longer stay, you’ll pay a daily copay from days 61–90, and a higher daily copay if you use any of your 60 lifetime reserve days beyond that. Skilled nursing facility care is covered in full for the first 20 days (after a qualifying hospital stay), but daily copays apply for days 21–100, and you are responsible for all costs after day 100.
Part B (medical coverage for doctor visits, outpatient care, and other services) has a small annual deductible. Once that is met, Medicare generally pays 80% of approved charges, and you are responsible for the remaining 20%, with no out-of-pocket maximum.
Original Medicare (Parts A & B) does not include a maximum out-of-pocket limit, meaning there’s no cap on how much you could spend in a calendar year. It also does not provide prescription drug coverage (Part D). Because of this high potential financial exposure and the lack of drug benefits, many beneficiaries choose to add coverage through a private insurance company to help manage costs and fill these gaps.
Through private insurance companies you have the option between a Medicare Advantage plan, also referred to as Part C, or a Medicare Supplement Plan, also referred to as Medigap.
These are two vastly different types of health insurance coverages, and the next article in the series will provide detail on these two choices, as well as address your Part D (prescription drug) options, and Dental and Vision coverage.
Nanette Makrauer is an independent insurance broker and Certified Medicare Advisor residing in Bluffton. nanette@health-wealth-insurance.com (www.health-wealth-insurance.com)