If you are turning 65 in the next six months, you have likely started receiving post cards, letters, advertisements, and phone calls from insurance companies and insurance agencies offering to help with your upcoming senior moment: the day you are eligible for Medicare.
If you are aging into Medicare, you have a seven-month window of eligibility to enroll. You can sign up for Original Medicare (Part A and Part B) three months prior to turning age 65, the month you turn age 65, and three months after your birth month. With some exceptions, if you fail to sign up during your initial open enrollment period, you will be subject to late enrollment penalties.
What is Original Medicare?
Medicare Part A provides coverage for hospital expenses while Medicare Part B covers doctor and outpatient expenses and additional costs that are not covered by Part A.
Once you are enrolled in Original Medicare, your plan will pay a large portion of your medical expenses, though it does not pay for everything. Many Medicare beneficiaries consider secondary coverage to provide additional financial security and fill in the gaps for the costly medical bills that Original Medicare does not cover.
There are two distinct options for secondary coverage: Medicare Supplement and Medicare Advantage. Both options have a very distinct approach for moderating the exposure to medical costs not paid by Original Medicare.
Let’s take a look at both options…
Medicare Supplement Plan
In some cases, Medicare supplement plans, which are offered by private insurance companies, are referred to as “Medigap” or a “gap plan”. Medicare Supplements are designed to provide coverage for some or nearly all of the remaining claim amounts that are not paid by Original Medicare. However, Original Medicare does not include Medicare Part D prescription drug coverage, so it is important to add a Part D plan based on your current medications.
Medicare Supplements are considered standardized plans. In total, there are ten standardized supplements available, including Plan A, Plan B, Plan C, Plan D, Plan F, Plan G, Plan K, Plan L, Plan M, and Plan N. Each plan will pay some or nearly all claim amounts not paid for by Original Medicare.
Insurance companies offering supplement plans are not required to offer all plans in all areas. By law, the Medicare benefit of each standardized plan is identical no matter which insurance company is offering the supplement plan. However, each insurance company can charge a different monthly premium amount for the same standardized plan. Your licensed health insurance agent can help you save costs with a premium price comparison. Your agent can also assist you with the application process.
Another significant feature of having a Medicare Supplement is that there is no provider network requirement. Beneficiaries covered by Original Medicare and a Medicare Supplement can go to any doctor and/or medical facility in the United States, as long as the doctor or facility accepts Original Medicare.
Medicare Advantage Plans
The second option for secondary coverage is a Medicare Advantage plan. Medicare Advantage, also known as Medicare Part C, is available with Part D prescription drug coverage and can also include preventive dental, vision, and hearing coverage, as well as other benefits not included with Original Medicare. These plans are also offered by private insurance companies under an annual contract with Medicare. Medicare Advantage plans are available today with a $0 monthly premium.
The more common Advantage plans available are either HMO or PPO network plans. With the HMO plans, the beneficiary must use in-network doctors and facilities to receive benefits from the plan. With the PPO plans, on the other hand, the beneficiary can use in-network providers with lower out-of-pocket cost for service or choose an out-of-network doctor and pay a higher price for services.
With coverage from a Medicare Advantage plan, there is a schedule of cost for services that the beneficiary pays out of pocket. For example, the cost for a primary care visit might be $10 under one plan and could be more or less under a different plan. Some services have copays, which is a set dollar amount, while other services will have a coinsurance or percentage amount due. The amounts paid out-of-pocket accumulate toward a maximum out-of-pocket limit set by the plan. Unlike Original Medicare, the Advantage plan limits exposure to catastrophic medical costs by putting a cap on annual expenses with the annual maximum out-of-pocket limit.
Comparing Your Options
A Medicare Supplement plan with a Part D drug plan will require a monthly premium, even though you may be presently healthy and not using the health care system. If and when you do need service, Original Medicare will pay its portion and the supplement will pay the remaining costs, according to the benefit schedule of the selected standardized plan. For example, Plan G pays all Medicare-approved amounts after meeting a $198 annual Part B deductible.
With the Medicare Advantage plan, on the other hand, you can enroll in a plan with $0 monthly premium cost, but copayment and coinsurance amounts are due as medical services are rendered. All out-of-pocket medical costs, not including prescription costs, accumulate toward the maximum out-of-pocket limit for the year. The out-of-pocket limit can vary from one plan to the next and can raise or lower from one year to the next. However, once the limit is reached during the calendar year, the plan pays all Medicare-approved amounts above the limit.
The key to finding a plan that works for your budget is knowing your options, but you don’t have to do the work on your own. Contact ARC Benefit Solutions today and our licensed health insurance agents can help you walk through your options, the benefits of each for your situation, and how to take advantage of those plans so you remain in good health.