Many people turning 65 experience feel anxious because they are unsure how to begin their Medicare journey. These new Medicare beneficiaries are being routed into a whole new world of health insurance that they’ve never experienced before.
Therefore, it’s normal for them to feel insecure about whether they will be fully covered. The best way to know if you are fully covered is to understand what each part of Medicare is for and how you can supplement those parts for maximum coverage.
Here’s what you should know about Medicare to feel confident you have chosen the right Medicare path for yourself.
Medicare Part A
The easiest way to remember what Medicare Part A is for is to think of it as “room and board” in the hospital. Medicare Part A covers your inpatient hospital stays. With Medicare Part A you will have coverage for a semi-private room and regular meals while admitted to the hospital.
This part of Original Medicare covers post-hospital care as well. Skilled nursing facility stays and short-term post-hospital home healthcare are both covered under Medicare Part A.
Medicare Part A is the only part of Medicare you have been paying into during your years of working. That’s why if you or your spouse have worked the minimum of 40 quarters, or 10 years, you get premium-free Part A.
Although your premium may be zero dollars each month, you still have to meet deductibles and pay copayments and coinsurances. As of 2018, Medicare Part A has a deductible of $1,340 for each benefit period. In short, a benefit period begins the day you enter the hospital and ends once you have been out of the hospital for at least 60 days.
Once you have met the Part A deductible, your first 60 days in the hospital are covered. In other words, your daily copay for the first 60 days in the hospital is $0. Then your daily copay goes up to $335 per day and on day 90 the copay goes up again. If you require a stay longer than 150 days, you take on 100% of your Medicare Part A costs beginning on Day 151.
Medicare Part B
Original Medicare Part B is in charge of covering nearly everything else. Any services you receive outside of the hospital or skilled nursing facility and even some services inside these facilities are covered under Part B. Services like doctor visits, lab testing, outpatient surgeries, chemotherapy, and durable medical equipment are just a few things that Medicare Part B covers.
The price you pay for Medicare Part B each month is determined by your income. Basically, if you make more, you pay more for Part B. This is called your IRMAA (Income Related Monthly Adjustment Amount).
Currently, the national average for Part B is $134/month. Unlike Medicare Part A, Part B’s deductible is annual. As of this year, Medicare Part B’s annual deductible is $183. Once that deductible has been met, Medicare will pay 80% of your Part B services and you will pay 20%.
Medicare Part A and Part B have the same initial enrollment period. Each beneficiary’s initial enrollment period begins three months prior to their 65th birthday month, lasts through the month of their birthday, then ends three months later. During this period, you’ll need to enroll in both Part A and Part B to avoid gaining late enrollment penalties.
Medicare Plan Options
As you can see from what’s listed above, Original Medicare poses some out-of-pocket spending for you. That’s why insurance companies formed additional plan options that you can add to your coverage.
There are two types of plans you can choose from. You can only have one or the other, but you can’t have both. Each plan has a monthly premium that you pay in addition to your Part B monthly premium (and Part A premium if you have one).
The plan options work very differently from one another. Therefore, it is very important that you learn how each type of plan works, to ensure that you make the right coverage decision for you.
Medicare Supplement Plans
Also known as Medigap plans, Medicare Supplement plans help the beneficiary with their cost-sharing expenses under Original Medicare. Cost-sharing expenses include things like deductibles, copayments, and coinsurance.
The best time to enroll in a Medigap plan is during your open enrollment. This is a 6-month period starting after your Part B effective date that allows you to enroll in a Medigap plan without answering health questions.
Right now, there are ten standardized Medigap plan options available to Medicare beneficiaries. Each plan is named with a letter, similar to Original Medicare.
Let’s talk about a few of the plan options in detail. Plan F is the most well-known Medigap plan because it is the most comprehensive. Medigap Plan F covers Part A and Part B coinsurance, Part A and Part B deductibles, the first 3 pints of blood needed in the hospital, skilled nursing facility coinsurance, and Part B excess charges, all at 100%. Plan F also covers 80% of foreign travel emergency expenses. In summary, Plan F is first dollar coverage that will pay for all of the expenses that normally you would have paid for.
Medigap Plan G covers everything listed above, just like Plan F, except your Part B deductible. Some people can actually save money when choosing Plan G over Plan F even though you pay the Part B $183 deductible. This is because the monthly premium for Plan G is usually lower than Plan F.
Factors such as age, gender, location, and tobacco use, can all affect your Medigap premiums. It’s important to note that when picking your Medigap plan, first choose which plan you want, then choose the lowest premium. Don’t focus on which carrier you’re getting it through, because the plan’s coverage guidelines will be the same regardless of the carrier.
One reason why many beneficiaries love their Medigap plan is that they don’t have to worry about staying within a network. They’re able to see any Medicare provider nationwide.
Medicare Advantage Plans
When you hear someone say, “Part C”, they are referring to Medicare Advantage. When you choose a Medicare Advantage plan, you are opting to get your Medicare benefits from a private insurance company. You will still pay for your Part B premiums however you will receive your medical services from providers who are in the plan’s network.
A network is a specified group of healthcare providers. If you go outside of the network, you may not be covered, or you may pay a higher cost for your healthcare services. The plan will have set copays and/or coinsurance that you pay when you receive various healthcare services.
Medicare Advantage plans often have lower premiums and many plans include Part D drug coverage. The plans also have an out-of-pocket maximum cap to protect you from spending beyond a certain amount each year.
Medicare Part D
Part D covers retail prescription drugs. These drug plans have a set list of medications they cover as well as rules for certain medications, such as quantity limits or prior authorizations.
Part D is a voluntary part of Medicare, meaning you aren’t required to enroll. However, not enrolling when you first come Medicare eligible could result in late enrollment penalties. It’s recommended, that even if you aren’t currently taking any prescriptions, you should enroll in Part D. You never know when you might begin needing medication.
Are You Fully Covered?
While the fullest coverage is provided by Medigap plans, many individuals like the lower premiums that are offered by Medicare Advantage plans. Understanding your cost-sharing responsibility will help you to decide which plan is right for you.