Medicare Advantage Plans (Part C of Medicare) have grown substantially over the past decade. In 2018, 34% of Medicare beneficiaries were enrolled in Medicare Advantage plans. However, “Original Medicare” remains the choice of more than two thirds of all Medicare recipients. In fact, Original Medicare is the default plan, if you don’t choose another option.
There could be several reasons for the continued popularity of Original Medicare; many people just do not want to invest the time and effort needed to choose an Advantage Plan, while others do not wish to be locked into a network of providers as required by many of those plans. Whatever the reason, it is likely that most of the seniors who read this article will be covered by Medicare Part A for hospitalization and Part B for outpatient services like doctors’ fees, lab costs, etc.
If you are covered by Original Medicare, by default or intentional choice, there are several important points that you should keep in mind. First, Original Medicare (Parts A and B) is good coverage at a very reasonable cost, but it is not complete coverage. The cost-sharing features of Parts A and B (deductibles and copays) expose the senior to an added expense that can add up to a substantial burden.
Suppose that a senior had one serious illness and was hospitalized for three or four days in early 2019. Medicare Part A covers 100% of inpatient hospital, skilled nursing facility, and some home health care services, but only after the patient has paid the first $1,364 of expenses. That $1364 is the Part A deductible for 2019. However, it is not a yearly deductible; it is a benefit period deductible. Medicare defines a hospital benefit period as extending 80 days after being discharged from the original hospital stay. After the benefit period has ended, a new deductible may apply, meaning that a senior could pay Part A deductibles twice or even more in a year.
Part B copays can also be considerable. After the senior meets the Part B 2019 deductible of $185, Part B pays for 80% of Medicare approved costs for most doctor services (including services while you’re a hospital inpatient), outpatient therapy, lab tests and durable medical equipment. Considering the age group covered and the cost of Medicare Part B premiums, this is very good coverage at a reasonable price. It is very doubtful that any senior could duplicate this in the private market if Medicare did not exist.
The 20% copay can amount to a very considerable expense. Medicare negotiates an approved cost for each service, and, after meeting the deductible, the senior should never be asked to pay more than 20% of that Medicare approved amount if the physician or other provider accepts Medicare assignment. That can still add up, way up! Some lab tests using very sophisticated equipment, MRI or CT scanners, nuclear stress testing equipment, etcetera can cost hundreds or even thousands of dollars.
Seniors need a way to complement the Parts A and B coverage of Medicare. “Medigap Plans,” (Medicare supplemental insurance) provide that complimentary coverage to Original Medicare. It is important to know the difference between Medigap Plans and Medicare Advantage Plans. A Medigap policy only supplements your Original Medicare Part A and B benefits. A Medicare Advantage Plan is a way to get Medicare benefits plus some extras.
If you buy a Medigap policy, Medicare will pay its share of the Medicare-approved amount for covered health care costs, then your Medigap policy pays its share. That Medigap policy share may range from 100% of the copay and deductible for expensive policies to much lower coverage for less costly plans. Seniors pay a monthly premium to a private insurance company for a Medigap policy as well as a monthly premium for Medicare Part B. Medigap policies cover one person; a senior couple must buy a separate policy for each spouse.
You can buy a Medigap policy from any insurance company that’s licensed in your state to sell one. All standardized Medigap policies are guaranteed to be renewable, even if you develop new health problems. They cannot be canceled if you pay the premium. Medigap policies do not include prescription drug coverage. If you want prescription drug coverage, you can join a Medicare Prescription Drug Plan (Part D).
There are 10 standard Medigap plans, each identified by a letter; they are Medigap Plans A, B, C, D, F, G, K, L, M, and N. This is a little confusing, isn’t it? Where did Plans H, I and J go? They are not available because of changes to Medicare itself. These are strictly standardized plans; a Medigap “Plan N” sold by United Health in Miami has the same benefits and coverage as a Plan N sold by Humana in Daytona. The requirements for these plans are set by the Medicare Administration. Medigap policies vary widely in price depending on the coverage offered and there can be differences in premiums that insurance companies charge for the same coverage. Private insurance companies set their own premiums; as seniors shop among the providers, they should be certain that they are comparing the same Medigap letter plans.
Often, private insurers will promote a Part D, prescription drug coverage plan, along with a Medigap plan. It is likely that the senior will then pay three insurance premiums each month – the Part B premium, often deducted from Social Security payments, a Medigap premium and a Part D, prescription drug coverage premium. This seems like a complicated situation, and it is a good argument for choosing a Medicare Advantage plan that combines all these coverages into one policy. We will take that up next week.
Murray Insurance Agency can answer your Medicare questions in a professional, knowledgable and convenient way, Their Medicare Specialists meet face to face with clients, using up-to-date computer screen technology to compare plans. You can find out more at Murray Insurance Agency/Florida Blue or by calling their office at 321-233-2424.
For information about any senior-related need, you may contact an OurSeniors.net Advisor by phone at 866-333-2657 (se habla Español), or Contact Us. Check out our website at Ourseniors.net and take an online look at our senior living magazine, OurSeniors.net Magazine.
