When you are new to Medicare it can be overwhelming. All these companies want you to sign up for their plan when you turn 65, but there is not a whole lot to help you understand what you are signing up for. That’s where I come in.
This is the 1st of my three letter of my series that will broadly introduce you to Medicare. You can call me for an appointment at 865.712.5711, visit my website at www.InsuranceThatFits.com, or find me on facebook at “Insurance That Fits, 865.712.5711.”
First, how do you get Medicare? Do you have to sign up or does it happen automatically? If you are already receiving Social Security or are on disability, then you will be automatically enrolled. If you do not fall into one of those categories you can apply for benefits at Medicare.gov, by calling 800.772.1213, or by visiting your local Social Security office.
Your first option is traditional Medicare (sometimes called Original Medicare) which has Parts A & B (this is the left side of the flow chart). Traditional Medicare has no networks. You can go anywhere in the nation that accepts Medicare. This is one of the biggest benefits of traditional Medicare.
Part D is your drug plan (pharmacy benefit). Part D is managed by insurance companies that have contracts with CMS (The Center for Medicare and Medicaid Services) and follow certain guidelines. Every plan is required to have a formulary (the list of drugs covered) with drugs in every single therapeutic category. They don’t all have to have every drug in every category, but something. You are not required to get a drug plan, but if you don’t there is a penalty.
Advantage plans (the right side of the flow chart) have contracts with CMS and kind of bundle together Parts A, B, and generally D as well. Quite often, (but not always) Advantage plans offer extra coverage such as dental and vision that traditional Medicare does not cover. When choosing plans please note that the extra benefits vary from company to company and year to year.
With Advantage plans the doctors and hospitals are paid by the insurance companies not by Medicare. Advantage plans, just like a regular health insurance policy have networks. Networks are generally state based, but there are no networks for emergency care.
In general, with Advantage Plans you would expect to pay a little less in premium, but more in out of pocket costs. On the Traditional Medicare side you would typically pay more in premium, (a separate part D, Supplement, and dental plan) but less in out of pocket costs. You may also have more flexibility in which doctors and hospitals you can use. However, as you can imagine those are pretty general statements and it depends on your health situation and what choices you make for supplemental and dental protection.
Let’s dive a little deeper into Parts A & B…
Part A is generally referred to as “Hospital Insurance” and covers; hospital charges, skilled nursing facilities, nursing home care, home health services, and hospice services. If you think back to one of your paycheck stubs you would have seen a line item for “Medicare.” Well that was your part A premium you were paying. Once you have enrolled in Medicare you generally won’t have to pay that anymore! That’s a good thing.
Part B is referred to as “Medical Insurance.” It will cover the medical services needed to diagnose and treat your health issue. In addition, it will cover preventive services, durable medical equipment, second opinions before surgery, and more.
Part B does have a premium and most people will have to pay $135.5 a month in 2019. Higher income earners may have to pay more and lower income earners may be eligible for extra help. The Part B premium ($135.50 a month) does have to be paid regardless of whether you choose to stay with traditional (original) Medicare or go with an Advantage plan.
Now that you have an idea about costs, let’s talk about coverage. First, the deductibles. Part A has a $1364 deductible for the services it covers. That deductible will cover between 1 to 60 days of care.
It’s important to note that this is a per incident deductible, not per year. It is rare that a person would be admitted to a hospital multiple times in one year, but it does happen, so you need to be aware of that. Part B has an annual deductible of $185 in 2019 and after that it pays out 80/20.
I am available for “in home” consultations, via phone (865.712.5711), online meetings, etc. Call me today to start the Medicare solution that fits your needs and fits your budget. If you have not received your Medicare card or are not sure how to apply for it please give me a call and I can tell you how to get that process started.
Keep in mind you are not required to have a part D plan, but if you do not have drug coverage you may be opening yourself up to a penalty when you finally do enroll. If you choose to use your VA benefits for prescriptions, you will not have to worry about having a penalty for not having a Part D plan.
First, a company cannot charge you more (the monthly premium) simply because of what you need to take. Everyone on a given plan pays the same premium. Second, every Part D plan has to have drugs in every therapeutic category in its’ formulary (the formulary is the list of drugs that are covered).
When we look at your drug plan, we will look at the prescriptions, milligrams, how many times a day you take them, and even your favorite pharmacy to get you into the best plan for you.
A question I often get asked is what if my doctor prescribes something in the middle of the year that isn’t covered? There are two answers for that. You can compare your coverage every year during open enrollment and choose the best plan. In addition, if something is prescribed and not covered there is a quick appeal process your doctor can help you with. Remember, every plan has to have drugs in every therapeutic category so there will likely be something you can take.
You should base your choice of drug plan on what you are now taking, not what might happen 6 months down the road. Finally, Advantage plans often include a “built-in” part D plan. I often find their formularies are very, very good as well. It all comes down to looking at your drug list and seeing what plan gives you the best benefits.
Extra help is available for those with lower income. Some of these programs cut down prescription costs, while others help with prescription costs and Medical out of pocket costs. See the reverse side for the income and asset restrictions. I can help you apply for these programs or point you in the right direction. For people with Medicare and Medicaid there are special programs available.
Medicare Advantage Plans are through insurance companies that have contracts with CMS (The Center for Medicare and Medicaid Services). What they do is to bundle Parts A, B and (generally) D into a policy that looks more like a normal health insurance policy. Medicare Advantage Plans will have networks and you need to make sure you are seeing in-Network doctors and using in-Network facilities.
With Medicare Advantage the insurance company, not Medicare, is paying the doctors & hospitals. What you pay is generally a series of co-pays. It varies company by company and policy by policy.
The monthly cost of Medicare Advantage plans (the premium) is generally lower than what you might pay for separate coverage through Traditional Medicare, Part D, supplement and Dental plan, but you might pay more out of pocket. In general, the Out-of-Pocket-Maximums will be significantly higher.
Everything is on that continuum. More premium, less out of pocket OR Less premium, more out of pocket.
One of the biggest decisions you will have when you are turning 65 is whether to go with Traditional/Original Medicare or to go with a Medicare Advantage plan. So…what is the difference?
Very loosely, one key difference is your “financial exposure.” That is to say, if something bad happens to your health how much do you end up paying? With a “G” Medicare supplement your effective out of pocket maximum is the $185 (In 2019…all these numbers change a little every year). Advantage plans have a legal limit on their out of pocket maximums of $6700. The national average is about $5500, but some are lower. Generally, the less you pay in premium the bigger your out of pocket maximum will be.
I tell people all the time what you should get depends on your finances…not your health. Your health WILL change. For most of us, our finances in retirement don’t change much at all. Let me tell you the story of two retirements and how the differences drove choices in Medicare.
Client #1 had very little income for retirement. All they had to live on was Social Security. However, they did have some money from savings. Because they had little income; they could not afford the higher monthly cost of a separate Part D (drug plan), Medicare supplement, and dental plan. Their monthly budget drove them to the lower premium of the Medicare Advantage plans. For years when there was higher out-of-pocket cost they did have savings to fall back on to cover those costs. So, the Advantage plan fit their financial circumstances.
Client #2 had a decent retirement income with Social Security, a small pension, and an annuity. What they didn’t have was any savings to fall back on at all. This client could not handle unexpected out of pocket costs that might come with an Advantage plan. They did have more than enough income to cover the cost of traditional Medicare, part D plan, supplement, and dental coverage. For this client Traditional Medicare was the best choice.
By way of disclosure Insurance Agents make more commission on Medicare Advantage plans. Iif you talk to 10 of us then I am guessing at least 8 will tell you that Advantage plans are the best thing since sliced bread. The drawbacks to Advantage Plans are; 1. Networks, 2. Extra Benefits (such as dental) may change from year to year, 3. Aggressive use of “Utilization Reviews” (that’s where your doctor wants to do one thing, but your insurance company might think it’s too expensive or unnecessary), 4. Higher out of pocket Maximums.
Though I’m not a fan of Advantage plans I would still say that most everything inside Medicare is better than most everything outside Medicare. So if you want an Advantage Plan we will find you the best one we can. There are a lot of choices. I’ll be glad to walk you through all your options. Just give me a call and we can set up a time to meet. I get paid by the insurance companies and they charge you the same rate whether you buy from them direct or have me help you. You might as well give me a call.
 There are a few other categories that will be auto-enrolled, such as people with ALS (see Medicare.gov for details).
 You can also find this chart in the CMS publication, “Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare.”