What is Medicare?

Medicare is a federally funded health insurance program that was signed into law in 1965.  It was designed to provide low cost, comprehensive health insurance to seniors of retirement age.  Most people pay into it throughout their working lives and are automatically enrolled upon their 65th birthday.  

Original Medicare works differently than the health insurance you’ve most likely utilized provided by your employment.  Rather than dependence on a carrier and a network, you have access to the full range of doctors and hospitals who accept Medicare.  Most do.  Additionally, there are no choices to make regarding HMOs or PPOs.  

Original Medicare will cover most of your health care needs.  Part A is your hospital insurance.  Part B is your outpatient insurance.  For services covered by Medicare, provided by a physician who accepts it, Medicare will usually cover 80% of the costs and you will be responsible for 20%.  

For both Part A and Part B, you’ll have a deductible to meet.  Usually, there are no monthly premiums for Part A and your Part B premium will be determined by your income.  

Original Medicare provides comprehensive coverage, but outside of Original Medicare, there are many decisions to be made to supplement that coverage.   

 

Why is It Such an Important Decision?

Medicare will most likely be your primary form of insurance after retirement.  Understanding our health insurance is always important but even more so as our health needs increase with age.  Making the right decision is important not only for your health, but for your wallet as well.  Unfortunately, our health and finances often seem to be inextricably linked.

Of course, you need to make sure that your coverage suits your health needs.  For example, many find themselves faced with deciding between Original Medicare and an Advantage Plan.  While Medicare Advantage can offer more benefits than Original Medicare (or even a Supplement Plan and Part D), the networks can be much smaller.  Additionally, copays can be much higher or even cost prohibitive with a Part C Plan when compared with a Medicare Supplement Plan (Medigap).  Quite frankly, it’s never that one option or another is better.  It’s always about finding a plan that suits your needs which is why you are best served working with a broker.   

How to Choose

Choosing your type of coverage is a balancing act between needs and finances.  Very often, we are drawn to plans with lower monthly premiums because those costs are the easiest to understand.  But you will still have deductibles, copays and coinsurance to take into consideration. You want to make sure that your type of coverage serves you and supports the benefits you will most frequently utilize.

There are additional ways to save money on Medicare (or unfortunately waste money) that you should understand to ensure you are getting the best bang for your buck.  There are savings programs and late enrollment penalties to be aware of.  Being informed can help to ensure you are receiving the best possible health insurance at the lowest possible rate.  

Medicare offers so many customized solutions for your health needs, but more options means more room for user error.  

 

What Are Your Options?

Original Medicare will most likely be your primary coverage.  But there are decisions to be made regarding voluntary secondary coverage as well as optional programs which can help you save money.

Let’s discuss:

  • Original Medicare
  • Part C
  • Medigap
  • Part D
  • Medicare Savings Programs
  • Extra Help
  • DSNPs
  • Medicare Medical Savings Accounts 

Part A

Original Medicare is Part A, your hospital insurance and Part B, your outpatient insurance.  

Part A will cover:

  • Inpatient care in a hospital
  • Nursing facility care
  • Nursing home care
  • Hospice care
  • Home Health Care

Part B

Medicare Part B helps to cover your outpatient insurance, namely medically necessary services, and preventative services.  It will cover:

  • Doctors Visits
  • Mental health services
  • Outpatient Surgery
  • Ambulance services
  • Durable medical equipment, like wheelchairs or walkers.  
  • Limited outpatient prescription drugs such as injections you get in a doctor’s office, certain oral cancer drugs, and drugs used with some types of durable medical equipment—like a nebulizer.  For more complete prescription drug coverage, you will want to look into Medicare Part D, which we discuss in another video.
  • Clinical research such as limited drugs, procedures, and services that Medicare would cover if you were not enrolled in the clinical trial. Basically, Medicare will cover the basic medical care needed for the treatment that the clinical trial is studying

Some people choose to get by with Original Medicare alone.  However, Original Medicare does NOT cover coinsurance, copayments, or deductibles.  Additionally, there is no out of pocket maximum, so these costs can stack up.

Medigap

You may want to consider enrolling in a Medicare supplement plan (also known as Medigap) or an Advantage Plan.  They both seek to cover the gaps of Original Medicare and limit your out of pocket costs.  However, they work entirely differently.  

Medigap plans will not offer additional benefits, just a different way to structure costs.  You will pay a monthly premium to lower or eliminate your coinsurance or copays.  You will still have access to the full Medicare network.

Part C 

Medicare Advantage (Part C) will replace Original Medicare entirely.  You may have added benefits, but will lose access to the full Medicare network.  You will also still have copays and coinsurance.  Very often Part C will offer prescription drug coverage as well.

Part D

Without Medicare Advantage, you will need Medicare Part D.  Although it is federally regulated, Part D is offered by private carriers who compete for your business by offering better benefits.  You’ll need to tailor your Part D coverage to your health and financial needs.

Additional Options

There are also ways to save money.  For example, your income and assets may make you eligible for Extra Help or a Medicare Savings Program.  Extra Help will assist with the payment of Part D.  Savings Programs will assist with Part A and Part B.  There are also DSNPs which are dual special needs plans.  These are a type of Part C Plan which encapsulate the benefits of Medicare and Medicaid for those that are dually eligible.  

Finally, there are Medical Savings Accounts which are similar to HSAs.  We expect to see a re-emerging popularity of these in the near future.

 

How to Choose the Right Medicare Option 

So, you can see, there are actually many options to choose from.  It’s important to take an honest inventory of your:

  • Health Concerns
  • Income
  • Assets
  • Expenses
  • Preferred Physicians and Hospitals
  • Prescription Drug Needs

 

You’ll also need to factor in your age, gender, and location.  You can peruse your available options on Medicare.gov by using the plan finder.  However, given the importance of the decision and the overwhelming amount of information we suggest working with a broker to ensure you select the right plan for your needs and your budget.  

Please feel free to call us at iHealthBrokers at 888-918-0518 or schedule a call today.  Our services are 100% FREE.