In addition to Original Medicare, you have many decisions to make with regards to your Medicare coverage. Although Original Medicare provides excellent coverage, you may want to supplement that coverage with a Supplement Plan, also known as a Medigap Plan. Inn addition you may need a Part D plan, which is prescription drug coverage. You may also choose to replace your Original Medicare coverage with Part C (Medicare Advantage). Let’s break down all the different components of Medicare.
Part A is part of Original Medicare. You will most likely be automatically enrolled upon your 65th birthday and should receive your card in the mail. If you do not receive your card or you need to enroll, contact Social Security.
Part A is your hospital coverage. Generally speaking it helps to cover:
- Inpatient care in a hospital
- Nursing facility care
- Nursing home care
- Hospice care
- Home health care
Most people do not have to pay for Part A. Usually you qualify based on yours or your spouse’s work history. Because of this, you will want to enroll in Part A even if you are still working. If you do not qualify based on work history, you may have to pay a monthly premium of up to $471 until you qualify. This is the number as of 2021. You can qualify by working 40 quarters. If you are still working, there are programs that can help you pay for your Part A monthly premiums. Specifically, you’ll want to look into Medicare Savings Programs. Income and asset criteria apply.
Although, you usually will not have a monthly premium to contend with, Medicare Part A does have a deductible to meet as well as possible coinsurance. Unfortunately, there is no out of pocket maximum with Medicare Part A. So, should you have significant hospital bills, your costs may be extensive. This is why many turn to a Medigap Plan or Medicare Advantage.
Part B is also part of Original Medicare. Like Part A, you will most likely be automatically enrolled upon your 65th birthday and should receive your card in the mail. If you do not receive your card or you need to enroll, contact Social Security.
Part B is your outpatient insurance. It helps to cover preventative services like wellness visits and medically necessary services. Medicare Part B helps to 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
Your monthly premium for Medicare Part B is based on your income. In 2021, the standard Part B monthly premium is $148.50. But it can go up from there based on your income. However, you can apply to have your premium adjusted based on your post retirement income with form SSA-44. Like Part A, there are also Medicare Savings Programs available to help pay for Part B, but you need to meet certain income and asset limits.
Medicare Part B also has a deductible to be met as well as coinsurance for services rendered. In 2021, the Part B deductible is $203. Once you’ve met your deductible you’ll be responsible for coinsurance. Make sure the service you are receiving is covered by Medicare and provided by a physician who accepts Medicare (most do). Usually, Medicare will cover 80% of the costs leaving you with 20%.
Like Part A, there is no out of pocket maximum with Part B. So, you may want to look into Medicare Advantage or a Supplement Plan.
Medicare Supplement Plans
Although Medicare will cover a significant portion of your healthcare costs, there are still many gaps and unknowns. For this reason, many people turn to a Medicare Supplement Plan, also known as a Medigap Plan.
Medigap Plans will help to limit your out of pocket costs, impose yearly out of pocket maximums if need be, and cover the gaps of Original Medicare. However, Supplement Plans do not offer additional benefits not already offered by Original Medicare, i.e. dental, vision, etc… But they can help to cover your deductibles and coinsurance. You’ll pay an additional monthly premium but your deductibles and coinsurance will either be lowered or waived entirely based on the plan that you choose.
Think of Medigap Plans like an all inclusive vacation. You’ll pay more upfront rather than choosing to go a la carte, but you’ll know exactly what your yearly medical expenses are. And, there will be no sticker shock at the end of the vacation!
There are 10 plans to choose from with different levels of coverage. They can be viewed on Medicare.gov. Prices vary dependent upon the plan that you choose, your carrier, your location, your age and your gender. Remember, that Medicare Supplement Plans are standardized regardless of who your carrier is, so it’s very important that you shop around. And, with Medigap Plans, you’ll have access to the full Original Medicare network.
Medicare Advantage is also known as Medicare Part C. Part C Plans replace Original Medicare entirely. All Part C plans must offer at least the same benefits as Original Medicare. Like Medigap Plans, Medicare Advantage Plans seek to limit your out pocket expenses. But it’s very important you don’t confuse the two, as they are entirely different.
Unlike Supplement Plans, Part C Plans are not standardized. Benefits can vary widely and often offer fringe benefits such as dental, vision, hearing, and more. Plans very often offer prescription drug coverage as well. Because of the wide variety of benefits available, prices can also vary quite a bit. Plans van be viewed on Medicare.gov.
There can be a major cost savings associated with Part C Plans, but this is not always the case. There are a series of factors such as your specific needs, the carrier and plan you choose, and your location which affect whether a Medicare Advantage Plan is right for you. You will not have access to the same broad network as Original Medicare. Instead, you will be beholden to your specific carrier’s network, which can make finding a doctor or hospital a little more difficult.
In some areas of the country, Part C offers excellent cost savings with many added benefits. In other areas, it’s less desirable. Additionally, benefits and terms can change on a yearly basis, so it’s especially important to review your plan during the Annual Enrollment Period.
Original Medicare does not offer prescription drug coverage except for very limited drugs administered in a doctor’s office such as:
- Oral Cancer Medication
- Insulin to Be Administered via Insulin Pump
You can enroll in a prescription drug plan (PDP) in one of two ways:
- Medicare Part D
- Medicare Advantage (with prescription drug coverage)
If you are enrolled in Part C (Advantage Plans), then it is likely your plan will offer prescription drug coverage. If you are enrolled in a Medigap Plan, then you’ll need Part D. Either way, you can view available plans on Medicare.gov.
Part D is federally regulated, but offered by private carriers. There are four stages:
- The Deductible
- The Initial Coverage Period
- The Coverage Gap (Donut Hole)
- Catastrophic Coverage
Each of these stages has a cap as set by the Federal Government. Once you’ve reached that monetary amount you move onto the next stage. Carriers can choose to offer better benefits to compete for your benefits.
For Part D, you’ll be responsible for a monthly premium which is determined by the carrier and plan you choose. You may or may not have to meet a deductible dependent upon your plan. Then your copays will be determined by the stage you are in.
Based on your income and assets, you may be eligible for the Extra Help program which can help with your Part D premiums, deductibles and copays.
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