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Confused by all the Medicare Coverage Options?

by | Oct 9, 2020 | Government Programs, main post, Medicare, Open Enrollment

I have a lot of family members who are on Medicare, and my phone is already starting to ring as Open Enrollment, which runs from October 15-December 7, 2020, is getting underway. They, like many people, are confused by all of the options Medicare offers. Someone new to Medicare gets so much mail from companies offering coverage that they don’t know where to start.

Those who have gone through open enrollment before often don’t want to deal with it again, so they stick with the same policies they picked last year. But that isn’t always best because plans change, prices go up, and doctors and other providers may not stay in the plan’s network. At the very least, I tell them to look at the letter they received in September from their current plan to see what changes are coming in 2021. 

Choosing the right health insurance is really important for all of us, no matter what age we are. But it is really important for those with Medicare because for most people, the older we get, the more health services we use. Let’s take a basic look at what the options are.

Medicare Part A: Hospital Insurance

Once you turn 65, Medicare Part A is premium-free to most older Americans if you or your spouse worked for at least 10 years and paid Medicare taxes. Medicare is also available for people who get Social Security or Railroad Retirement Board disability insurance, and those with End-Stage Renal Disease (kidney failure) and Lou Gehrig’s disease (ALS). 

Medicare Part A covers:

  • Inpatient care in a hospital
  • Care in a skilled nursing facility
  • Hospice care
  • Some home health care.

Medicare Part A Costs

Medicare Part A is free, meaning you don’t have to pay a monthly premium to be covered. But it does not cover all of the costs of your care. You have to pay a deductible when you go into the hospital. In 2021, that will be $1,408 per benefit period. You could have to pay this per benefit period deductible more than once a year depending on how many times you have to stay in the hospital. You could also pay co-insurance if your stay is 61 days or longer.  

Medicare Part B: Medical Insurance

Medicare Part B helps pay for medically necessary doctor’s visits, outpatient care, home health services, durable medical equipment, mental health services, and other medical services. It also covers many preventive services, like flu shots and cancer screenings.

Medicare Part B Costs

You must pay a monthly premium for Medicare Part B, which is $144.60 in 2021. The premium could be higher depending on your income. You also have to pay coinsurance, which is 20% of the Medicare-approved amount for the services you receive. For example, if the Medicare-approved amount for a service is $100, Medicare would pay $80, and you would pay $20. 

For some of you, this may make sense. But we are about to get to the confusing parts.

Medigap Insurance

You have to pay for Medicare Part A and Part B copayments and coinsurance for the care and supplies you need out of your own pocket. To protect yourself from these gaps in coverage, you may want to buy a Medigap policy. 

There are a lot of different Medigap policies to choose from. They are lettered: A, B, C, D, F, G, K, L, M, and N. Not all plans are available, depending on when you enrolled in Medicare. And Massachusetts, Minnesota, and Wisconsin, plans are a bit different. 

To try to make it easier for you, all plans in each letter group must offer the same basic benefits  — they’ve been standardized. The cost may vary, and some may offer more coverage than others. For example, all companies offering Plan A in Tennessee must cover all the same benefits; they can just charge you more or add a few perks. Medigap plans do not cover prescription drugs.

If your head is swimming, you are not alone. And you aren’t even thinking about the most important thing — which option is best for you based on your budget and healthcare needs. That’s where the real work comes in. If you travel outside of the US, you will want to think about a plan that covers your healthcare while you’re away — Medicare Parts A and B do not.

Medigap Costs

Remember, you do not have to buy a Medigap plan. You can choose to pay the costs that Medicare Parts A and B do not cover out of your own pocket. A Medigap policy just protects you from unexpected costs. 

Medigap policies vary in price. The price goes up the deeper into the alphabet you go. Plans A and B will cost you less than plan G.

Medicare Part D: Prescription Drugs

Original Medicare — that’s Part A and Part B — doesn’t cover your medicines. If you want help paying prescription drug costs, you will need to get Medicare Part D. You may not need this if your retirement plan covers benefits. Call your retirement plan to find out if you are covered. 

What you pay will depend on the plan you choose. Most plans have premiums, deductibles, copayments, and coinsurance. Plans change each year, so it is important to check your options.

Medicare Part C: Medicare Advantage

Medicare offers more of a one-stop-shop to get your covered benefits called Medicare Advantage. Instead of having to sign up for Medicare Parts A & B and choosing to enroll in a Medigap plan, you can get all of the same coverage as Original Medicare. 

Medicare plans to set limits on how much you will have to pay out of pocket each year, like deductibles and coinsurance. This protects you from costs you weren’t expecting. Most plans even cover prescription drugs, so you wouldn’t need Medicare Part D.

There are many Medicare Advantage plans to choose from. Lower cost plans usually require you to get all of your services from in-network healthcare providers. The types of plans include:

  • Health Maintenance Organizations (HMO)
  • HMO Point-of-Service (HMOPOS)
    • This HMO plan may allow you to get some services out-of-network for a higher copayment or coinsurance.
  • Medical Savings Accounts (MSA)
  • Preferred Provider Organizations (PPO)
  • Private Fee-for-Service (PFFS)
  • Special Needs Plans (SNP)
    • These plans are for people with specific diseases, certain health care needs, or limited incomes.
  • Programs of All-inclusive Care for the Elderly (PACE):
    • This Medicare and Medicaid program that allows people who would need a nursing home-level of care to remain in the community. It is available in most states. 
  • Medicare Cost Plans:
    • These plans are available in limited areas of the country.

Medicare Advantage Plan Costs

The types of plans vary in price. The more freedom you have to choose your providers, the higher the cost.

I am Confused. How Can I Pick the Right Medicare Coverage for Me?

Many people are confused by all of the Medicare options to choose from. Working with a licensed independent agent can really help you get the plan that is right for you. They don’t just sell you a plan, they establish a relationship with you. 

When you work with an independent agent, he or she will compare benefits and costs across companies at no cost to you. Your agent will ask you questions about your income to see if you qualify for discounts or to find plans that fit your budget. 

The agent will also ask you about your health and where you receive care to make sure, if possible, that you continue to see the providers you already work with. If you travel, it is important to have coverage while you are gone. Your agent can make sure that you are covered. 

Make sure you work with an independent agent so you can compare plans across companies. Captive agents sell policies from just one company, so you are not getting access to all plans and options available to you. 

American Exchange has licensed independent agents who can help you. Call 1.888.995.1674 or email us at info@americanexchange.com to speak to a licensed independent agent. We are people helping people, and we want to make sure you get the coverage you need.