Decoding Medicare’s Alphabet Soup
While many Americans automatically become eligible for Medicare upon turning 65 years old, they don’t realize that enrolling in Medicare—without incurring penalties—requires making important choices well before they become eligible.
As a Certified Medicare Advisor, I can help you decipher the “alphabet soup” of Medicare and Medicare Advantage plans to find regular and supplemental coverage that works with your retirement budget and gives you peace of mind.
Parts of Medicare A, B & D
Many Americans have heard of Medicare Parts A, B, and D. Each of these Medicare Parts requires separate enrollment and a series of choices, which you should make in consultation with a Certified Medicare Advisor. As Your Benefits Concierge, I can help you decipher the “alphabet soup” of Medicare options to find the plan that provides the security and coverage that you’re looking for.
Part A: Hospitalization Insurance
What it covers: When you enroll in Medicare, you’re automatically enrolled in Part A. It includes coverage for
- inpatient hospitalization
- critical access and skilled nursing facilities
- some home-health and hospice services
- other inpatient services.
What it does not cover, however, is long-term or custodial hospitalization.
What it costs:
- Most people who are enrolled in Part A do not pay monthly premiums. Those costs were covered by the payroll taxes that they or a spouse paid while they were working.
- If you aren’t enrolled in a premium-free Part A plan—because you didn’t pay for it through payroll taxes, for example—you can still enroll in Part A coverage, but you’ll be paying a monthly premium of up to $411. Some states offer financial support for those who can’t easily afford Part A coverage.
- Those who are enrolled in Part A will still pay deductibles and a portion of the cost of any hospitalization.
Part B: Medical Insurance
What it covers: Part B covers a portion of
- outpatient and doctor services
- physical and occupational therapy
- lab tests
- other typical outpatient medical services.
What it costs:
You won’t be automatically enrolled in Part B. Because it’s optional, the time at which you choose to enroll in it—if you do—can significantly affect your costs. Those who enroll in Part B can expect to pay a premium and a deductible.
Part D: Prescription Drug Coverage
What it covers: Medicare approves plans provided by private insurers to help you pay for prescription drugs. Part D is optional coverage.
What it costs:
- In most cases, you’ll pay a monthly premium and copays. Some plans also include deductibles for prescription drugs.
- Drug prices will differ from plan to plan according to each company’s drug price sheet or “formulary.”
Medigap: Parts F and G
Each of the Parts of Medicare aside from Parts A, B, and C are considered supplemental or secondary plans and are sometimes called voluntary enrollment plans. These Parts—also called Medigap plans—help “fill the gap” to cover expenses that Parts A and B do not pay for. Some supplemental Medigap plans are standardized differently from state to state. Each Medigap plan—including Parts F, G, K, L, M, and N—has its own costs and policies. You can take advantage of this range of options to get the best benefits for your needs and budget, but it also requires you to make some important choices.
This Part of Medicare helps cover out-of-pocket costs not paid for by Parts A and B. This includes hospitalization costs associated with Plan A—such as deductible and copayments for hospice, long-term care, and skilled nursing facilities—and outpatient services covered (partially) by Part B. Part F can also provide you with coverage for emergency medical care while you’re traveling outside the United States.
Part G offers much of the same coverage available to you in Part F. They both help cover costs—such as deductibles and out-of-pocket expenses—that you’d have to pay for if you only have Parts A and B. The difference is that Part G, unlike Part F, won’t cover the deductible for Part B. In other words, if you’re enrolled in Part B and decide to enroll in Part F, you won’t pay for Part B’s deductible, whereas if you choose to enroll in Part G, you will be responsible for the Part B deductible. That deductible cost fluctuates from year to year. But assuming responsibility for paying Part B’s deductible may be a risk that you are willing to take. Click here to find out more about how I can help you determine which choice is right for you.
Who Is Eligible?
Most U.S. citizens and legal residents of a U.S. state who have resided in the U.S. for at least five years and worked for at least 10 years in Medicare-covered employment are eligible to apply for Medicare starting at age 65. However, there are important exceptions and qualifications regarding eligibility, and coverage does not begin automatically.
Types of Medicare Plans
Those who are enrolling in Medicare can choose to enroll in an Original Medicare plan or a Medicare Advantage plan in addition to Medicare prescription drug coverage.
- Original Medicare: Medicare serves as the administrator of Original Medicare, which is managed by the U.S. Federal Government. Those who enroll typically share the cost of their healthcare services and prescriptions. Cost-sharing typically includes paying monthly premiums, coinsurance, deductibles, and copayments.
- Medicare Advantage: These plans provide coverage for hospitalizations, medical services, and sometimes prescription drug coverage. Beneficiaries can choose from among cost-sharing PPO, HMO, or PFFS plans, which are approved by Medicare and provided by private insurance companies. Those who enroll in one of these plans typically share the cost of their healthcare services and prescriptions by paying monthly premiums, coinsurance, and copayments. One key difference between Original Medicare and Medicare Advantage is that Medicare Advantage plans are network-based, and costs to the beneficiary may depend on whether services are provided by in-network healthcare providers or providers who are outside the network.
- Medicare Prescription Drug Coverage: Plans that provide coverage for prescription drugs are part of Medicare Part D. These plans are available to anyone who is covered by an Original Medicare or Medicare Advantage plan.
While most supplemental plans offer similar coverage, working with a trusted healthcare benefits agent can help you find out which insurance companies offer the plans and coverage that you need. Contact me today to start the process of finding a good fit for your coverage needs.
When Should You Enroll?
There are three windows of opportunity to enroll for Medicare coverage:
- Three months before and four months after your 65th birthday: Those who qualify for Medicare at age 65 have a total of seven months to enroll, including three months prior to their 65th birthday and four months afterward. For those who enroll early, coverage for Parts A and B can begin as early as the day of their 65th birthday. However, the window of time that an eligible person has to enroll in Parts A and B is surprisingly brief. Once the seven-month window has closed, penalties and higher plan costs will probably apply, especially for those who enroll outside of the open enrollment period and who are not enrolling due to a qualifying event. Enrolling on time is essential for keeping healthcare costs down over time and for preventing medical underwriting related to preexisting conditions.
- Open enrollment: Those who are 65 years old and are eligible to enroll in Medicare but who did not enroll during the seven-month window around their 65th birthday have annual opportunities to enroll in Medicare with guaranteed acceptance, or what’s known as “guaranteed issue.” Those who are currently enrolled in Medicare and who wish to make changes to their coverage can also do so during the annual open enrollment period. The next open enrollment period is October 15, 2018 through December 7, 2018.
- Qualifying events: Occasionally, those who are eligible for Medicare may not have chosen to enroll when they first become eligible. Often, this is because they already have coverage through their employers or their spouses’ employers. Losing or dropping employer coverage counts as a qualifying event for those enrolling in Medicare outside of then open enrollment window and the seven-month window around their 65th birthday. Medicare-eligible beneficiaries may also be able to enroll without medical underwriting or increased costs as a result of other qualifying events such as relocating to a state where their existing insurance coverage is not offered.
Regardless of your age, it’s never too soon to learn more about how to plan for healthcare costs in retirement. To learn more about how you can get the best coverage and ensure your peace of mind while staying within your budget, send me a message today.
Important Regulations for Getting Help with Medicare or Medicare Advantage
If you’re ready to find out more about how Medicare will work for you, it’s up to you to contact a Certified Medicare Advisor. Federal regulations prohibit agents from contacting beneficiaries without permission.
According to regulations, agents are explicitly prohibited from:
- Soliciting beneficiaries via telephone or email
- Initiating contact with beneficiaries about any specific products the agents offer
- Following up with beneficiaries whom they have contacted via mail, unless the beneficiary requests that they do so.
Agents can only solicit beneficiaries by mail, not email. This may directly affect your ability to enroll for Medicare on time because it’s up to you to know that agents can only accept enrollment applications starting on the open enrollment date of October 15, 2018 and ending December 7, 2018, unless you have a qualifying event.
As a Certified Medicare Advisor, I can help you enroll on time. Start the conversation with me today about taking advantage of your Medicare benefits!