Taking Advantage of Medicare Means Understanding Its Parts
Healthcare in the United States is expensive, and it increases each year. Many people, especially seniors, have not always been able to pay for their medical bills. Medicare was signed into law in 1965 by President Johnson as an amendment to the then 30-year-old Social Security Act. The program has evolved over the years and now offers private supplemental plans and additional coverages that were not available to those first subscribers.
Original Medicare
Original Medicare is a two-part plan that covers hospital stays (Part A) and some medical expenses (Part B). Most people are enrolled automatically in Part A upon reaching their 65th birthday. Medicare Part A is a benefit that does not involve a premium and covers things such as skilled nursing facilities, inpatient hospital stays, and hospice care. Part B, however, is typically funded in part by premiums. Both elements of Original Medicare require a copayment/coinsurance and deductible as services are rendered.
Medicare Advantage
Medicare Advantage, which is also known as Medicare Part C, is optional and is purchased on the Medicare marketplace via an independent insurance agent. Advantage plans are often set up just like regular insurance and may utilize a PPO, HMO, or PFFS structure. Medicare Advantage is a type of Medicare supplement, and it is available to anyone enrolled in Medicare. It is priced based on elected coverage, although rates and availability vary by state.
Some individuals choose a Medicare Advantage plan because this coverage is more comprehensive than Original Medicare. Many online resources offer a wealth of information catered toward non-tech-savvy individuals. Medicare.org is an example of an Advantage plan provider and has agents available in every state to answer questions and help seniors choose the coverage that’s right for their lifestyle and budget. Medigap
Medigap insurance is also supplemental. However, the primary difference between Medicare and Medigap is t the latter virtually eliminates out-of-pocket costs (after premiums are paid). Medigap recipients are covered by Original Medicare, but copayments are paid by Medigap once the claims have been processed. There are multiple options for Medigap coverage, and some feature a high monthly premium, while others are more affordable but may limit benefits.
Medicare Part D
Medicare Part D, or prescription drug coverage, is separate from Medicare Parts A and B and Medicare Advantage. Part D plans are purchased separately and, according to CNBC, limit out-of-pocket medication costs to $4,550 per year.
Medicare and Social Security
One misunderstood aspect of Medicare is those receiving Social Security benefits must enroll in Part A to continue receiving monthly payments. It is important to note, however, anyone can reject Part B. Waiving Part B coverage is not without its caveats, and should coverage be needed later it may be significantly more expensive. Former American Diabetes Association policy analyst Kelly Montgomery further explains that Original Medicare is only premium-free for individuals with a work history of at least 10 years. She notes further there is no specific law mandating retirees drop out of their private health care plan, and Medicare can overlap with some employer-sponsored plans. Even still, Medicare and Medicare Advantage are typically more affordable than other forms of insurance.
With all of the different choices, the decision to stick with Original Medicare, a Medicare Advantage plan, or Medigap insurance isn’t easy. By understanding the various elements of each, you are in a better position to make a wise choice and will be better prepared to speak with an insurance agent during your initial enrollment or the next open enrollment period.