Medicare 101: Knowledge Is Power

TERMS YOU SHOULD KNOW:

When the term “original Medicare” is used, this refers to Part A and B. In the simplest terms Part A covers hospitalization and Part B covers doctors and patient care.

Original Medicare covers approximately 80% of your health care. (This does not include prescription drugs.)

This means that the Medicare recipient will pay the remaining 20% for their healthcare. Original Medicare allows for freedom in doctor and hospital choice.

Where it falls short is not being able to predict out of pocket expenses. If you have a catastrophic year, then 20% could be more than you are prepared for.

1. Medicare Supplements (also called Medigap Insurance)

A Supplement works with original Medicare (Part A and B) and does exactly what it says; it supplements Medicare by covering the 20% that Medicare does not.

By purchasing a Medicare Supplement, you will continue to have the freedom that you have with Original Medicare.

You can choose your doctors, you will not have to get referrals and you will not have many co-pays. Medicare Supplements are purchased in addition to the Part B premium that is coming out of your social security.

They can start at about $175 a month. The best way that we describe supplements is that you prepay for your healthcare so that you don’t have to pay later.

For those that can afford this monthly expense, there are few fees that will be out of pocket and most everything is covered. There are several levels of Medicare Supplements.

The plans are described with letters (not to be confusing). These lettered plans describe the same benefit plan no matter which company you choose.

The Plans are as follows: Plan A, Plan B, Plan C, Select C, Plan F, Select F, Plan G, Plan K, Plan L, Plan N.

The plans have different benefits and structuring so it is best to talk to a licensed independent insurance agent that can go over the different plans and can offer competitive prices from several companies.

The plans are the same, the prices are not. Supplements are only for your healthcare.

If you purchase a supplement you also should purchase a Part D Drug plan. (see Part D below)

2. Medicare Advantage with Prescription Drug Plans (MA and MAPD) Also called Medicare Part C

The second major option is to join a Medicare Advantage Plan with Prescription Drug coverage. This means that Part A, Part B and Part D are provided by a private insurance carrier.

Most of these plans do not require an additional premium, since you are already paying your Part B premium from your social security.

These plans will provide the services that original Medicare (Part A and B) covered, prescription drug coverage (Part D), and additional benefits as well.

These plans are what we consider pay as you go. They are less expensive than a supplement, however you will need to pay co-insurance and copayments for services.

Another very important thing that Medicare Advantage plans offer is a maximum out of pocket amount.

This an important benefit so that you can stop your losses at some point if you have a catastrophic year.

The maximum out of pocket amount cannot exceed $7,550 for benefit year 2021 (this does not include prescription drugs).

There are many Medicare Advantage Plans in Florida, offered by several insurance companies.

The two major plan types are PPO’s and HMO’s. You may be familiar with these terms. A PPO is a Preferred Provider Organization.

These plans allow you to access a large network of doctors and hospitals and usually do not require referrals to see specialists. An HMO is a Health Maintenance Organization.

These plans are often less expensive and usually have a network of doctors and hospitals that work with your plan, and are referred to as “in-network”.

HMO’s usually require referrals for network specialists.

3. Original Medicare + Part D prescription drug plan

When you turn 65 it is important to have some form of drug coverage. The third option is to be covered by original Medicare and enroll in a Part D prescription drug plan.

More about Part D prescription drug plans: Part D Prescription drug plans can be purchased with Original Medicare, a Medicare supplement (medigap policy), or can be a part of a Medicare Advantage Plan with Part D Drug Coverage.

Every company and plan has a different formulary (list of drugs covered by the plan and their tier structure) so it is important to look up your prescription drugs and be sure that your medicine is covered on your plan.

Note: If you go 63 days without creditable drug coverage, generally you will be penalized.

Currently, the late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($33.06 in 2021) times the number of full, uncovered months that you were eligible but didn’t join a Medicare drug plan and went without other creditable prescription drug coverage. -Medicare and You Handbook 2021

Note: Many of you may want to go to a seminar to learn about a company and product.

We encourage you to do so because knowledge is power. Most seminars sponsored by a health insurance company can only go over one plan in the seminar, per CMS rules.

Because there are over 65 Medicare Advantage plans in Hillsborough County, it may be time consuming to go to seminars for each of the top plans.

That is why we compare many  plans that best fit your healthcare needs.

We review the Medicare system and explain how it works.

If you are interested in a powerpoint presentation that can go over all of this information, you can download the presentation from Center for Medicare Services (CMS) here.