With increasing healthcare choices for people enrolling in Medicare, we’ve also seen more confusion. In fact, it now appears that many beneficiaries miss the plan with the lowest premiums, at least when it comes to Medicare Advantage plans that cover prescriptions and Part D Prescription Drug plans. To avoid that, you need to understand not only how Medicare works, but also what type of Medicare plans are available where you live.
Here’s a primer on original Medicare. Part A covers mainly hospital expenses and is premium free for most people. It can help with inpatient hospital care, inpatient care at skilled nursing facilities, home health care services and even hospice care. It covers hospital stays of up to 60 days, and then you’re required to cover co-payments of $289 per day for days 61 through 90. If you need further hospital care, days 91 to 150 have co-payments of $578.
Unlike Part A, Part B is not free, but you are not required to buy it. It helps with doctor care, home health care, lab tests, outpatient care and other services from non-hospital providers. Part B covers 80 percent of a pre-determined amount that Medicare sets for every service. Doctors are free to accept Medicare’s rates or charge more. If your doctor does charge more, you’ll be responsible for not only the 20 percent that Medicare doesn’t cover of the pre-determined amount, but also for any excess above Medicare’s pre-determined rate.
Then, there’s Medicare Part C, which is actually an alternative to original Medicare. Known as Medicare Advantage Plans, these policies are available from private insurance companies to replace the Part A and B benefits of original Medicare. Why would you want a substitute? Advantage Plans typically add extra value, like coverage for dental care or eyeglasses or hearing aids.
Even if you choose Medicare when you are first eligible, you have an annual open enrollment period when you’re allowed to change your mind. Each year, you can switch to a Medicare Advantage Plan between October 15 and December 7. Advantage Plans cover the same health care that Medicare does and many add coverage for some prescription drugs. Unlike Medicare Supplemental Insurance (also known as Medigap Plans), Advantage Plans are not standardized. You’ll need to check each plan’s specific rules and requirements. Advantage Plans set up their own network of providers, and since you’ll no longer have original Medicare coverage, you’ll be required to use those providers for all services except in cases of emergency.
Like Part B, Medicare Part D is optional. It covers prescription drugs and is available for Medicare beneficiaries who have Part A or Part B. Also like Part B, the Prescription Drug plans have a monthly premium. As with Part B, if you don’t enroll when first eligible, you may have to pay higher premiums as a late enrollment penalty, but you can sign up between October 15 and December 7 each year. These private plans vary in cost and do not all cover the same medications. In addition, if you move outside of a plan’s service area, your coverage could be automatically dropped even for a temporary relocation.
There’s no annual enrollment period for Medicare supplement insurance, or Medigap, because you can apply throughout the year. You must have Part A and Part B to get a Medigap Plan, and you’ll have a special open enrollment period when you first become eligible for Medicare. It’s special because you don’t need to explain anything about your health then. Since insurance companies can’t ask about pre-existing conditions, your application can’t be denied due to probable medical costs. Open enrollment begins on the first day of the month in which you are at least 65 and enrolled in Part B. It only lasts for six months.
As the name implies, Medigap policies fill the gaps of Medicare’s Part A and B coverage. Remember that Medicare only pays for 80 percent of doctors’ fees even if they accept Medicare. There are 10 different Medigap Plans so you’ll be able to find some that cover much more than 20 percent of doctor bills. Some will reimburse the Part A and Part B deductible and even pay for emergency medical care when you travel outside of the U.S. even though Medicare has very little coverage in those instances.