Reclaim your health with us! This article helps you understand your medicare healthcare options, including the most common questions people ask, such as:
- An overview of your healthcare choices from Medicare
- What is Original Medicare?
- What is Medicare Advantage?
- What are the key differences between these plans?
Overview of Medicare Choices:
People who are 65 or older become eligible for Medicare, the federal health insurance program. Medicare offers a range of choices, with a variety of healthcare coverage options. It is important to understand all the different options to make the right selections for your healthcare needs. We’ll help you understand the difference between Original Medicare and Medicare Advantage, so you have all the information you need to decide for yourself which Medicare option is best for you.
Original Medicare – The Basic Option
Original Medicare covers most medical care that is provided by a doctor, hospital, or care facility that is enrolled in the Medicare programs. You can select your care providers with few exceptions, and most specialists do not require a referral - saving you time and money. You usually do not have to file any claims, as providers are required to do that for you. Think of this as the “basic” healthcare option from Medicare. It is a good foundation for healthcare insurance, but may not cover all of your healthcare expenses and needs.
While Original Medicare is provided at age 65, it is important to understand that there are also costs associated with these plans. There is generally a deductible to pay before Medicare pays its share, and there are also required copayments for services. There is NO annual out-of-pocket maximum.
What Does Original Medicare Cover?
Original Medicare includes Medical Part A (hospital insurance) and Medicare Part B (medical insurance). Medicare Part A covers hospital stays, skilled nursing facility care, nursing home care, hospice, and home health. Most people do not pay a monthly premium for Part A. Medicare Part B covers preventative care, testing, ambulance services, home medical equipment, mental health services, and some prescription drugs. Part B requires a monthly premium, which is currently $144.60 per month in 2020. Medicare Part A and Part B combined do NOT cover some very important healthcare scenarios, including:
- Long-term care
- Dental care
- Eye exams and glasses
- Hearing aids
- Foot care
- Chiropractic care
If you’re not sure whether a healthcare expense is covered by Original Medicare, you can go online at medicare.gov/coverage to find out if Medicare covers an item or service that you need. Additionally, you can contact your state’s SHIP – State Health Insurance Assistance Program. Each state has a toll-free call center and website. Your physician’s office should also be able to guide you and help answer your questions related to coverage.
What is Medicare Advantage (Sometimes called Medicare part C)?
Medicare Advantage plans are provided by private insurance companies that are approved by Medicare. These plans include all the coverage of Original Medicare parts A and B, and usually include other added services such as vision, hearing, and dental coverages. These plans are attractive because they bundle Original Medicare plus added coverages into one convenient plan. Medicare Advantage plans are available based on your geographic location.
You may need to use health care providers that participate in the plan’s network, so evaluate plans carefully if you have specific hospital or physician preferences. You will need to follow the rules of the plan to utilize the coverage without incurring “Out-of-network" costs. Referrals to specialists are required. Some Medicare Advantage plans require a Part B premium, plus the Medicare Advantage premium, while others may pay all or part of the Part B premium.
You may have a copayment for covered services, and these may differ from Original Medicare. One benefit of Medicare Advantage plans over Original Medicare is an annual out-of-pocket limit. After you pay this amount, you will pay nothing for the rest of the year for treatment. To compare plans, including coverage, monthly premiums, drug coverage, and yearly deductibles, visit medicare.gov/plan-compare.
Selecting a Medicare Plan:
Medicare.gov suggests considering seven things when selecting Medicare coverage:
- Costs out of your pocket
- What is covered
- Additional coverage
- Prescription drugs
- Doctor and hospital choice
- Quality of care
Since this is a LOT to consider all at once, let’s put this in a simple comparison table. Be aware that this table does NOT have every detail in it, but represents a basic guideline for how to compare and decide what your insurance needs may be. When making the decision, it may be helpful to rank how important these things are to you, in order 1-7, to help you prioritize.
Medicare Part D (Prescription Drug Coverage)
Original Medicare parts A and B do not cover prescription drug costs, and Medicare Advantage plans vary by plan. The solution to this problem is Medicare Part D. Drug costs can be some of the most expensive parts of healthcare, and It is important to understand your existing drug costs and potential future costs. There are some important caveats to understand about Part D:
- Late enrollment: If you do not enroll in Part D when you are first eligible (typically age 65), but decide to later, you may incur a late enrollment penalty, which continues for as long as you have the coverage (so you could be paying this penalty for 20 years or more). This makes the total cost of coverage more expensive.
- The “donut hole”. The Part D donut hole is a coverage gap that occurs for some in the latter part of the coverage year. You enter the donut hole when your total drug costs, which includes what both YOU and your PLAN have paid for drugs, reaches a certain limit. The limit for 2020 is $4,020. When you are in this coverage gap, you will need to pay for a larger percentage of your drug costs than normal (25% in 2020). After you have paid $6,350 in 2020 out-of-pocket costs for covered drugs (just YOU, not your PLAN), then you reach catastrophic coverage and will pay less for drugs, typically 5% of the cost.
- In-Network Pharmacies: Just like you need to utilize in-network care providers for your Medicare Advantage plan, you will also need to make sure your pharmacy is in-network. Out-of-network drug costs will not count towards your donut hole to reach catastrophic coverage.
- Keeping Track: Part D plans send a separate monthly statement that will detail how much money you have spent out of pocket for covered drugs, and your status in regards to coverage periods. You should be able to anticipate entering the coverage gap and catastrophic period.
Extra help: There are income-based options that eliminate some of the out-of-pocket costs and penalties associated with Part D. If monthly income is below $1,615 as an individual or $2,175 for couples in 2020, then you are eligible for extra benefits. You are also eligible if you are enrolled in Medicaid, Supplemental Security Income (SSI), or a Medicare Savings Program (MSP).