If you, like me, have reached age 65, you are being mailed, phoned and emailed about Medicare insurance because we are in the open enrollment period. This is the time (Nov. 1 through Dec. 15) the government set aside for people to change or purchase Medicare Advantage plans and Part D drug plans with out any medical underwriting.
When a U.S citizen turns 65, he or she is enrolled in Part A of Medicare. Part A covers inpatient hospital, skilled nursing facility and some home health care. There is no cost for Part A. There also is a Part B, which covers medically necessary services like doctor’s services and tests, outpatient care, home health services and durable medical equipment. Part B is optional and has a cost.
When we turn 65, we have several options for how we will pay for our future medical bills. We can do nothing. If we are hospitalized, Part A will cover a majority of our treatments, but not all. We can elect Part B, pay for it and additional medical bills will be paid for.
Unfortunately, Parts A and B do not cover all medical costs related to our treatments. To pay costs not covered by Medicare, we can elect to purchase a Medicare supplement plan or a Medicare Advantage plan.
A Medicare Advantage plan is an agreement with a company to provide medical care in exchange for your Part B Medicare premium and some additional premium from you. A medicare supplemental plan is an agreement with a company to provide coverage for things Medicare Parts A and B do not cover. Though the two may seem similar, they are quite different.
The easiest to explain is a Medicare supplemental plan. You keep Plans A and B of Medicare, and the supplemental plan pays for things not covered. The government, in an attempt to make it easier to understand supplemental plans, created a series of uniformed plans and assigned letters to them. Plan F with company X is the same as plan F with company Y.
The only difference is cost and service. With a Medicare supplemental plan, you can go to any doctor or hospital that accepts Medicare anywhere in the country. I do not want you to believe Medicare supplemental plans cover everything, but because you pay a premium for them, they should provide more coverage than an Advantage plan.
Medicare Advantage plans take your Medicare Part B premium and any additional premium they charge and make you part of their network. If you seek treatment within their network, they will bill the government for Part A coverage and provide Part B coverage to you.
If you seek treatment outside of their network, then you may face additional charges. Why the government has not also required some type of standardization between Advantage plans is beyond my pay grade. Within a Medicare Advantage plan, there may be deductibles and co-insurances. These are costs you will be responsible for. I have seen Medicare Advantage plans that claim no premium, but require you to pay part of a hospital stay.
I do not want to say one plan is better than another, but want to point out there is no free lunch. If you pay nothing, or little, for something, then you should expect there to be a difference between something that costs hundreds of dollars per month.
Unfortunately the differences are not easily seen and require reading some fine print. The first three phone calls I received this month began with, “We can provide you with a Medicare Advantage plan with no premium charge.
The last part of Medicare that you need to understand is Part D. Medicare does not cover self-administered (prescription) drugs. The Medicare Modernization Act of 2003, which went into effect Jan. 1, 2006, enables you to participate in a program that uses private pharmacy benefit managers on a regional basis to negotiate drug prices. These plans consider your current medications and will attempt to align you with a pharmacy that, with the cost of the drug and the premium you pay, will be the most cost-effective.
Bob Hollick is a State Farm Insurance agent based in Washington.
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