Two women were recently overheard having a conversation about medical issues and aging. One who had just transitioned to Medicare and was 65 years old. The other was 63 and just starting to look at her options and what is needed to enroll. The older woman said, “You have to sign up for Part A and B with a supplement and then Part D covers the drugs, but only if you don’t have Medigap. We have a supplement to cover co-pays and deductibles.” Incredulous the younger woman asked, “How much does all that cost and how do you manage it?” Her friend replied, “I’m never really sure!”
Medicare is complicated for anyone. It is important to understand the various parts of Medicare, so you are assured that you have the coverage you need, when you need it. In Successfully Navigating Medicare-Part One: Understanding the basics, we discussed the basics of Medicare and simply outlined some definitions. This article is designed to add some detail about the different parts of Medicare so that you can better understand how it all fits together.
What are the parts of Medicare?
We have already established that Medicare is a federally funded health insurance program for people over 65 or with special circumstances. Medicare and its various parts cover things like hospitalization, skilled nursing, outpatient care, and prescriptions. But which parts cover what? Mike Dietz, owner of MIB Health Insurance says, “There is not a bad choice with Medicare for supplements and plans. The most important thing to consider is having access to the doctors and healthcare you need. Every person has a different situation. Income level, choice of doctor, risk tolerance, and drug requirements all play into the decision-making process to choose your Medicare path.”
Sometimes a person has better options than Medicare like a group health insurance plan that may be more cost-effective. If you are still employed, sometimes staying with the group plan from your employer is the best option. If you work for an employer with less than 20 employees when you turn 65, Medicare can be your primary health plan and the group health insurance becomes a secondary supplement. If you opt out of Medicare A and B without other coverage, you risk not having any health insurance coverage. So, let’s look at the various parts of Medicare to help you determine the best way to navigate Medicare for your unique circumstance.
Medicare Part A
If you (or your spouse) have worked longer than ten years in the United States, you have prepaid for your Medicare Part A. With this basic requirement, Medicare Part A is free. There are deductibles for hospitalization which is where Medicare Advantage plans and supplements like Medigap come in. Most simply put, Medicare Part A is hospital insurance that covers in-patient acute hospitalization, short-term skilled nursing facilities, immediate in-patient mental health facilities, short-term rehabilitation facilities, and in-patient palliative care. Basically, anywhere you are occupying a bed in a facility, Medicare Part A provides coverage. Medicare Part A does not cover long-term stays such as nursing homes. There may be fees that are not covered which is why supplemental plans are necessary.
Medicare Part B
Medicare Part B is coverage for any outpatient medical care provided by a doctor. It covers preventative care and things like lab testing, home health care, medical equipment, ambulance services, and some chiropractic. There is some overlap between Part A and Part B. Part B can also provide some care in hospitals like physician visits, radiation and chemotherapy, diagnostic imaging, medical equipment, and dialysis. Part B can also cover some medications associated with your hospital stays and outpatient care if they are administered in a clinical setting. Depending on income, time of enrollment, and disability status, your cost for Medicare Part B as of 2023 will be $164.90 per month with a $226.00 deductible and 20% co-pay.
Medicare Part C
Medicare Part C is also known as a Medicare Advantage plan. Medicare Advantage was created in the 1997 Balanced Budget Act. Nearly half of the people on Medicare choose Medicare Part C which is a private network Medicare insurance plan that covers Part A and B benefits, and extra benefits like wellness visits, gym memberships, vision, dental and hearing. It can sometimes cover medical and prescription drugs within one plan. Medicare Advantage is private and completely separate from Medicare. It is an alternative to Original Medicare but offered by private insurance companies. Medicare Advantage plans have a $0 or low premium cost. Your out-of-pocket annual maximum is $8,300, but this can be lower depending on the company. It is a ‘pay as you go’ program where the consumer pays a small co-pay or co-insurance up to an annual maximum out-of-pocket for the year when healthcare becomes needed. These plans sometimes offer additional benefits like dental, over-the-counter drugs, and gym memberships. The biggest limitation of Medicare C is a limited Physician Network, and it may not always offer the cheapest option depending on your healthcare needs. You will choose either a private Medicare Advantage or a Medicare supplement plan to cover your Medicare Parts A and B.
Medicare Part D
Medicare Part D is a federal program that provides Medicare recipients with affordable access to prescription drugs. This plan was established in 2006 to help cover the rising cost of prescription medication. Prescription drug plans can also be obtained through private insurance companies with different costs like varying premiums, deductibles, copays, and coinsurance. Different tiers of prescription drugs dictate what the consumer will ultimately pay for medication. Medicare Part D offers a wide range of choices and choosing one over another is a little bit daunting. Prescription drugs tend to be the highest cost in Medicare and a guiding factor to a plan that best covers your medications. The experts at MIB Health Insurance can help you navigate the best and most cost-effective plan for you.
Medicare supplement plans, or Medigap, are policies that help cover gaps in Medicare coverage. There are also additional Medicare Supplement Parts F-N with differing fees, structures, and benefits. These supplements work alongside your Original Medicare(A and B) plan to help fill coverage gaps. Because it is used in addition to your federal Medicare coverage, it provides freedom and flexibility. Medigap allows you to use any doctor that participates in Medicare. With Medigap, you can change your policy at any time without enrollment time frames and windows, however you may be subject to medical underwriting if you are enrolling in Medigap outside of your Initial Enrollment Period (IEP). Medigap policies are completely renewable with no pre-existing conditions. There are countless types of Medigap plans from many different insurance providers. Costs for Medicap vary based on deductibles, copayments, and out-of-pocket options. Choosing the right plan can be tricky and it is best to seek guidance from a trusted insurance broker.
Who is Irma?
There is an IRMA tax that increases the cost of Medicare Part B premiums for individuals at higher income levels. A request to lower an Income-Related Monthly Adjustment Amount (IRMAA) is available for special circumstances. If you experience a life-altering event that changes your income, you can request through IRMAA to lower the additional costs for Medicare Part B and Part D.
Understanding Medicare and its parts and supplements can be complicated. The Medicare guide provided by the Government is over 100 pages and difficult to decipher. The Medicare team at MIB Health Insurance has over 35 years of experience matching individuals with the perfect Medicare solutions to meet their needs. Call for a free consultation to see how they can help you navigate the transition to Medicare. You will receive the free resource The MIB Guide to Medicare including the IRMAA details.
MIB Health Insurance is a family-owned health insurance brokerage with a team of caring health insurance professionals in the Fox Cities who want to understand your unique healthcare story. Together you can find the right Medicare solutions for you and your family. Your health insurance partners at MIB are committed to helping you understand your Medicare options saving you time and money. Call a MIB Health Insurance partner at 920-731-2100 to see what Medicare peace of mind may look like for you.